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EXHIBIT 10.23
CABOT MICROELECTRONICS CORPORATION
CHANGE IN CONTROL SEVERANCE PROTECTION AGREEMENT
THIS SEVERANCE AGREEMENT, (the "Agreement") is entered into as of this
_____ day of ________________, _______ (the "Agreement Date"), by and between
Cabot Microelectronics Corporation, a Delaware corporation (the "Company") and
____________________ (the "Executive");
WITNESSETH THAT:
WHEREAS, the Executive is employed by the Company, and the Company
desires to provide protection to the Executive in the event of a Change in
Control of the Company;
NOW, THEREFORE, it is hereby agreed by and between the parties, for
good and valuable consideration the receipt and sufficiency of which are hereby
acknowledged, as follows:
Article I. Establishment and Purpose
1.1 TERM OF THE AGREEMENT. This Agreement will commence on the
Agreement Date and will terminate on the earliest to occur of the date: (i) that
is the first anniversary of the date as of which the Company or Committee
notifies the Executive in writing that the Agreement is being terminated; (ii)
the Company terminates the Executive's employment for Cause, Disability or an
Excluded Termination; (iii) the Executive voluntarily terminates his employment
other than during the One-Year Window Period or without Good Reason; or (iv)
that is the first anniversary of the date as of which the Company no longer
employs the Executive, if that happens before a Change in Control occurs.
However, if a Change in Control occurs while this Agreement is effective, this
Agreement will remain irrevocably in effect for the greater of 24 months from
the date of the Change in Control or until all benefits that are owing to the
Executive hereunder have been paid to him or her.
1.2 PURPOSE OF THE AGREEMENT. The purpose of this Agreement is to
advance the interests of the Company by providing the Executive with an
assurance of equitable treatment, in terms of compensation and economic
security, in the event of an acquisition or other Change in Control of the
Company. An assurance of equitable treatment will enable the Executive to
maintain productivity and focus during the period of significant uncertainty
that is inherent in an acquisition or other Change in Control. Further, the
Company believes that Agreements of this kind will aid it in attracting and
retaining the highly qualified, high-performing professionals who are essential
to its success.
1.3 CONTRACTUAL RIGHT TO BENEFITS. This Agreement establishes and vests
in the Executive a contractual right to the benefits to which he is entitled
hereunder, enforceable by the Executive against the Company.
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Article II. Severance Benefits
2.1 RIGHT TO SEVERANCE BENEFIT. The Executive will be entitled to
receive from the Company the Severance Benefit provided in Section 2.3 if a
Change in Control occurs and, within the two- (2-) year period commencing on the
date of the Change in Control, the Executive's employment with the Company and
all of its Affiliates is involuntarily terminated for any reason other than the
Executive's death or Disability, Cause, or an Excluded Termination. In addition,
if the Executive voluntarily terminates employment with the Company and all of
its Affiliates for Good Reason within the two- (2-) year period commencing on
the date of a Change in Control, he or she will be entitled to receive from the
Company the Severance Benefit provided in Section 2.3. Lastly, if the Executive
voluntarily terminates employment with the Company and all of its Affiliates
during the One-Year Window Period, he or she will be entitled to receive from
the Company the Severance Benefit provided in Section 2.3. Other than during the
One-Year Window Period, if the Executive voluntarily terminates employment at
any time for any reason other than Good Reason, he or she will not be entitled
to a Severance Benefit.
(a) An "Affiliate" is any entity directly or indirectly
controlled by, controlling or under common control with the Company.
(b) A "Disability" is a physical or mental condition that would
entitle the Executive to benefits under the Company's long-term
disability plan, or if the Company maintains no such plan, then under
the federal Social Security Law.
(c) "Cause" means either:
(i) the Executive's willful and continued failure to
perform substantially the duties reasonably assigned to
him or her; or
(ii) the Executive's willful engaging in conduct that is
demonstrably and materially injurious to the Company,
monetarily or otherwise.
The Executive's willful failure to perform substantially his or her
duties constitutes "Cause" only if the Board has delivered a written
demand for substantial performance to the Executive that specifically
identifies the manner in which the Board believes the Executive has
failed to perform, and has otherwise followed the procedure described
in Section 3.2 below. The Executive's failure to perform substantially
his or her assigned duties does not include either a failure that
results from the Executive's death, Disability, physical or mental
incapacity, or an anticipated failure following upon the Executive's
notifying the Company that he or she intends to resign for Good Reason
or during the One-Year Window Period. No act or failure to act of the
Executive's will be deemed "willful" if the Executive acted (or failed
to act) in good faith or in the reasonable belief that his or her act
or omission was in the best interests of the Company.
