DELAWARE
|
36-4324765
|
(State of Incorporation)
|
(I.R.S. Employer Identification No.)
|
870 NORTH COMMONS DRIVE
|
60504
|
AURORA, ILLINOIS
|
(Zip Code)
|
(Address of principal executive offices)
|
YES
|
X
|
NO
|
YES
|
X
|
NO
|
Large accelerated filer
|
X
|
Accelerated filer
|
Non-accelerated filer
|
Smaller reporting company
|
YES
|
NO
|
X
|
Part I. Financial Information
|
Page
|
|
Item 1.
|
Financial Statements
|
|
3 | ||
4 | ||
5 | ||
6
|
||
Item 2.
|
18 | |
Item 3.
|
24
|
|
Item 4.
|
25
|
|
Part II. Other Information
|
||
Item 1.
|
26
|
|
Item 1A.
|
26
|
|
Item 2.
|
30
|
|
Item 6.
|
31
|
|
32
|
Three Months Ended
|
||||||||
December 31,
|
||||||||
2010
|
2009
|
|||||||
Revenue
|
$ | 114,205 | $ | 97,672 | ||||
Cost of goods sold
|
56,774 | 47,264 | ||||||
Gross profit
|
57,431 | 50,408 | ||||||
Operating expenses:
|
||||||||
Research, development and technical
|
13,856 | 12,581 | ||||||
Selling and marketing
|
7,480 | 6,322 | ||||||
General and administrative
|
11,676 | 11,245 | ||||||
Total operating expenses
|
33,012 | 30,148 | ||||||
Operating income (loss)
|
24,419 | 20,260 | ||||||
Other income (expense), net
|
(935 | ) | 61 | |||||
Income before income taxes
|
23,484 | 20,321 | ||||||
Provision for income taxes
|
6,992 | 7,197 | ||||||
Net income
|
$ | 16,492 | $ | 13,124 | ||||
Basic earnings per share
|
$ | 0.73 | $ | 0.57 | ||||
Weighted average basic shares outstanding
|
22,710 | 23,167 | ||||||
Diluted earnings per share
|
$ | 0.71 | $ | 0.56 | ||||
Weighted average diluted shares outstanding
|
23,131 | 23,294 |
December 31,
2010
|
September 30, 2010
|
|||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$ | 262,951 | $ | 254,164 | ||||
Accounts receivable, less allowance for doubtful accounts of $1,150 at December 31, 2010, and $1,121 at September 30, 2010
|
62,740 | 57,456 | ||||||
Inventories
|
54,246 | 51,896 | ||||||
Prepaid expenses and other current assets
|
11,721 | 13,973 | ||||||
Deferred income taxes
|
4,369 | 3,540 | ||||||
Total current assets
|
396,027 | 381,029 | ||||||
Property, plant and equipment, net
|
115,857 | 115,811 | ||||||
Goodwill
|
42,758 | 40,436 | ||||||
Other intangible assets, net
|
17,130 | 17,089 | ||||||
Deferred income taxes
|
3,423 | 8,044 | ||||||
Other long-term assets
|
9,643 | 9,347 | ||||||
Total assets
|
$ | 584,838 | $ | 571,756 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$ | 16,530 | $ | 17,521 | ||||
Capital lease obligations
|
983 | 1,296 | ||||||
Accrued expenses, income taxes payable and other current liabilities
|
20,208 | 34,513 | ||||||
Total current liabilities
|
37,721 | 53,330 | ||||||
Capital lease obligations
|
9 | 12 | ||||||
Other long-term liabilities
|
4,358 | 4,071 | ||||||
Total liabilities
|
42,088 | 57,413 | ||||||
Commitments and contingencies (Note 8)
|
||||||||
Stockholders’ equity:
|
||||||||
Common Stock: Authorized: 200,000,000 shares, $0.001 par value; Issued: 26,954,240 shares at December 31, 2010, and 26,384,715 shares at September 30, 2010
|
27 | 26 | ||||||
Capital in excess of par value of common stock
|
244,244 | 228,103 | ||||||
Retained earnings
|
400,259 | 383,767 | ||||||
Accumulated other comprehensive income
|
25,669 | 18,538 | ||||||
Treasury stock at cost, 3,728,363 shares at December 31, 2010, and 3,446,069 shares at September 30, 2010
|
(127,449 | ) | (116,091 | ) | ||||
Total stockholders’ equity
|
542,750 | 514,343 | ||||||
Total liabilities and stockholders’ equity
|
$ | 584,838 | $ | 571,756 |
Three Months Ended December 31,
|
||||||||
2010
|
2009
|
|||||||
Cash flows from operating activities:
|
||||||||
Net income
|
$ | 16,492 | $ | 13,124 | ||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Depreciation and amortization
|
6,054 | 6,373 | ||||||
Provision for doubtful accounts
|
31 | 19 | ||||||
Share-based compensation expense
|
3,429 | 3,311 | ||||||
Deferred income tax benefit
|
473 | (368 | ) | |||||
Non-cash foreign exchange (gain) loss
|
(532 | ) | 652 | |||||
Loss on disposal of property, plant and equipment
|
17 | 52 | ||||||
Other
|
1,034 | 35 | ||||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable
|
(4,491 | ) | 2,818 | |||||
Inventories
|
(1,635 | ) | 464 | |||||
Prepaid expenses and other assets
|
3,587 | 90 | ||||||
Accounts payable
|
(1,412 | ) | (2,644 | ) | ||||
Accrued expenses, income taxes payable and other liabilities
|
(14,506 | ) | 3,266 | |||||
Net cash provided by operating activities
|
8,541 | 27,192 | ||||||
Cash flows from investing activities:
|
||||||||
Additions to property, plant and equipment
|
(3,289 | ) | (833 | ) | ||||
Proceeds from sales of property, plant and equipment
|
1 | - | ||||||
Purchase of patents
|
- | (115 | ) | |||||
Net cash used in investing activities
|
(3,288 | ) | (948 | ) | ||||
Cash flows from financing activities:
|
||||||||
Repurchases of common stock
|
(11,358 | ) | (751 | ) | ||||
Net proceeds from issuance of stock
|
13,507 | 90 | ||||||
Windfall tax benefits associated with share-based compensation expense
|
591 | - | ||||||
Principal payments under capital lease obligations
|
(316 | ) | (295 | ) | ||||
Net cash provided by (used in) financing activities
|
2,424 | (956 | ) | |||||
Effect of exchange rate changes on cash
|
1,110 | (430 | ) | |||||
Increase in cash and cash equivalents
|
8,787 | 24,858 | ||||||
Cash and cash equivalents at beginning of period
|
254,164 | 199,952 | ||||||
Cash and cash equivalents at end of period
|
$ | 262,951 | $ | 224,810 |
Supplemental disclosure of non-cash investing and financing activities:
|
||||||||
Purchases of property, plant and equipment in accrued liabilities and accounts payable at the end of the period
|
$ | 1,030 | $ | 564 | ||||
Issuance of restricted stock
|
6,005 | 4,478 |
December 31, 2010
|
Level 1
|
Level 2
|
Level 3
|
Total
Fair Value
|
||||||||||||
Cash and cash equivalents
|
$ | 262,951 | $ | - | $ | - | $ | 262,951 | ||||||||
