Exhibit 10.23
Cabot
Microelectronics Corporation
AMENDED AND RESTATED
CHANGE IN CONTROL
SEVERANCE PROTECTION
AGREEMENT
This Amended and
Restated Agreement , (the
“Agreement”) is entered into effective as of
____________, 2008 (the “Agreement Date”), by and
between Cabot Microelectronics Corporation , a Delaware
corporation (the “Company”) and [Executive] (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;
Whereas, the Executive and the Company desire to
amend and restate the Change in Control Severance Protection
Agreement between the Company and the Executive, dated as of
_______, ____ (the “Original Agreement”), in order to
comply with Section 409A of the Internal Revenue Code of 1986, as
amended (the “Code”) and to make certain other
clarifications to ensure that the intended benefits of the Original
Agreement are provided to the Executive;
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
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.
Article II.
Certain Definitions
2.1
“Affiliate” is any
entity directly or indirectly controlled by, controlling or under
common control with the Company.
2.2
“Cause” means
either:
(a) the
Executive’s willful and continued failure to perform
substantially the duties reasonably assigned to the Executive;
or
(b) 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 shall constitute “Cause” only if the
Applicable Board (as defined in Section 5.2) has delivered a
written demand for substantial performance to the Executive that
specifically identifies the manner in which the Applicable Board
believes the Executive has failed to perform, and has otherwise
followed the procedure described in Section 5.2
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
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.
2.3
“Change in Control”
means the first to occur of any of the events or conditions
described in subsections (a) through (e):
(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, the
acquisition of Voting Securities in a Non-Control Acquisition will
not constitute 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, (i) a new
director designated by a person who has entered into an agreement
with the Company to effect a transaction described in Section
2.3(d) will not be deemed to be an Incumbent Director
and (ii) no individual will be considered to be an Incumbent
Director if he or she initially assumed office through an actual or
threatened “Election Contest” with respect to the
election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person
other than the Board (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,
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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
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any person not
a nominee of, and endorsed by, the Company is elected to serve as a
director of the Company.
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a merger,
consolidation or reorganization involving the Company, unless the
merger, consolidation or reorganization is a “Non-Control
Transaction;” or
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a transaction
pursuant to which all or substantially all of the assets of the
Company are sold or disposed of to any Person (other than a
transfer to a Change in Control Subsidiary).
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(e) Approval by the
stockholders of the Company of a complete liquidation or
dissolution of the Company; or
(f) This Section
2.3(f) contains the definitions of the capitalized terms used in
subsections (a) through (e) above.
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“Voting
Securities” are securities of the Company generally entitled
to vote in the election of directors.
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“Person” is used under this
Agreement in the same way as under Section 13(d) and 14(d) of the
Exchange Act.
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“Beneficial Ownership” is used in
the same way as under Rule 13d-3 promulgated under the Exchange
Act.
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A
“Non-Control Acquisition” is an acquisition (A) by an
employee benefit plan maintained by the Company or by a Change in
Control Subsidiary; (B) by the Company or by a Change in Control
Subsidiary; or (C) directly from the Company (1) by an underwriter
in connection with an underwritten public offering or private
placement, (2) of non-voting convertible debt or non-voting
convertible preferred stock (until converted into Voting
Securities), or (3) by a Person who, in connection with the
acquisition, (a) 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 (b) agrees to assume, honor and perform the
Company’s obligations under this Agreement. An
acquisition pursuant to sub-clause (C)(3) will be a Non-Control
Acquisition only for so long as the standstill agreement remains in
effect.
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“Board” means the Board of Directors
of the Company.
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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.
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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 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 (1) the
Company, (2) a Change in Control Subsidiary, or (3) 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.
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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.
2.4
“Change in Control
Period” means the period commencing on the Agreement Date and
ending on the earliest to occur of the date that is (a) the first
anniversary of the date as of which the Company or Committee
notifies the Executive in writing that the Agreement is being
terminated or (b) other than with respect to an Anticipatory
Termination (as defined in Section 2.6), the date on which the
Company and its Affiliates cease to employ the Executive, if such
cessation occurs prior to a Change in Control.
2.5
“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.
2.6
“Effective Date” means
the first date during the Change in Control Period on which a
Change in Control occurs. Notwithstanding anything in
this Agreement to the contrary, if a Change in Control occurs and
if the Executive’s employment with the Company is terminated
during the one-year period prior to the date on which the Change in
Control occurs, and if it is reasonably demonstrated by the
Executive that such termination of employment (a) was at the
request of a third party that has taken steps reasonably calculated
to effect a Change in Control or (b) otherwise arose in connection
with or anticipation of a Change in Control, then “Effective
Date” means the date immediately prior to the date of such
termination of employment (an “Anticipatory
Termination”). In the event of an Anticipatory
Termination, the Severance Benefits will be paid or provided as set
forth in Section 4.2 and for purposes thereof the
“Termination Date” shall be the date of the Change in
Control.