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(d) An "Excluded Termination" exists if the Executive's
employment with the Company and its Affiliates is terminated in
connection with the sale, divestiture or other disposition of all or
part of an Operating Unit, and:
(i) the Executive is offered employment with the Operating
Unit or the acquirer of the Operating Unit (or of a
part of it) on terms and conditions that would not
constitute Good Reason (substituting the Operating Unit
or acquirer for the Company) and
(ii) the Company obtains an agreement from the Operating
Unit or acquirer, enforceable by the Executive, to
provide severance pay and benefits that are at least
equal to the Severance Benefit and that are payable on
termination of the Executive's employment with the
Operating Unit or the acquirer on the same terms as
they would have been payable under this Agreement
(substituting the Operating Unit or acquirer for the
Company).
An "Operating Unit" is a subsidiary, division or other business unit of
the Company or an Affiliate.
(e) "Good Reason" exists if, after the occurrence of a Change in
Control, any of the events or conditions described below occurs:
(i) There is a change in the Executive's status, title,
position or responsibilities (including reporting
responsibilities) which, in the Executive's reasonable
judgment, represents an adverse change. If the
Executive is an officer of the Company designated by
the Company as an "executive officer" for purposes of
Section 16 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") and if, as a consequence
of the Change in Control (A) the Executive is not an
officer of the entity effecting the Change in Control
designated by that entity as an "executive officer "
for purposes of Section 16 of the Exchange Act, (B) the
Company becomes a subsidiary of another corporation and
the Executive is not employed by the ultimate parent
corporation or (C) the Executive is employed by an
entity that has no class of equity interests that are
publicly traded, then the Executive will be deemed to
have experienced an adverse change in status, title
position or responsibilities.
(ii) The Executive is assigned duties or responsibilities
that are, in the Executive's reasonable judgment,
inconsistent with his or her status, title, position or
responsibilities.
(iii) The Executive is removed from any of his or her offices
or positions, or there is a failure to reappoint the
Executive to any of his or her offices or positions.
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(iv) The Executive's annual base salary is reduced below
the rate in effect as of the date of the Change in
Control or as of any date following the Change in
Control, whichever is greater.
(v) The offices of the Company or Operating Unit at which
the Executive is principally employed are moved to a
location more than twenty-five (25) miles from the
location they occupied immediately prior to the Change
in Control.
(vi) The Executive is required to be based anywhere other
than the offices of the Company or Operating Unit at
which he or she was principally employed immediately
prior to the Change in Control, unless the Executive
was not previously assigned to a principal employment
location. This clause (vi) does not include a
situation in which the Executive is required to travel
on Company business to an extent substantially
consistent with his or her business travel obligations
at the time of the Change in Control.
(vii) The Company fails to pay the Executive any portion of
his then-current compensation or an installment of
deferred compensation, in either case, within seven
(7) days after the date it is due.
(viii) The Company fails to continue in effect, or to
continue the Executive's participation in, any
material compensation or benefit plan in which the
Executive participated immediately prior to the Change
in Control. Notwithstanding the foregoing, Good Reason
will not exist if an equitable arrangement, embodied
in one or more ongoing substitute or alternative plans
that provide compensation and benefits not materially
less favorable than those provided to the Executive
immediately prior to the Change in Control, has been
made with respect to the discontinued plan, or with
respect to the Executive's changed or discontinued
plan participation. If the Executive continues to
participate in a material compensation or benefit plan
after a Change in Control, but on less favorable terms
than immediately prior to the Change in Control,
either as to the amount of benefits provided or as to
the level of the Executive's participation relative to
other Executives, the Company will be deemed to have
failed to continue his or her participation in the
plan.
(ix) The Company fails to obtain a satisfactory agreement
from any successor, enforceable by the Executive, to
assume and agree to honor and perform the Company's
obligations under this Agreement.
(x) The Company purports to terminate the Executive's
employment in a manner that violates Article IV below.
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(f) The "One-Year Window Period" is the thirty- (30-) day period
commencing on the first anniversary of a Change in Control.
2.2 CHANGE IN CONTROL. A "Change in Control" occurs on the first
date that any of the events or conditions described in subsections (a)
through (d) occurs.