Auction rate securities (ARS)
|
- | - | 8,066 | 8,066 | ||||||||||||
Total
|
$ | 262,951 | $ | - | $ | 8,066 | $ | 271,017 |
September 30, 2010
|
Level 1
|
Level 2
|
Level 3
|
Total
Fair Value
|
||||||||||||
Cash and cash equivalents
|
$ | 254,164 | $ | - | $ | - | $ | 254,164 | ||||||||
Auction rate securities (ARS)
|
- | - | 8,066 | 8,066 | ||||||||||||
Total
|
$ | 254,164 | $ | - | $ | 8,066 | $ | 262,230 |
December 31,
|
September 30,
|
|||||||
2010
|
2010
|
|||||||
Raw materials
|
$ | 23,720 | $ | 23,542 | ||||
Work in process
|
3,255 | 3,189 | ||||||
Finished goods
|
27,271 | 25,165 | ||||||
Total
|
$ | 54,246 | $ | 51,896 |
December 31, 2010
|
September 30, 2010
|
|||||||||||||||
Gross Carrying
|
Accumulated
|
Gross Carrying
|
Accumulated
|
|||||||||||||
Amount
|
Amortization
|
Amount
|
Amortization
|
|||||||||||||
Other intangible assets subject to amortization:
|
||||||||||||||||
Product technology
|
$ | 8,403 | $ | 3,213 | $ | 8,206 | $ | 2,926 | ||||||||
Acquired patents and licenses
|
8,115 | 6,213 | 8,115 | 6,135 | ||||||||||||
Trade secrets and know-how
|
2,550 | 2,550 | 2,550 | 2,550 | ||||||||||||
Distribution rights, customer lists and other
|
12,640 | 3,792 | 11,939 | 3,300 | ||||||||||||
Total other intangible assets subject to amortization
|
31,708 | 15,768 | 30,810 | 14,911 | ||||||||||||
Total other intangible assets not subject to amortization*
|
1,190 | 1,190 | ||||||||||||||
Total other intangible assets
|
$ | 32,898 | $ | 15,768 | $ | 32,000 | $ | 14,911 |
Fiscal Year
|
Estimated Amortization
Expense
|
|
Remainder of 2011
|
$ 2,052
|
|
2012
|
2,703
|
|
2013
|
2,536
|
|
2014
|
2,491
|
|
2015
|
2,450
|
December 31,
|
September 30,
|
|||||||
2010
|
2010
|
|||||||
Long-term investments
|
$ | 8,066 | $ | 8,066 | ||||
Other long-term assets
|
1,577 | 1,281 | ||||||
Total
|
$ | 9,643 | $ | 9,347 |
December 31,
|
September 30,
|
|||||||
2010
|
2010
|
|||||||
Accrued compensation
|
$ | 10,545 | $ | 25,752 | ||||
Goods and services received, not yet invoiced
|
4,781 | 4,359 | ||||||
Warranty accrual
|
336 | 375 | ||||||
Taxes, other than income taxes
|
1,178 | 1,162 | ||||||
Other
|
3,368 | 2,865 | ||||||
Total
|
$ | 20,208 | $ | 34,513 |
Asset Derivatives
|
Liability Derivatives
|
||||||||||||||||
Balance Sheet
Location
|
Fair Value at December 31,
2010
|
Fair Value at September 30, 2010
|
Fair Value at December 31,
2010
|
Fair Value at September 30, 2010
|
|||||||||||||
Derivatives not designated as hedging instruments
|
|||||||||||||||||
Foreign exchange contracts
|
Prepaid expenses and other current assets
|
$ | - | $ | 5 | $ | - | $ | - | ||||||||
Accrued expenses and other current liabilities
|
$ | - | $ | - | $ | 249 | $ | - |
Gain (Loss) Recognized in Statement of Income
|
|||||||||
Three Months Ended
|
|||||||||
Statement of Income Location
|
December 31, 2010
|
December 31, 2009
|
|||||||
Derivatives not designated as hedging instruments
|
|||||||||
Foreign exchange contracts
|
Other income (expense), net
|
$ | (195 | ) | $ | 490 |
Balance as of September 30, 2010
|
$ | 375 | ||
Reserve for product warranty during the reporting period
|
277 | |||
Settlement of warranty
|
(316 | ) | ||
Balance as of December 31, 2010
|
$ | 336 |
Three Months Ended
|
||||||||
December 31,
|
||||||||
Income statement classifications:
|
2010
|
2009
|
||||||
Cost of goods sold
|
$ | 324 | $ | 248 | ||||
Research, development and technical
|
311 | 242 | ||||||
Selling and marketing
|
316 | 301 | ||||||
General and administrative
|
2,478 | 2,520 | ||||||
Total share-based compensation expense
|
3,429 | 3,311 | ||||||
Tax benefit
|
1,215 | 1,179 | ||||||
Total share-based compensation expense, net of tax
|
$ | 2,214 | $ | 2,132 |
Three Months Ended
|
||||||||
December 31,
|
||||||||
2010
|
2009
|
|||||||
Interest income
|
$ | 78 | $ | 44 | ||||
Interest expense
|
(44 | ) | (71 | ) | ||||
Other income (expense)
|
(969 | ) | 88 | |||||
Total other income (expense), net
|
$ | (935 | ) | $ | 61 |
|
The components of comprehensive income were as follows:
|
Three Months Ended
|
||||||||
December 31,
|
||||||||
2010
|
2009
|
|||||||
Net income
|
$ | 16,492 | $ | 13,124 | ||||
Other comprehensive income:
|
||||||||
Foreign currency translation adjustment
|
7,126 | (1,334 | ) | |||||
Minimum pension liability adjustment
|
5 | 7 | ||||||
Total comprehensive income
|
$ | 23,623 | $ | 11,797 |
Three Months Ended
|
||||||||
December 31,
|
||||||||
2010
|
2009
|
|||||||
Numerator:
|
||||||||
Earnings available to common shares
|
$ | 16,492 | $ | 13,124 | ||||
Denominator:
|
||||||||
Weighted average common shares
|
22,710,250 | 23,167,213 | ||||||
(Denominator for basic calculation)
|
||||||||
Weighted average effect of dilutive securities:
|
||||||||
Share-based compensation
|
420,950 | 126,677 | ||||||
Diluted weighted average common shares
|
23,131,200 | 23,293,890 | ||||||
(Denominator for diluted calculation)
|
||||||||
Earnings per share:
|
||||||||
Basic
|
$ | 0.73 | $ | 0.57 | ||||
Diluted
|
$ | 0.71 | $ | 0.56 |
Three Months Ended
|
||||||||
December 31,
|
||||||||
Revenue:
|
2010
|
2009
|
||||||
Tungsten slurries
|
$ | 41,947 | $ | 36,047 | ||||
Dielectric slurries
|
31,182 | 26,836 | ||||||
Copper slurries
|
20,514 | 17,286 | ||||||
Polishing pads
|
8,365 | 6,642 | ||||||
Data storage slurries
|
7,110 | 6,069 | ||||||
Engineered Surface Finishes
|
5,087 | 4,792 | ||||||
Total revenue
|
$ | 114,205 | $ | 97,672 |
·
|
Research related to fundamental CMP technology;
|
·
|
Development and formulation of new and enhanced CMP consumable products, including collaborating on joint development projects with our customers;
|
·
|
Process development to support rapid and effective commercialization of new products;
|
·
|
Technical support of CMP products in our customers’ manufacturing facilities; and
|
·
|
Evaluation and development of new polishing and metrology applications outside of the semiconductor industry.