2.7
“Good Reason” means the
taking of actions by the Company that result in a material negative
change in the Executive’s employment
relationship. For these purposes, a “material
negative change in the Executive’s employment
relationship” includes any of the events or conditions
described below:
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There is a
change in the Executive’s status, title, position or
responsibilities (including reporting responsibilities and, if
applicable, membership on the Board) which represents a material
adverse change from those in effect as of immediately prior to the
Change in Control;
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The Executive
is assigned duties or responsibilities that are materially
inconsistent with the Executive’s status, title, position or
responsibilities as of immediately prior to the Change in
Control;
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A material
decrease in the Executive’s annual base salary from 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;
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The offices of
the Company or Operating Unit at which the Executive is principally
employed are moved to a location that increases the
Executive’s one-way commute by more than thirty-five (35)
miles from the location of the offices occupied immediately prior
to such relocation; or
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Any other
action or inaction that constitutes a material breach by the
Company of this Agreement.
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2.8
“One-Year Window Period”
is the thirty (30)-day period commencing on the date of the first
anniversary of a Change in Control.
Article III.
Employment Period
The Company hereby agrees to continue the
Executive in its employ, subject to the terms and conditions of
this Agreement, for the period commencing on the Effective Date and
ending on the day after the date that is thirteen months following
the Effective Date (the “Employment
Period”). The Employment Period shall terminate
upon the Executive’s termination of employment for any
reason. During the Employment Period, the
Executive’s annual base salary shall be at least equal to the
Executive’s annual base salary as in effect immediately prior
to the Effective Date and the Executive shall be eligible to
participate in compensation and benefit plans that are no less
favorable than those in which the Executive participated
immediately prior to the Effective Date and on terms and
conditions no less favorable (including as to the amount of
benefits provided and as to the level of the Executive’s
participation) than those that applied immediately prior to the
Effective Date (or, if more favorable, those in which similarly
situated executives of the Company are eligible to participate
during the Employment Period).
Article IV.
Severance Benefits
4.1
Right to Severance
Benefit. The
Executive will be entitled to receive from the Company the
Severance Benefit provided in Section 4.2 if a Change in Control
occurs and, within the Employment Period, the Executive’s
employment with the Company and all of its Affiliates is (a)
involuntarily terminated by the Company for any reason other than
the Executive’s death or Disability or for Cause or (b) by
the Executive (i) for Good Reason within the Employment Period (or
due to an Anticipatory Termination) or (ii) during the One-Year
Window Period. Other than during the One-Year Window
Period, if the Executive voluntarily terminates employment at any
time for any reason other than Good Reason (or due to an
Anticipatory Termination), the Executive will not be entitled to
the Severance Benefit.
4.2
Severance Benefit.
The “Severance
Benefit” to which the Executive will become entitled if the
Executive meets the requirements of Section 4.1 is composed of all
of the amounts and benefits described in subsections (a) through
(f) below, paid or provided as described in those
subsections.
(a) The Company will
pay the Executive all Accrued Compensation within ten (10) days
after the Termination Date (as defined below). The
Executive’s “Accrued Compensation is all amounts earned
or otherwise payable to the Executive as of the 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 earned and unpaid bonuses
and incentive compensation with respect to periods prior to the
Termination Date; provided, that notwithstanding the foregoing, if
the Executive has made an irrevocable election under any deferred
compensation arrangement subject to Section 409A of the Code to
defer any portion of the annual base salary, bonuses or incentive
compensation described above then for all purposes of this
Agreement, such deferral election, and the terms of the applicable
arrangement shall apply to the same portion of such amounts, and
such portions shall not be considered as part of the “Accrued
Compensation” but shall instead be considered as an
“Other Amount” (as defined below).
(b) The Company will
pay the Executive a Pro-rata Bonus within thirty (30) days after
the Termination Date, subject to the proviso in Section 4.2(a)
above. The Executive’s “Pro-rata
Bonus” shall be the amount equal to the Executive’s
Bonus Amount (as defined below) multiplied by a fraction, the
numerator of which is the number of days that have elapsed through
the Termination Date in the Company’s then-current fiscal
year and the denominator of which is 365. For purposes
of this Agreement, the Executive’s “Bonus Amount”
shall equal the greatest of:
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the
Executive’s target bonus amount for the fiscal year in which
the Change in Control occurs under the Short-Term Incentive Plans
(as defined below) in which the Executive is eligible to
participate as of immediately prior to the Change in
Control;
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the
Executive’s target bonus amount for the fiscal year in which
the Termination Date occurs under all Short-Term Incentive Plans in
which the Executive is eligible to participate as of immediately
prior to the Termination Date; and
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the highest
bonus amount paid or payable to the Executive 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 (or
for such lesser number of full fiscal years prior to the Change in
Control for which the Executive was eligible to earn such a
bonus).
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For purposes of
determining the Bonus Amount, the bonus formulations set forth in
clauses (i) through (iii) above shall include any portion of a
bonus that the Executive elected to defer and any portion that is
settled in equity awards and, for any fiscal year consisting of
less than 12 full months or during which the Executive was employed
for less than 12 full months and received a pro-rated bonus, shall
be annualized.
“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 [ for executive officers
other than the chief executive officer and principal accounting
officer: two (2)] [ for the chief executive officer:
three (3)][ for the principal accounting officer: one (1)
time ] tim