(a) Any Person, together with all affiliates and associates
(within the meaning of Rule 12b-2 promulgated under the Exchange Act),
acquires Beneficial Ownership, directly or indirectly, or securities of
the Company representing at least thirty percent (30%) of the combined
voting power of the Company's then outstanding Voting Securities.
Notwithstanding the foregoing, Voting Securities that are acquired in a
Non-Control Acquisition will not constitute an acquisition that would
cause a Change in Control.
(b) During any period of twenty-four (24) consecutive months
beginning on or after the Agreement Date, individuals who, at the
beginning of that 24-month period, constitute the Board (the "Incumbent
Directors"), cease for any reason to constitute at least a majority of
the Board. A new director of the Company whose election or nomination
for election as a director of the Company was approved by a vote of at
least two-thirds of the Incumbent Directors will be deemed to be an
Incumbent Director. Notwithstanding the foregoing, a new director
designated by a person who has entered into an agreement with the
Company to effect a transaction described in subsection 2.2(d) will not
be deemed to be an Incumbent Director. Also notwithstanding the
foregoing, no individual will be considered to be an Incumbent Director
if he or she initially assumed office through an actual or threatened
"Election Contest" (as described in Rule 14a-11 promulgated under the
Exchange Act) or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board (a "Proxy
Contest") including by reason of any agreement intended to avoid or
settle any Election Contest or Proxy Contest.
(c) At any duly conducted election of directors at a special or
annual meeting of the Company's stockholders,
(i) two or more nominees who are both (A) nominees of and
endorsed by the Company and (B) not employees of the
Company or any Affiliate at the time of the election
are not elected to serve as directors; and
(ii) any person not a nominee of, and endorsed by, the
Company is elected to serve as a director of the
Company.
(d) the stockholders of the Company approve:
(i) a merger, consolidation or reorganization involving the
Company, unless the merger, consolidation or
reorganization is a "Non-Control Transaction;"
(ii) a complete liquidation or dissolution of the Company;
or
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(iii) an agreement for the sale or other disposition of all
or substantially all of the assets of the Company to
any Person (other than a transfer to a Change in
Control Subsidiary).
(e) This subsection 2.2(e) contains the definitions of the
capitalized terms used in subsections (a) through (d) above.
(i) "Voting Securities" are securities of the Company
generally entitled to vote in the election of
directors.
(ii) "Person" is used under this Agreement in the same way
as under Section 13(d) and 14(d) of the Exchange Act.
(iii) "Beneficial Ownership" is used in the same way as under
Rule 13d-3 promulgated under the Exchange Act.
(iv) A "Non-Control Acquisition" is an acquisition (x) by an
employee benefit plan maintained by the Company or by a
Change in Control Subsidiary; (y) by the Company or by
a Change in Control Subsidiary; or (z) directly from
the Company (A) by an underwriter in connection with an
underwritten public offering or private placement, (B)
of non-voting convertible debt or non-voting
convertible preferred stock (until converted into
Voting Securities), or (C) by a Person who, in
connection with the acquisition, (X) enters into a
standstill agreement with the Company that has a
duration of at least two years and pursuant to which
the Person agrees to vote the acquired securities on
any matter either at the direction of the Board or in
the same proportion as the Company's other stockholders
vote on the matter and (Y) agrees to assume, honor and
perform the Company's obligations under this Agreement.
An acquisition pursuant to sub-clause (C) will be a
Non-Control Acquisition only for so long as the
standstill agreement remains in effect.
(v) "Board" means the Board of Directors of the Company.
(vi) A "Change in Control Subsidiary" is a corporation or
other Person, a majority of whose voting power, voting
equity securities or equity interest is owned directly
or indirectly by the Company.
(vii) A "Non-Control Transaction" is a merger, consolidation
or reorganization of the Company where (A) the
stockholders of the Company, immediately before the
merger, consolidation or reorganization, own directly
or indirectly immediately after the merger,
consolidation or reorganization, at least sixty percent
(60%) of the combined voting power of the outstanding
voting securities of the corporation resulting from the
merger, consolidation or reorganization (the "Surviving
Corporation") in
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substantially the same proportion as their ownership of
the Voting Securities immediately before the merger,
consolidation or reorganization; (B) the individuals
who were Incumbent Directors immediately before the
agreement providing for the merger, consolidation or
reorganization was executed constitute at least
two-thirds of the members of the board of directors of
the Surviving Corporation; and (C) no Person other than
(x) the Company, (y) a Change in Control Subsidiary, or
(z) an employee benefit plan maintained by the Company,
the Surviving Corporation or a Change in Control
Subsidiary, acquires Beneficial Ownership of thirty
percent (30%) or more of the combined voting power of
the Surviving Corporation's then outstanding voting
securities.