|
CONTRACTUAL OBLIGATIONS
|
Less Than
|
1-3 | 3-5 |
After 5
|
||||||||||||||||
(In millions)
|
Total
|
1 Year
|
Years
|
Years
|
Years
|
|||||||||||||||
Purchase obligations
|
$ | 50.8 | $ | 48.0 | $ | 1.8 | $ | 0.3 | $ | 0.7 | ||||||||||
Capital lease obligations
|
1.0 | 1.0 | - | - | - | |||||||||||||||
Operating leases
|
10.7 | 3.3 | 3.7 | 1.9 | 1.8 | |||||||||||||||
Other long-term liabilities
|
4.4 | - | - | - | 4.4 | |||||||||||||||
Total contractual obligations
|
$ | 66.9 | $ | 52.3 | $ | 5.5 | $ | 2.2 | $ | 6.9 |
Period
|
Total Number of Shares Purchased
|
Average Price Paid Per Share
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in thousands)
|
||||
Oct. 1 through
Oct. 31, 2010
|
324
|
$33.72
|
-
|
$25,005
|
||||
Nov. 1 through
Nov. 30, 2010
|
255,735
|
$40.11
|
249,194
|
$140,005
|
||||
Dec. 1 through
Dec. 31, 2010
|
26,235
|
$41.51
|
-
|
$140,005
|
||||
Total
|
282,294
|
$40.24
|
249,194
|
$140,005
|
|
The exhibit numbers in the following list correspond to the number assigned to such exhibits in the Exhibit Table of Item 601 of Regulation S-K:
|
Exhibit
Number
|
Description
|
10.4
|
Form of Second Amended and Restated Cabot Microelectronics Corporation 2000 Equity Incentive Plan Non-Qualified Stock Option Grant Agreement (employees (including executive officers)).
|
10.5
|
Form of Second Amended and Restated Cabot Microelectronics Corporation 2000 Equity Incentive Plan Restricted Stock Award Agreement (employees (including executive officers)).
|
10.34
|
Code of Business Conduct.
|
10.46
|
Non-Employee Directors’ Compensation Summary to be effective as of March 2011.
|
10.54
|
Cabot Microelectronics Corporation Annual Incentive and Sales Incentive Programs.
|
10.58
|
Employee Stock Purchase Plan Prospectus as of November 24, 2011.
|
31.1
|
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
31.2
|
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
32.1
|
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
CABOT MICROELECTRONICS CORPORATION
|
|
Date: February 8, 2011
|
/s/ WILLIAM S. JOHNSON
|
William S. Johnson
|
|
Vice President and Chief Financial Officer
|
|
[Principal Financial Officer]
|
|
Date: February 8, 2011
|
/s/ THOMAS S. ROMAN
|
Thomas S. Roman
|
|
Corporate Controller
|
|
[Principal Accounting Officer]
|
PARTICIPANT
|
Type of Grant
|
Number of Option Shares Granted
|
Exercise Price Per Share on [grant date]
|
Participant ID Number
|
NAME
|
Non-Qualified Stock Option
|
[
]
|
$XX.XX
[general: grant date (GD) fmv/close price]]
|
XXX-XX-XXXX
|
Grant Date
|
Vesting Dates
|
Expiration Date
|
Grant Number
|
|
[date of grant]
|
25% 1
st
anniv. GD
25% 2
nd
anniv GD
25% 3
rd
anniv. GD
25% 4
th
anniv. GD
|
[general: tenth anniv. GD]
|
000000XXXXX
|
1.
|
Vesting and Exercise
. The Award shall become vested and exercisable in accordance with the following table:
|
Installment
|
Vesting Date Applicable to Installment
|
25%
25%
25%
25%
|
[1
st
anniv. GD]
[2
nd
anniv. GD]
[3
rd
anniv. GD]
[4
th
anniv. GD]
|
|
Unless otherwise provided in this Agreement or the Plan, if the date of Participant’s termination of Service, as defined in the Plan, with the Company precedes the relevant Vesting Date, an installment shall not vest on the otherwise applicable Vesting Date and all Options subject to such installment shall immediately terminate as of the date of such termination of Service.
|
2.
|
Termination / Cancellation / Rescission.
The Company may terminate, cancel, rescind or recover an Award immediately under certain circumstances, including, but not limited to, the Participant’s:
|
(a)
|
actions constituting Cause, as defined in the Plan and as otherwise enforceable under local law;
|
|
(b)
|
rendering of services for a competitor prior to, or within six (6) months after, the exercise of any Option or the termination of Participant's Service with the Company;
|
|
(c)
|
unauthorized disclosure of any confidential/proprietary information of the Company to any third party;
|
|
(d)
|
failure to comply with the Company’s policies regarding the identification, disclosure and protection of intellectual property;
|
|
(e)
|
violation of the Cabot Microelectronics Corporation Employee Confidentiality, Intellectual Property and Non-Competition Agreement;
|
(f)
|
violation of the Cabot Microelectronics Corporation Code of Business Conduct, including those provisions related to financial reporting.
|
|
In the event of any such termination, cancellation, rescission or revocation, the Participant must return any Stock obtained by the Participant pursuant to the Award, or pay to the Company the amount of any gain realized on the sale of such Stock, and the Company shall be entitled to set-off against the amount of any such gain any amount owed to the Participant by the Company. To the extent applicable, the purchase price for such Stock shall be returned to the Participant, including any withholding requirements.
|
3.
|
Purpose of Award
. The Award is intended to promote goodwill between the Participant and the Company and shall not be considered as salary or other remuneration for any employment or other services the Participant may perform for the Company or any of its affiliates or Advisors. The Company’s grant of the Option does not confer any contractual or other rights of employment or service with the Company or Advisors. Benefits granted under the Plan shall not be considered as part of the Participant’s salary in the event of severance, redundancy or resignation. Granting of the Award shall also not be construed as creating any right on the part of Participant to receive any additional benefits including awards in the future, it being expressly understood and agreed that any future awards shall be made solely at the discretion of the Company.
|
4.
|
Expiration
. The Option, including vested Options, shall not be exercisable after the Company’s close of business on the last business day that occurs on or prior to the Expiration Date. The “Expiration Date” shall be the
earliest
to occur of:
|
(a)
|
December 1, 2020;
|
(b)
|
If the Participant’s termination of Service occurs by reason of death or Disability, the three (3) year anniversary of the date of such termination or the ten (10) year anniversary of the Grant Date, whichever is sooner. In such case of termination of Service occurring by reason of death or Disability, then any unvested portion of the Option shall be fully vested and exercisable as of such date of termination. For purposes hereof, “Disability” shall have the meaning provided under: (i) first, an employment agreement between the Participant and the Company or an Advisor; (ii) second, if no such employment agreement exists, the long-term disability program maintained by the Company, an Advisor employing the Participant or any governmental entity covering the Participant; or (iii) third, if no such agreement or program exists, as defined under local law;
|
(c)
|
If the Participant’s termination of Service occurs by reason of Cause, the date preceding the date of such termination;
|
(d)
|
If the Participant’s termination of Service occurs by reason of Change in Control, three (3) months after the date of such termination;
|
(e)
|
If the Participant’s termination of Service occurs by reason of Retirement, all Options vested and exercisable as of the date of such termination will remain exercisable until the ten (10) year anniversary of the Grant Date. For purposes hereof, “Retirement” shall mean the termination of the Participant’s Service following the Participant’s attainment of at least (i) five (5) years of employment with the Company
and
(ii) fifty-five (55) years of age,
provided, however
, that the Participant’s termination of Service will not be deemed to have occurred by reason of Retirement if the Participant’s Service has been terminated by reason of Cause, as determined by the Company in its sole discretion; or
|
(f)
|
If the Participant’s termination of Service is for any reason other than (b), (c), (d) or (e) above, all Options vested and exercisable as of the date of termination will remain exercisable for one (1) month after the termination date, after which all unexercised Options are terminated.