Notwithstanding the foregoing, a Change in Control will not be deemed to occur
solely because a Person acquires Beneficial Ownership of more than the permitted
amount of the then outstanding Voting Securities as a result of the acquisition
of Voting Securities by the Company which, by reducing the number of Voting
Securities then outstanding, increases the percentage of shares Beneficially
Owned by the Person. Notwithstanding the foregoing, if a Change in Control would
occur but for the operation of the preceding sentence as a result of the
acquisition of Voting Securities by the Company, and after that acquisition by
the Company, the Person described in the preceding sentence increases the
percentage of then outstanding Voting Securities he or she owns, a Change in
Control will occur.
Notwithstanding any other provision of this Agreement, if the Executive's
employment is terminated (whether by the Company for any reason other than
Cause, Disability, or the death of the Executive or by the Executive for Good
Reason) (A) at the request of a third party who has indicated an intention or
taken steps reasonably calculated to effect a Change in Control and who
effectuates a Change in Control or (B) otherwise in connection with or in
anticipation of a Change in Control that actually occurs, then for purposes of
this Agreement, the date immediately prior to the Executive's Termination Date
will be deemed to be the date of a Change in Control.
2.3 SEVERANCE BENEFIT. The "Severance Benefit" to which the Executive
will become entitled if he or she meets the requirements of Section 2.1 is
composed of all of the amounts described in subsections (a) through (g) below,
paid as described in those subsections.
(a) The Company will pay the Executive all Accrued Compensation
within ten (10) days after his or her Termination Date. The Executive's
"Accrued Compensation is all amounts earned, accrued or otherwise
payable to the Executive as of his or her Termination Date, including
base salary, reimbursement for reasonable and necessary expenses
incurred by the Executive on behalf of the Company through the
Termination Date, vacation pay and bonuses and incentive compensation.
(b) The Company will pay the Executive a Pro-rata Bonus within
thirty (30) days after his or her Termination Date. The Executive's
"Pro-rata Bonus" means an amount equal to his or her Bonus Amount
multiplied by a fraction whose numerator is
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the number of days that have elapsed through the Termination Date in
the then-current fiscal year and whose denominator is 365. The
Executive's "Bonus Amount" is the greatest of:
(i) the Executive's target bonus amount (including any
portion the Executive may have elected to defer) under
all Short-Term Incentive Plans for the fiscal year in
which the Change in Control occurs;
(ii) the Executive's target bonus amount (including any
portion the Executive may have elected to defer) under
all Short-Term Incentive Plans for the fiscal year in
which the Termination Date occurs; and
(iii) the highest bonus amount paid or payable to the
Executive (including any portion that the Executive may
have elected to defer) under all Short-Term Incentive
Plans in respect of any of the three fiscal years
preceding the fiscal year in which the Change in
Control occurs.
"Short-Term Incentive Plans" are any bonus or incentive compensation
plans, policies, programs or other arrangements that make cash awards
to the Executive on the basis of award periods that are no longer than
one year.
(c) The Company will pay the Executive an amount equal to [enter
multiplier] times the sum of: (I) the Executive's annual base salary,
(II) his or her Bonus Amount and (III) an amount equal to the
contributions made or credited by the Company under all employee
retirement plans for the benefit of the Executive for the most recently
completed plan year of each such plan. For purposes of this subsection
2.3(c), the Executive's base salary includes any amounts he or she may
have elected to defer, and will be calculated at the rate in effect
immediately before the Change in Control or on the Termination Date,
whichever is greater. The Company will pay the amount described in this
subsection 2.3(c) in one lump sum, without any discount for accelerated
payment, within thirty (30) days after the Termination Date. The amount
described in this subsection 2.3(c) will be paid as severance pay and
in lieu of any salary for periods after the Termination Date.
(d) For the [enter a number of months]-month period beginning on
the Termination Date, the Company will continue on behalf of the
Executive and his or her dependents and beneficiaries, at the Company's
expense and without any required contribution by the Executive:
(i) medical, health, dental and prescription drug benefits;
(ii) long-term disability coverage; and
(iii) life insurance and other death benefits coverage.
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The coverages and benefits (including deductibles, if any) provided
under this Section 2.3(d) will be no less favorable to the Executive
and his or her beneficiaries than the most favorable of those coverages
and benefits provided to the Executive and his or her dependents during
the ninety-day (90-day) period immediately before the earlier of the
Executive's Termination Date and the Change in Control, or as of any
date following the Change in Control but preceding the Executive's
Termination Date. If the Executive obtains benefits coverage under a
subsequent employer's benefit plans during the [enter same number of
months]-month period beginning on the Termination Date, the Company may
reduce or eliminate the coverages and benefits it is required to
provide under this subsection 2.3(d), so long as the aggregate
coverages and benefits of the combined benefit plans are no less
favorable to the Executive than the coverages and benefits required to
be provided under the first two sentences of this subsection 2.3(d).
Any period during which benefits described in clause (i) above are
provided pursuant to this subsection will not be considered to be in
satisfaction of any obligation of the Company to provide continuation
coverage under Section 4980B of the Internal Revenue Code of 1986, as
amended (the "Code), the obligation for which will begin after that
period.
(e) The Company will pay or reimburse the Executive for the
costs, fees and expenses of outplacement assistance services, up to a
maximum of fifteen percent (15%) of the Executive's annualized base
salary, provided by an outplacement agency selected by the Executive.
(f) All amounts accrued or awarded to the Executive under any
incentive compensation plan or benefit plan and not specifically
described in subsections 2.3(a) through (e) above will immediately vest
on the Executive's Termination Date, and the Executive will be entitled
to be paid those amounts in accordance with the terms of the plans. In
addition, all options and restricted stock granted to the Executive
under the Cabot Microelectronics Corporation 2000 Equity Incentive Plan
will immediately vest and become freely exercisable upon a Change in
Control, as per the terms of that plan. The first sentence of this
subsection 2.3(f) will not apply to any benefits allocated or accrued
to the Executive under any plan that is intended to be qualified under
Section 401(a) of the Code.
(g) [for particular executive agreements] If a Change in Control
occurs on or before September 29, 2002, the Company will pay the
Executive a lump sum cash payment equal to the Change in Control Net
Value of the Executive's Initial Stock Option Award, within thirty (30)
days of the Termination Date. The "Change in Control Net Value of the
Executive's Initial Stock Option Award" is (I) the price per share that
the purchaser pays for the Company in the Change in Control less [enter
strike price of initial option grant], which is the exercise price per
share of the initial stock option grant by the Company to the Executive
on [enter date of initial option grant], multiplied by (II) [enter
number of option shares of initial grant], which is the number of
option shares of Company stock subject to the initial option grant by
the Company to the Executive on [enter date of initial option grant].
If the Change in Control is an asset sale, then the "price per share
that the purchaser pays for the Company" will be the price paid for the
assets, divided by the total number of shares of all classes of stock
of the Company outstanding, on a fully-diluted basis. If the Change in
Control is a Board takeover, the
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"price per share that the purchaser pays for the Company" will be the
fair market value of a share on the date the Change in Control occurs,
determined in good faith by the Company's regular accountants.
All payments described in this Section 2.3 are described gross of any
withholding, and will be subject to any applicable requirement to withhold
income, payroll or other taxes, except with respect to, and to the extent
provided as, a Gross-up Payment as provided in Article IV below.
2.4 NO OBLIGATION TO MITIGATE. The Executive will not be required to
mitigate the amount of the Severance Benefit or any portion of it by seeking
other employment or otherwise. Except as provided in subsection 2.3(d), no
portion of the Severance Benefit will be offset or reduced by the amount of any
compensation or benefits provided to the Executive through subsequent
employment.
2.5 NONEXCLUSIVITY; NONDUPLICATION. Except as specifically provided in
this Agreement, the provisions of this Agreement will not affect any other plan,
program or arrangement under which the Executive may accrue or earn benefits or
compensation. Notwithstanding the foregoing, amounts owed to the Executive under
any other severance plan of the Company or an Affiliate will be reduced by any
amounts payable under this Plan.
Article III. Termination of Employment
3.1 TERMINATION DATE. The Executive's "Termination Date" is the date
his or her employment with the Company and all Affiliates terminates, pursuant
to the provisions of this Article 3.