|
5.
|
Method of Option Exercise
. Subject to the terms of this Agreement and the Plan, the Participant may exercise, in whole or in part, the vested portion of the Option at any time by complying with any exercise procedures established by the Company in its sole discretion. The Participant shall pay the exercise price for the portion of the Option being exercised to the Company in full, at the time of exercise, either:
|
(a)
|
in cash;
|
(b)
|
in shares of Stock having a Fair Market Value equal to the aggregate exercise price for the shares of Stock being purchased and satisfying such other requirements as may be imposed by the Committee; provided, that, such shares of Stock have been held by the Participant for no less than six (6) months;
|
(c)
|
partly in cash and partly in such shares of Stock; or
|
(d)
|
through the delivery of irrevocable instructions to a broker to deliver promptly to the Company an amount equal to the aggregate exercise price for the shares of Stock being purchased (“cashless exercise”).
|
6.
|
Tax and Social Insurance Contributions Withholding
.
|
(a)
|
As permitted under applicable law, the Participant hereby authorizes the Company or an Advisor to withhold from payroll and any other amounts payable to the Participant, and otherwise agrees to make adequate provision for, any sums required to satisfy the federal, state, local and foreign tax and social insurance contributions withholding obligations of the Company or an Advisor, if any, which arise in connection with the Option, including, without limitation, obligations arising upon (i) the grant of the Option to the Participant, (ii) the exercise of the Option and the transfer of shares of Stock to the Participant, or (iii) the sale, disposition or other transfer by the Participant of any shares of Stock. The Company shall have no obligation to deliver any shares of Stock to the Participant until any and all tax and social insurance contributions withholding obligations of the Company or an Advisor, if any, have been satisfied by the Participant.
|
(b)
|
Unless otherwise prohibited under applicable law, the Company may withhold a number of whole shares of Stock otherwise deliverable to the Participant to satisfy all or any portion of the Company’s or an Advisor’s tax and social insurance contributions withholding obligations. The number of shares of Stock withheld shall have a fair market value, as determined by the Company as of the date on which the tax and social insurance contributions withholding obligations arise, not in excess of the amount of such tax and social insurance contributions withholding obligations determined by the applicable statutory withholding rates or, in the absence of any minimum statutory withholding rates, by the Company in its sole discretion. The Participant acknowledges and agrees that should the shares of Stock withheld for tax and social insurance contributions purposes be in excess of the amounts required to be withheld under applicable law, the Company shall refund the excess to the Participant, without interest, as soon as administratively practicable. Any adverse consequences to the Participant resulting from the procedure permitted under this subparagraph, including, without limitation, tax and social insurance contributions consequences, shall be the sole responsibility of the Participant.
|
(c)
|
Subject to approval by the Company and as permitted under applicable law, the Participant may satisfy all or any portion of the Company’s or an Advisor’s tax and social insurance contributions withholding obligations with respect to the Participant by tendering to the Company a number of whole vested shares of Stock acquired by the Participant otherwise than pursuant to the Option having a fair market value, as determined by the Company as of the date on which the tax and social insurance contributions withholding obligations arise, not in excess of the amount of such tax and social insurance contributions withholding obligations determined by the applicable statutory withholding rates or, in the absence of any minimum statutory withholding rates, by the Company in its sole discretion. The Participant acknowledges and agrees that should the shares of Stock tendered for tax and social insurance contributions purposes be in excess of the amounts required to be withheld under applicable law, the Company will refund the excess to the Participant, without interest, as soon as administratively practicable. Any adverse consequences to the Participant resulting from the procedure permitted under this subparagraph, including, without limitation, tax and social insurance contributions consequences, shall be the sole responsibility of the Participant.
|
7.
|
Transferability
. The Option is not transferable other than: (a) by will or by the laws of descent and distribution; (b) pursuant to a domestic relations order; or (c) to members of the Participant’s immediate family, to trusts solely for the benefit of such immediate family members or to partnerships in which family members and/or trusts are the only partners, all as provided under the terms of the Plan. After any such transfer, the Option shall remain subject to the terms of the Plan.
|
8.
|
Adjustment of Shares
. In the event of any transaction described in Section 8.6 of the Plan, the terms of this Option (including, without limitation, the number and kind of shares subject to this Option and the Exercise Price) shall be adjusted as set forth in Section 8.6 of the Plan.
|
9.
|
Shareholder Rights.
Participant shall have no rights as a stockholder with respect to any shares of Stock subject to the Option until the Option is exercised and the shares are issued and transferred on the books of the Company to the Participant. No adjustment shall be made for dividends, distributions or other rights for which the record date is prior to such date, except as provided under the Plan.
|
10.
|
Consent to Collection, Processing and Transfer of Personal Data
. Pursuant to applicable personal data protection laws, the Company hereby notifies the Participant of the following in relation to the Participant’s personal data and the collection, processing and transfer of such data in relation to the Company’s grant of this Award and the Participant’s participation in the Plan. The collection, processing and transfer of the Participant’s personal data is necessary for the Company’s administration of the Plan and the Participant’s participation in the Plan, and the Participant’s denial and/or objection to the collection, processing and transfer of personal data may affect the Participant’s participation in the Plan. As such, the Participant voluntarily acknowledges and consents (where required under applicable law) to the collection, use, processing and transfer of personal data as described in this paragraph.
|
|
The Company, the Advisors and the Participant’s employer hold certain personal information about the Participant, including the Participant’s name, home address and telephone number, date of birth, social security number or other employee identification number, salary, nationality, job title, any shares of Stock or directorships held in the Company, details of all options or any other entitlement to shares of Stock awarded, canceled, purchased, vested, unvested or outstanding in the Participant’s favor, for the purpose of managing and administering the Plan (“Data”). The Data may
be provided by the Participant or collected, where lawful, from third parties, and the Company will process the Data for the exclusive purpose of implementing, administering and managing Participant’s participation in the Plan. The Data processing will take place through electronic and non-electronic means according to logics and procedures strictly correlated to the purposes for which Data are collected and with confidentiality and security provisions as set forth by applicable laws and regulations in the Participant’s country of residence. Data processing operations will be performed minimizing the use of personal and identification data when such operations are unnecessary for the processing purposes sought. Data will be accessible within the Company’s organization only by those persons requiring access for purposes of the implementation, administration and operation of the Plan and for the Participant’s participation in the Plan.
|
11.
|
Severability
. In the event that any provision of this Agreement is found to be invalid, illegal or incapable of being enforced by any court of competent jurisdiction for any reason, in whole or in part, the remaining provisions of this Agreement shall remain in full force and effect to the fullest extent permitted by law.
|
12.
|
Waiver
. Failure to insist upon strict compliance with any of the terms and conditions of this Agreement or the Plan shall not be deemed a waiver of such term or condition.
|
13.
|
Notices
. Any notices provided for in this Agreement or the Plan must be in writing and hand delivered, sent by fax or overnight courier, or by postage paid first class mail. Notices are to be sent to the Participant at the address indicated by the Company’s records and to the Company at its principal executive office.
|
14.
|
Governing Law
. This Agreement shall be construed under the laws of the State of Illinois.
|
|
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed in its name and on its behalf, all as of the Grant Date.
|
GRANTED TO
|
Type of Grant
|
Number of Option Shares Granted
|
Exercise Price Per Share
|
Participant ID Number
|
NAME
|
Non-Qualified Stock Option
|
[______]
|
[general: GD fmv/close price]
|
XXX-XX-XXXX
|
Grant Date
|
Vesting Dates
|
Expiration Date
|
Grant Number
|
|
[date of grant]
|
25% 1
st
anniv. GD
25% 2
nd
anniv. GD
25% 3
rd
anniv. GD
25% 4
th
anniv GD
|
[general: tenth anniv. GD]
|
000000XXXXX
|
Participant
|
Type of Award
|
Number of Restricted Shares Awarded
|
Fair Market Value of Restricted Shares on Date of Award
|
Participant ID Number
|
NAME
|
Restricted Stock
|
[________]
|
$XX.XX
[general: award date (AD) fmv/closing price]
|
[xxx-xx-xxxx]
|
Date of Award
|
Date Restrictions Lapse (Vesting Date(s))
|
Award Number
|
||
[award date]
|
25% 1
st
anniv. AD
25% 2
nd
anniv. AD
25% 3
rd
anniv. AD
25% 4
th
anniv. AD
|
[xxxxx]
|
1.
|
Vesting Dates and Lapse of Restrictions
. The Award shall become vested and the restrictions will lapse in accordance with the following table:
|
Number of Shares
|
Vesting Date(s)
|
25%
25%
25%
25%
|
1
st
anniv. AD
2
nd
anniv. AD
3
rd
anniv. AD
4
th
anniv. AD
|
2.
|
Termination / Cancellation / Rescission.
The Company may terminate, cancel, rescind or recover the Award immediately under certain circumstances, including, but not limited to, the Participant’s:
|
(a)
|
actions constituting Cause, as defined in the Plan and as otherwise enforceable under local law;
|
(b)
|
rendering of services for a competitor prior to, or within six (6) months after, the exercise of any Award or the termination of Participant's Service with the Company;
|
(c)
|
unauthorized disclosure of any confidential/proprietary information of the Company to any third party;
|
(d)
|
failure to comply with the Company’s policies regarding the identification, disclosure and protection of intellectual property;
|
(e)
|
violation of the Cabot Microelectronics Corporation Employee Confidentiality, Intellectual Property and Non-Competition Agreement.
|
(f)
|
violation of the Cabot Microelectronics Corporation Code of Business Conduct, including those provisions related to financial reporting.
|
3.
|
Purpose of Award
. The Award is intended to promote goodwill between the Participant and the Company and shall not be considered as salary or other remuneration for any employment or other services the Participant may perform for the Company or any of its affiliates. The Company’s grant of the Award does not confer any contractual or other rights of employment or service with the Company. Benefits granted under the Plan shall not be considered as part of the Participant’s salary in the event of severance, redundancy or resignation. Granting of the Award shall also not be construed as creating any right on the part of Participant to receive any additional benefits including awards in the future, it being expressly understood and agreed that any future awards shall be made solely at the discretion of the Company.
|
4.
|
Rights and Restrictions Governing Restricted Stock
. As of the Date of Award, one or more certificates representing the appropriate number of shares of Stock granted to the Participant shall be registered in the Participant’s name but shall be held by the Company for the Participant’s account. The Participant shall have all rights of a holder as to such shares of Stock (including, to the extent applicable, the right to receive dividends and to vote), subject to the following restrictions: (a) the Participant has executed a valid stock power on behalf of the Company for such Stock; (b) the Participant shall be entitled to delivery of certificates representing shares of Stock when restrictions lapse; and (c) none of the Stock may be sold, transferred, assigned, pledged or otherwise encumbered or disposed of until the restrictions have lapsed.
|
5.
|
Delivery of Restricted Stock
. As soon as reasonably practicable following the date on which restrictions lapse, one or more stock certificates for the appropriate number of shares of Stock, free of the restrictions set forth in the Agreement, shall be delivered to the Participant or such shares shall be credited to a brokerage account if the Participant so directs; provided however, that such certificates shall bear such legends as the Committee, in its sole discretion, may determine to be necessary or advisable in order to comply with applicable federal and state securities laws.
|
6.
|
Tax Treatment
. The Participant will be taxed on the difference between any purchase price and the Fair Market Value of the Stock on the date the restrictions lapse. This income will be taxed as ordinary income and subject to income and FICA withholding taxes. The Company is required to withhold and remit these taxes to the appropriate tax authorities. The Participant will be required to provide the Company with an amount of cash sufficient to satisfy the Participant’s tax withholding obligations or to make arrangements satisfactory to the Company with regard to such taxes. The income will be reported to the Participant as part of the Participant's employment compensation on the Participant's annual earnings statement Form W-2.
|
7.
|
Tax Withholding
. All deliveries and distributions under this Agreement are subject to withholding of all applicable taxes. The various methods and manner by which tax withholding may be satisfied are set forth in Section 8.4 of the Plan. If the Participant is subject to Section 16 (an “Insider”), of the Securities Exchange Act of 1934 (“Exchange Act”), any surrender of previously owned shares to satisfy tax withholding obligations arising under an Award must comply with the requirements of Rule 16b-3 promulgated under the Exchange Act (“Rule 16b-3”).
|
8.
|
Transferability
. The Award Stock is not transferable other than: (a) by will or by the laws of descent and distribution; (b) pursuant to a domestic relations order; or (c) to members of the Participant’s immediate family, to trusts solely for the benefit of such immediate family members or to partnerships in which family members and/or trusts are the only partners, all as provided under the terms of the Plan. After any such transfer, the Award Stock shall remain subject to the terms of the Plan.
|
9.
|
Adjustment of Shares
. In the event of any transaction described in Section 8.6 of the Plan, the terms of this Award (including, without limitation, the number and kind of shares subject to this Award) shall be adjusted as set forth in Section 8.6 of the Plan.
|
10.
|
Severability
. In the event that any provision of this Agreement is found to be invalid, illegal or incapable of being enforced by any court of competent jurisdiction for any reason, in whole or in part, the remaining provisions of this Agreement shall remain in full force and effect to the fullest extent permitted by law.
|
11.
|
Waiver
. Failure to insist upon strict compliance with any of the terms and conditions of this Agreement or the Plan shall not be deemed a waiver of such term or condition.
|
12.
|
Notices
. Any notices provided for in this Agreement or the Plan must be in writing and hand delivered, sent by fax or overnight courier, or by postage paid first class mail. Notices are to be sent to the Participant at the address indicated by the Company’s records and to the Company at its principal executive office.
|
13.
|
Governing Law
. This Agreement shall be construed under the laws of the State of Illinois.