3.2 TERMINATION BY COMPANY FOR CAUSE. At any time following a Change in
Control, the Company must follow the procedure set forth in this Section 3.2, in
order to terminate the Executive for Cause. First, the Board will hold a meeting
to determine whether Cause exists. The Company must give the Executive
reasonable advance written notice of the meeting and of the facts and
circumstances that will be presented to the Board as constituting Cause,
including facts evidencing that the Executive has been given at least a thirty
(30) day opportunity within which to cure any facts and circumstances
constituting Cause, unless the facts and circumstances constituting Cause do not
allow for cure. The Executive will have an opportunity, together with his or her
counsel, to be heard before the meeting. If the Board finds, by a resolution
duly adopted in good faith by affirmative vote of at least three-quarters of the
entire membership of the Board, that Cause exists and that the Executive should
be terminated for Cause, then the Board must set forth those findings in a
written resolution that also includes the specific facts and circumstances found
to constitute Cause (which cannot include any facts or circumstances not
included in the written notice of the Board meeting given to the Executive). The
Company must furnish the Executive with a copy of the resolution, together with
a written notice that he or she is being terminated for Cause. The notice must
specify the effective date of the termination. The effective date of the
termination may not be sooner than five business days after the date the Company
delivers the resolution and notice to the Executive. In any action to contest
the existence of Cause, the Board's findings will have no presumptive weight.
The Company may not later rely upon any facts or circumstances as Cause for the
Executive's
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termination, other than the facts or circumstances set forth in the notice of
the Board meeting given to the Executive and found by the Board at that meeting
to constitute Cause.
3.3 TERMINATION BY COMPANY FOR DISABILITY. At any time following a
Change in Control, the Company must follow the procedure set forth in this
Section 3.3, in order to terminate the Executive for Disability. If, as a result
of Disability, the Executive has been absent from the performance of his or her
duties for the Company for the elimination period provided in the Company's
long-term disability plan (or, if the Company does not maintain a long-term
disability plan, for six consecutive months) and the Executive is unable to
return to his or her duties on a full-time basis, even with reasonable
accommodations on the Company's part, the Company may give the Executive written
notice that it proposes to terminate the Executive's employment for Disability.
The notice will state that the Company will terminate the Executive for
Disability effective on a specific date, unless the Executive returns to the
performance of his or her duties on a full-time basis by that date. The
effective date of the termination may not be sooner than thirty (30) days after
the date the Company delivers the notice to the Executive. The Executive will be
terminated for Disability if and only if the Company has made all reasonable
accommodations required to permit the Executive to return to work and the
Executive has not returned on a full-time basis by the date specified in the
notice. Notwithstanding any other provision of this Section 3.3, if the
Executive elects a disability retirement under any qualified retirement plan of
the Company, or begins to receive benefits under the Company's long-term
disability plan, he or she will be deemed to have been properly terminated for
Disability by the Company. The effective date of such a termination will be the
Executive's retirement date under the retirement plan or the date as of which
long-term disability benefits begin under the Company's long-term disability
plan, whichever is sooner.
3.4 TERMINATION BY EXECUTIVE FOR GOOD REASON. Following a Change in
Control, if the Executive has Good Reason, he or she may terminate his or her
employment without giving prior notice to the Company, and will not be required
to give any notice in order to perfect his or her rights under the Plan on
termination for Good Reason, except as provided in this Section 3.4. Within
thirty (30) days after the Executive receives a written request from the Company
for a statement of the facts and circumstances that the Executive believes
constitute Good Reason, the Executive will, if he or she has not already done
so, provide the Company with a written statement setting forth in reasonable
detail all facts and circumstances the Executive believes constitute Good Reason
for his or her termination. The Executive will have the right to amend and
supplement his or her statement until thirty (30) days after the date he or she
receives the request for the statement from the Company. The Executive may not
thereafter rely on any facts or circumstances not set forth in his or her
statement (as amended and supplemented) as Good Reason for his or her
termination. The written request for a statement that the Company provides to
the Executive must specifically refer to this Section 3.4, and must be
accompanied by a hard copy of this Agreement.
3.5 VOLUNTARY TERMINATION BY EXECUTIVE DURING THE ONE-YEAR WINDOW
PERIOD. Following a Change in Control, the Executive may voluntarily terminate
his or her employment with the Company and its Affiliates for any or no reason
during the One-Year Window Period without giving prior notice to the Company,
and will not be required to give any notice in order to perfect his or her
rights under this Agreement on termination during the One-Year Window Period.