|
Participant
|
Type of Award
|
Number of Restricted Shares Awarded
|
Fair Market Value of Restricted Shares on Date of Award
|
Participant ID Number
|
[First Name]
[Last Name]
|
Restricted Stock
|
[________]
|
[general: fmv/closing price on AD]
|
[xxx-xx-xxxx]
|
Date of Award
|
Date Restrictions Lapse (Vesting Date(s))
|
Award Number
|
||
[award date]
|
25% 1
st
anniv. AD
25% 2
nd
anniv. AD
25% 3
rd
anniv. AD
25% 4
th
anniv. AD
|
[xxxxx]
|
·
|
Providing a personal check, bank draft or money order payable to the Company at the time of each of the four vesting dates (instructions for doing so will be provided in advance of each vesting date)
_______________________.
|
·
|
Selling enough shares of those that vest from the Award at the time of each of the four vesting dates (“withhold to cover”) to satisfy your tax liability _____________________. My initialed election of this option confirms that at the time that I am making this election, I am not in possession of any material non-public information regarding the Company and am in compliance with the Company’s Insider Trading Guidelines.
|
·
|
I prefer to decide whether to “withhold to cover” or pay my tax obligation through personal check, bank draft or money order payable to the Company in advance of each vesting date (instructions for doing so will be provided in advance of each vesting date)__________________.
|
1.
|
The name, address and taxpayer identification number of the undersigned taxpayer are as follows:
|
2.
|
The property with respect to which the election is made is described as follows: [_________________________________] shares of Cabot Microelectronics Corporation Common Stock.
|
3.
|
The date on which the property was transferred and the taxable year for which this election is made are as follows:
|
4.
|
The property is subject to the following restrictions:
|
5.
|
The fair market value at the time of transfer, determined without regard to any restriction other than a restriction which by its terms will never lapse, of such property is:
|
6.
|
The amount paid for such property is:
|
·
|
sending a personal check, bank draft or money order payable to Cabot Microelectronics Corporation to my attention by
_______________________.
|
·
|
you may elect to use Shares to satisfy your tax liability.
|
0.0
|
CABOT MICROELECTRONICS CORPORATION’S VISION AND VALUES
|
1.0
|
A LETTER FROM THE CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
|
2.0
|
INTRODUCTION
|
3.0
|
YOU AND YOUR JOB AT CABOT MICROELECTRONICS
|
3.1
|
Communications Channels
|
3.2
|
Personal Conduct
|
3.3
|
Work Environment
|
3.4
|
Employee Privacy
|
3.5
|
Protecting CMC’s Assets
|
3.5.1
|
Physical Assets
|
3.5.2
|
Financial Assets
|
3.5.3
|
CMC Information and Communication Systems
|
3.5.4
|
Proprietary Information
|
3.5.4.1
|
Inadvertent Disclosure
|
3.5.4.2
|
Direct Requests for Information and Contacts with the Press, Analysts, Attorneys and Others
|
3.5.4.3
|
Using Proprietary Information
|
3.5.5
|
CMC Intellectual Property Rights
|
3.5.6
|
Leaving CMC
|
3.5.7
|
Legal Remedies
|
3.6
|
Recording, Reporting and Retaining Information
|
3.7
|
Authority to Make Commitments on Behalf of CMC
|
4.0
|
DEALING WITH OTHERS OUTSIDE OF CABOT MICROELECTRONICS
|
4.1
|
Bribes, Gifts and Entertainment
|
4.1.1
|
Business Amenities
|
4.1.2
|
Receiving Gifts
|
4.1.3
|
Referral Fees
|
4.1.4
|
Giving Gifts
|
4.1.5
|
Relationships with Government Employees
|
4.1.6
|
Public Official and Campaign Visits, Speaking Engagements and Honoraria
|
4.2
|
Complying with Laws
|
4.2.1
|
Competition
|
4.2.2
|
Export
|
4.2.3
|
Antiboycott
|
4.2.4
|
Import
|
4.2.5
|
The Environment
|
4.2.6
|
Lobbying
|
4.2.7
|
Accounting, Financial Reporting and Disclosure Obligations
|
5.0
|
FURTHER GUIDANCE REGARDING WORKING WITH CUSTOMERS, SUPPLIERS AND OTHER OUTSIDE PARTIES
|
5.1
|
Avoiding Misrepresentation
|
5.2
|
Dealing with Suppliers
|
5.2.1
|
Avoiding Reciprocal Dealing
|
5.3
|
Competing in the Field
|
5.3.1
|
Working with Customers and Avoiding False and Misleading Statements about Competitors
|
5.4
|
Relationships with Other Organizations Related to Our Industry or Business
|
5.4.1
|
Complementary Third Parties
|
5.4.2
|
Business Contacts with Competitors
|
5.4.3
|
Prohibitions
|
5.5
|
Acquiring and Using Information about Others
|
5.6
|
Information Owned by Others
|
5.6.1
|
Receiving Information that May Be Confidential or Have Restrictions on Its Use
|
5.6.2
|
Acquiring Software
|
5.7
|
Using Trademarks
|
6.0
|
YOUR OWN ACTIVITIES
|
6.1
|
Conflicts of Interest
|
6.1.1
|
Assisting a Competitor
|
6.1.2
|
Competing against CMC
|
6.1.3
|
Supplying CMC
|
6.1.4
|
Personal Financial Interests
|
6.1.4.1
|
Publicly Traded Securities
|
6.1.4.2
|
Closely Held Organizations
|
6.2
|
Using Inside Information and Insider Trading
|
6.3
|
Using CMC's Time and Assets
|
6.4
|
Public Service
|
6.5
|
Participation in Political Life
|
6.5.1
|
Speaking Out
|
6.6
|
Someone Close to You Working in the Industry
|
7.0
|
SOME ADDITIONAL GUIDANCE
|
8.0
|
CODE OF BUSINESS CONDUCT CERTIFICATION
|
0.0
|
CABOT MICROELECTRONICS CORPORATION’S VISION AND VALUES
|
·
|
We are honest and ethical in all of our dealings with all of our employees, customers, business partners, suppliers, competitors, and other stakeholders.
|
·
|
We adhere to all laws, regulations, and our business practices.
|
·
|
We value people’s differences.
|
·
|
We value diverse opinions, we listen and learn.
|
·
|
We treat people fairly and respect their need for work/life balance.
|
·
|
We provide honest, constructive, and discreet feedback.
|
·
|
We have the strength and willingness to take risks and do what is right.
|
·
|
We admit mistakes, we learn from our mistakes, we ask for help.
|
·
|
We take ownership and responsibility for our actions and performance.
|
·
|
We take initiative to make a difference and to help.
|
·
|
We focus on results.
|
·
|
We recognize and celebrate our successes.
|
·
|
We value the talent, ambition, and drive of each employee to be his or her best and to achieve superior results.
|
-
|
Personal conduct and protection of CMC’s assets
|
-
|
Obligations in conducting CMC’s business with other people and organizations
|
-
|
Conflicts of interest and other considerations affecting CMC that may arise from our own activities
|
-
|
Acting according to CMC’s Vision and Values
|
-
|
Acting honestly
|
-
|
Treating others fairly
|
-
|
Protecting CMC’s physical and intellectual property
|
-
|
Avoiding conflicts of interest
|
-
|
Complying with laws
|
-
|
You may call the
CMC Ethics Line at 630/499-2702 (either direct or collect);
|
-
|
You may send an
email to
Ethics_Email@cabotcmp.com
;
|
-
|
You may contact directly any member of our Board of Directors, including any member of our Board’s Audit Committee by sending an
email to Audit_Committee@cabotcmp.com
;
|
-
|
We also have instituted an independent, multi-language contact that you may access from the places in which we do business in a wide variety of languages:
|
-
|
via
email to
www.listenupreports.com
|
-
|
via
letter to Listen Up Reports, Box 274, Highland Park, IL, USA, 60035
|
-
|
via phone, per country:
|
-
|
What is the extent of the competition or the nature of the relationship between CMC and the other company?