The Executive will be deemed to voluntarily terminate his or her employment with
the
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Company and all Affiliates during the One-Year Window Period only if he or
she actually terminates employment with the Company and all Affiliates before
the end of the One-Year Window Period, or if he or she gives written notice of
his or her intent to terminate before the end of the One-Year Window Period and
actually terminates employment with the Company and all Affiliates within thirty
(30) days after the end of the One-Year Window Period.
3.6 OTHER TERMINATION. Neither the Company nor the Executive must
follow any particular procedures to effect a termination for a reason other than
Cause, Disability or Good Reason, or for the Executive to terminate employment
voluntarily at a time other than during the One-Year Window Period.
Article IV. Parachute Payments
4.1 EXCISE TAX GROSS-UP PAYMENT. If the total amounts the Executive
would receive on account of or following a Change in Control would subject the
Executive to an excise tax under Section 4999 of the Code, the Company will pay
the Executive, in addition to his or her Severance Benefit, a "Gross-up
Payment." The amount of the Gross-up Payment will be equal to the entire excise
tax the Executive must pay, plus the entire amount necessary to pay all federal,
state, local, excise, and payroll taxes that will be assessed on the Gross-up
Payment itself.
4.2 DETERMINATION OF GROSS-UP PAYMENT. Within thirty (30) days after
the Termination Date, the Company's regular accounting firm will make an initial
determination of whether the Company must pay a Gross-up Payment, and if so, how
large the Gross-up Payment must be. The accounting firm will provide the Company
and the Executive with the determination and detailed supporting calculations
and documentation. The Company will pay the expense of the initial
determination. The Executive will have the right to accept the determination, or
to have the determination reviewed by an accounting firm selected by the
Executive, at the Executive's expense. The determination of the second
accounting firm will be binding, final and conclusive on the Company and the
Executive. The Company will pay the Gross-up Payment finally determined under
this Section 4.2 to the Executive within thirty (30) days after it is finally
determined.
Article V. Other Rights and Benefits Not Affected
5.1 OTHER BENEFITS. Except as otherwise specifically provided in this
Agreement, the provisions of this Agreement will not affect any other plan,
program or arrangement under which the Executive may accrue or earn benefits or
compensation. Notwithstanding the foregoing, amounts owed to the Executive under
any other severance plan of the Company or an Affiliate will be reduced by any
amounts payable under Agreement.
5.2 EMPLOYMENT STATUS. This Agreement does not constitute a contract of
employment or impose on the Executive or the Company any obligation to retain
the Executive as an employee, to change the status of the Executive's
employment, or to change the Company's policies regarding termination of
employment.
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Article VI. Successors and Beneficiaries
6.1 SUCCESSORS. The Company will require any successor (whether direct
or indirect, by purchase, merger, consolidation, or otherwise) of all or
substantially all of the business or assets of the Company expressly to assume
and agree to perform this Agreement in the same manner and to the same extent
that the Company would be required to perform it if no such succession had taken
place.
This Agreement shall inure to the benefit of and be enforceable by the
Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees, and legatees. If the Executive should
die while any amount would still be payable to him hereunder had he continued to
live, all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement, to the Executive's devisee,
legatee, or other designee, or if there is no such designee, to the Executive's
estate.
6.2 BENEFICIARIES. The Executive's beneficiary under the Cabot
Microelectronics Corporation 401(k) Plan will be the Executive's Beneficiary
under this Agreement, unless the Executive otherwise designates a Beneficiary in
the form of a signed writing acceptable to the Committee. The Executive may make
or change such designation at any time.
Article VII. Legal Fees and Arbitration
The Company will indemnify and reimburse the Executive for all legal
fees and related expenses (including the costs of experts, evidence and counsel,
but not including the costs of an accounting firm selected by the Executive to
perform an excise tax determination as provided in Section 4.2) reasonably
incurred by the Executive:
(a) to contest or dispute in good faith his or her termination of
employment with the Company and the Affiliates; or
(b) to seek to obtain or enforce any benefit or right provided by
this Agreement or by any other plan or arrangement maintained by the
Company or an Affiliate and under which the Executive is or may be
entitled to receive benefits upon or following his or her termination
of employment.
In either case, the Executive will be entitled to indemnification and
reimbursement only if the termination of employment the Executive contests or
disputes, or as to which the Executive seeks benefits or rights, must have taken
place as the result of a Change in Control.
Article VIII. Amendment, Modification, Termination and Substitution
8.1 AMENDMENT, MODIFICATION, TERMINATION AND SUBSTITUTION. Subject to
Section 8.2, the Board may at any time and from time to time alter, amend,
modify, extend or terminate this Agreement, or accept its surrender and execute
a new Agreement in substitution of it, by resolution or consent adopted by
two-thirds of the Board. Notwithstanding the foregoing, no modification or
substitution of this Agreement will, without the prior written consent of the
Executive, alter or impair any rights or obligations under this Agreement. The
Executive must
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be given a copy of any instrument that purports to alter, amend, modify, extend
or terminate this Agreement.
8.2 LIMITATIONS ON AMENDMENT, MODIFICATION, TERMINATION AND
SUBSTITUTION. No amendment, termination, modification, extension or substitution
of this Agreement will be effective if it would adversely affect the rights of
the Executive, if a Change in Control occurs within one year after the date it
is meant to be effective. Instead, such an amendment, termination, modification
or substitution will be automatically rescinded. In addition, this Agreement may
not be amended, modified, terminated, extended or substituted at the request of
a third party who has indicated an intent, or taken steps to effect, a Change in
Control, or otherwise in connection with or anticipation of a Change in Control.
From and after the occurrence of a Change in Control, this Agreement may not be
amended, modified, terminated, extended or substituted in a manner that would in
any way adversely affect the benefits or rights provided to the Executive.
Article IX Administration
9.1 ADMINISTRATION BY COMMITTEE. This Agreement will be administered by
the Compensation Committee of the Board, or by any other committee appointed by
the Board (the "Committee"). The members of the Committee will be appointed from
time to time by, and serve at the discretion of, the Board. The Committee will
act by a majority of its members at the time in office and eligible to vote on
any particular matter. The Committee may act either by a vote at a meeting or in
writing without a meeting. No Committee member may vote on any matter
specifically involving his or her Severance Benefit.
9.2 AUTHORITY OF THE COMMITTEE. Except as limited by law and subject to
the provisions of this Agreement, the Committee will have full power to construe
and interpret this Agreement. The Committee will make all other determinations
that may be necessary or advisable to administer this Agreement. The Committee
may delegate some or all of its authority under this Agreement.
9.3 DECISIONS BINDING. All determinations and decisions made by the
Committee pursuant to the provisions of this Agreement will be final, conclusive
and binding on all persons, including, without limitation, the Company, the
Board, the Company's stockholders, all employees, the Executive and their
estates and beneficiaries.
Article X Miscellaneous
10.1 SEVERABILITY. If any provision of this Agreement is held to be
illegal or invalid for any reason, the illegality or invalidity will not affect
the remaining parts of the Agreement, and the Agreement will be construed and
enforced as if the illegal or invalid provision had not been included.
10.2 UNFUNDED STATUS OF AGREEMENT. This Agreement is intended to
constitute an "unfunded" arrangement for executive compensation. As to any
payments due but not yet made under this Agreement, the Executive's rights are
no greater than those of a general creditor of the Company. The Company is not
required to fund or otherwise set aside assets to pay the amounts
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owed under this Agreement. Notwithstanding the foregoing, immediately prior to a
Change in Control, the Company or its successor must and will establish a
"rabbi" trust and fully fund the Severance Benefit, Gross-up Payment (if any),
and any other amounts that may become payable under this Agreement.
10.3 GOVERNING LAW. To the extent they are not preempted by federal
law, the laws of the State of Illinois, other than its conflict of law
principles, will govern in all matters relating to this Agreement.
10.4 NONASSIGNABILITY. Neither the Executive nor his or her
beneficiaries or legal representatives may assign or transfer this Agreement or
any right under it, except by will or by the laws of descent and distribution.
This Agreement will inure to the benefit of and be enforceable by the
Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees, and legatees.
10.5 SETTLEMENT OF CLAIMS. The Company's obligation to make the
payments provided for in this Agreements will not be affected by any
circumstances, including, without limitation, any set-off, counterclaim,
defense, recoupment or other right which the Company may have against the
Executive or others.
IN WITNESS WHEREOF, the Company and the Executive have duly executed
this Agreement as of the date first written above.
CABOT MICROELECTRONICS CORPORATION
By:
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Its:
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(Executive's Signature)
Executive's Name and Address for notices:
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