|
-
|
If the other company is in more than one line of business, how significant is the part that competes with or supplies CMC?
|
-
|
What is the size of my investment in relation to my salary and other family income, including income from other investments?
|
-
|
Is it significant enough to cause me to take some action as a CMC employee to protect or enhance my investment?
|
-
|
Given the nature of my job in CMC, could my actions as a CMC employee affect the value of my investment in the other company (for example, do you have anything to do, either directly or indirectly, in deciding whether CMC does business with that company)?
|
-
|
Could my actions significantly enhance my investment, even if it is a relatively modest one?
|
-
|
If you know that CMC is considering an alliance or is about to announce a new product or make a purchasing decision that could affect the price of the stock of a CMC supplier or other company, you should not buy or sell the stock of that company until after the information becomes public.
|
-
|
Similarly, if you know that CMC is about to make an announcement that could affect the price of its own stock, you should not buy or sell CMC stock on the open market until after the announcement.
|
-
|
You should not buy or sell the stock of a customer,supplier or other company with whom CMC does business based on any inside information you have about that company.
|
-
|
If you have nonpublic information that CMC is about to build a new facility or expand an existing facility, you should not invest in land or in any business near the new site.
|
-
|
You should not disclose inside information to CMC employees who do not have a business need to know or to anyone outside of CMC.
|
-
|
Is it legal?
|
-
|
Does it violate CMC’s policy?
|
-
|
Is it consistent with CMC’s Vision and Values?
|
-
|
Is it fair and just? How does it make me feel about myself?
|
-
|
What would my family think about it?
|
-
|
How would it look in a newspaper article?
|
-
|
Will I sleep soundly tonight?
|
-
|
What would I tell a child to do?
|
Annual Retainer Fee
*
|
$60,000
|
|
Committee Membership Fee
*:
Audit committee member
Compensation committee member
Nominating and corporate governance committee member
|
$12,500
$10,000
$10,000
|
|
Committee Chair Annual Retainer Fees*
:
|
||
Audit committee chairperson
|
$25,000
|
|
Compensation committee chairperson
|
$15,000
|
|
N Nominating and corporate governance committee
chairperson
|
$15,000
|
|
No Standing Committee or Board Meeting Fees**
Annual Non−qualified Stock Option Grant***
|
6,000 options
|
|
Annual Restricted Stock Unit Award***
|
2,000 units
|
|
Initial Non−qualified Stock Option Grant****
|
7,500 options
|
|
Initial Restricted Stock Unit Award****
|
2,500 units
|
*Paid quarterly beginning with the quarter end following each the effective date of appointment, and subsequently, beginning with the quarter end following our annual meeting
**To the extent a special committee is established by board of directors to address a unique matter, committee meeting fee of $1,500 will be provided
***Made at the time of our annual meeting, with 100% vesting occurring on the first anniversary of the grant/award date
|
|
****Made as of the effective date of appointment to the board of directors, with vesting occurring 25% immediately on the grant/award date, and 25% per year on the next three anniversaries of the grant/award date
|
Enrollment Period
(When You Enroll)
|
Offering Period
(When You Make Contributions)
|
December 1 through 31
_____________ or _____________
June 1 through 30
|
January 1 through June 30
_____________ or _____________
July 1 through December 31
|
§
|
get account balance information
|
§
|
get duplicate 1099-DIVs
|
§
|
sell shares
|
§
|
get market price quotes
|
§
|
get Computershare’s address
|
§
|
speak with a customer service representative
|
|
Some Background Information
|
|
Q:
What is the purpose of the Plan?
|
|
A:
The Plan gives eligible employees the opportunity to acquire a stock ownership interest in Cabot Microelectronics Corporation through convenient payroll deductions. These deductions are applied semi-annually to the purchase of shares of Cabot Microelectronics Corporation common stock at a discount from the then-current market price.
|
|
Q:
When was the Plan adopted?
|
|
A:
The Plan was originally adopted by Cabot Microelectronics Corporation’s Board of Directors on March 24, 2000, and offered a total of 475,000 shares (this is referred to as the "Prior Plan"). Cabot Corporation approved the Prior Plan on March 27, 2000 as our sole stockholder on that date. At the annual meeting of the stockholders of Cabot Microelectronics Corporation on March 4, 2008, the Prior Plan was amended to authorize the offering of an additional 500,000 shares and to change the name of the Prior Plan to the Cabot Microelectronics 2007 Employee Stock Purchase Plan. The Prior Plan, as amended, is referred to throughout this Prospectus as the "Plan." The Plan was most recently amended and restated January 1, 2010.
|
|
Eligibility and Enrollment
|
|
Q:
Who is eligible to participate in the Plan?
|
|
A:
You’re eligible to participate in the Plan if you’re a full-time or part-time employee of Cabot Microelectronics Corporation, any of its international branch locations or any designated subsidiary of CMC (this means that you are regularly scheduled to work at least 20 hours per week and more than 5 months per year).
|
|
Q:
Will any subsidiaries of Cabot Microelectronics Corporation participate in the Plan?
|
|
A:
Any subsidiary of Cabot Microelectronics Corporation that the Plan administrator designates as eligible may participate in the Plan.
|
|
Q:
When may I enroll?
|
|
A:
Eligible employees may participate in an offering period under the Plan if they enroll in the Plan before the cutoff date for that offering period. The cutoff date for an offering period generally will be last business day before the offering period begins. You may not begin participating in an offering period once the cutoff date for that offering period has passed.
|
|
Employees will be eligible to enroll at the beginning of the offering period following their date of hire, with enrollment forms received after the enrollment period being applied to the next offering period.
|
|
Q:
How do I enroll?
|
|
A:
Eligible employees who are not executive officers or have not been identified as a “key employee” as it relates to CMC’s Insider Trading Policy may enroll in the Plan by contacting Cabot Microelectronics Corporation’s Human Resources department and completing the appropriate enrollment form, as long as you are in compliance with the provisions of the Policy and are not in possession of any material non public information regarding CMC. Those who are executive officers or have been identified as “key” employees may only enroll outside the designated blackout periods, and after receiving pre-clearance from CMC’s General Counsel, as per the Policy.
|
|
Payroll Contributions
|
|
Q:
How much of my paycheck can I contribute?
|
|
A:
You may authorize payroll contributions to the Plan of not less than 1% and not more than 10%,
or any whole dollar amount that equates to from one percent (1%) through ten percent (10%),
of your compensation per payroll period. Please also note that
in any offering period you may not purchase more than the number of shares determined by dividing U.S. $12,500 (or the local currency equivalent) by the fair market value of a share of common stock on the first day of the offering period, also called the “enrollment date”. During any one calendar year, you may not purchase more than U.S. $25,000 (or the local currency equivalent) worth of Cabot Microelectronics Corporation common stock based on its fair market value on the applicable enrollment dates. Your compensation includes your straight-time gross earnings, overtime pay, shift differential, cash bonuses exclusive of relocation and sign-on bonuses, and any salary continuation or short-term disability payments paid to you by Cabot Microelectronics Corporation, in each case before any contributions you make to the Cabot Microelectronics Corporation 401(k) and Savings Plan or any Plan qualified under Internal Revenue Code Section 125 (in the U.S. only).
|
|
Your compensation for this purpose does not include severance payments, moving allowances, reimbursement of expenses, any other additional compensation paid to you during a payroll period, or any non-cash compensation.
|
|
Q:
When do my payroll deductions begin?
|
|
A:
Payroll deductions begin on the first payday of the offering period for which you enroll and continue at the same rate until you change your payroll deduction amount or stop participating in the Plan.
|
|
Q:
Can I change my payroll deductions?
|
|
A:
To make changes to your contribution amount, complete the ESPP Enrollment/Change Form and return it to the Corporate Human Resources Department or your designated HR representative. If you are not an executive officer or have not been identified as a “key employee” as it relates to CMC’s Insider Trading Policy, you may change your contribution percentage at any time during the offering period, as long as you are in compliance with the provisions of the policy and are not in possession of any material non public information regarding CMC. Those identified as “key” employees may only make changes outside the designated blackout periods, and after receiving pre-clearance from CMC’s General Counsel, as per the Policy. Changes take effect on the pay period following the processing of your Enrollment/Change Form.
|
|
Q:
What happens to my payroll deductions?
|
|
A:
Although all your payroll deductions are credited to you, we will not establish separate accounts to hold them. Instead, we will hold all payroll deductions as part of our general assets and use them for any corporate purpose. No interest is payable under the Plan.
|
|
Options, Stock Purchases and Sales
|
|
Q:
What is an “offering period”?
|
|
A:
The Plan will have two offering periods per calendar year, each of which will be approximately six months in duration. The two offering periods will occur during the following dates:
|
|
Q:
What is an “enrollment date”?
|
|
A:
The “enrollment date” is the first day of an offering period.
|
|
Q:
What happens on the enrollment date?
|
|
A:
On the enrollment date, each participant in the offering period is deemed to have been granted an option to purchase shares of Cabot Microelectronics Corporation common stock with the participant’s accumulated payroll deductions for the offering period, up to the Plan’s share maximums. This option will then be deemed exercised on the exercise date.
|
|
Q:
What is an “exercise date”?
|
|
A:
The “exercise date” is the last day of an offering period, when the options granted to participants under the Plan on the preceding enrollment date are deemed exercised and shares of Cabot Microelectronics Corporation common stock are purchased with your accumulated payroll deductions.
|
|
Q:
How will my accumulated payroll deductions be converted into U.S. $ for the purchase of shares?
|
|
A:
Shares are purchased in the open market in U.S. $ by Computershare, the Plan administrator, transfer agent and record keeper. For employees based outside the U.S., payroll deductions will have to be exchanged from local currency into U.S. $.
Your contributions will be exchanged from your local currency into U.S. $,
using the average of the official exchange rates on the last day of each month over the six-month offering period.
|
|
Q:
When are my shares purchased?
|
|
A:
The total amount of payroll deductions made on your behalf during the offering period will be used to purchase full and deemed fractional shares of Cabot Microelectronics Corporation common stock in your name at the discounted price on the exercise date.
|
|
Q:
What is the purchase price of common stock?
|
|
A:
At the end of each offering period - on or about June 30th and December 31st - the fair market value of Cabot Microelectronics Corporation common stock on the exercise date is compared with the fair market value of the stock on the enrollment date. The price per share you pay for the stock - called the “purchase price” - is 15% less than the lower of these two prices.
|
|
Example:
When the share price is
higher
on the exercise date than on the enrollment date:
|
|
Price on January 1st (enrollment date): $25
|
|
Price on June 30th (exercise date):$30
|
|
What you pay per share of Cabot Microelectronics Corporation common stock:
|
|
$25 less 15%, or $3.75 = $21.25 per share
|
|
Example:
When the share price is
lower
on the exercise date than on the enrollment date:
|
|
Price on January 1st (enrollment date): $25
|
|
Price on June 30th (exercise date): $20
|
|
What you pay per share of Cabot Microelectronics Corporation common stock:
|
|
$20 less 15%, or $3 = $17 per share
|
|
Q:
If I’m based outside the U.S., what exchange rate will be used when my shares are converted?
|
|
A:
The exchange rate used to convert local currency into U.S.$ for the
purchase of shares will be determined by Cabot Microelectronics
Corporation’s
internal Treasury department and will be the average of the official exchange rates on the last day of each month over the six-month offering period
.
|
|
Q:
What is the purchase price of common stock and how would it be determined outside the U.S.?
|
|
A:
At the end of each offering period - on or about June 30th and December 31st - the fair market value of Cabot Microelectronics Corporation common stock on the exercise date is compared with the fair market value of the stock on the enrollment date. The price per share you pay for the stock - called the “purchase price” - is 15% less than the lower of these two prices.
|
|
Price on January 1st (enrollment date): 2560 Japanese Yen
|
|
Price on June 30th (exercise date): 3071 Japanese Yen
|
|
What you pay per share of Cabot Microelectronics Corporation common stock:
|
|
2176 Japanese Yen (15% less than 2560)
|
|
Example:
When the share price is
lower
on the exercise date than on the enrollment date:
|
|
Price on January 1st (enrollment date): 2560 Japanese Yen
|
|
Price on June 30th (exercise date): 2048 Japanese Yen
|
|
Q:
How is the fair market value of Cabot Microelectronics Corporation common stock determined?
|
|
A:
Our common stock is listed on the Nasdaq Global Select Market and its fair market value on any date is the closing sales price (or the closing bid, if no sales were reported) quoted for it on the Nasdaq system on that date, as reported in The Wall Street Journal or another source the board of directors deems reliable. In the absence of an established market for the common stock, the fair market value will be determined in good faith by the Plan administrator.
|
|
Q:
Are there any limitations on the number of shares I may purchase?
|
|
A:
Yes. The following limitations apply:
|
|
•The number of shares of Cabot Microelectronics Corporation common stock available for purchase by all Plan participants together is (i) 500,000 plus (ii) the number of shares previously reserved for issuance but not issued under the Plan (which was 7,222 as of September 30, 2010). These numbers are subject to adjustment as discussed in “What happens if there’s a change in Cabot Microelectronics Corporation’s capital structure?” below.
|
|
• In any offering period you may not purchase more than the number of shares determined by dividing U.S. $12,500 (or the local currency equivalent) by the fair market value of a share of common stock on the enrollment date.
|
|
• During any one calendar year, you may not purchase more than U.S. $25,000 (or the local currency equivalent) worth of Cabot Microelectronics Corporation common stock based on its fair market value on the applicable enrollment dates.
|
|
•You may not purchase shares in the Plan if you own 5% or more of the total voting power or value of all classes of stock of Cabot Microelectronics Corporation or any parent corporation or subsidiary corporation.
|
|
• Any payroll deductions that cannot be applied to the purchase of Cabot Microelectronics Corporation common stock because of any of the last four of these limitations will be refunded on the exercise date without interest.
|
|
Q:
What if there aren’t enough shares available to cover all the exercised purchase rights on a particular exercise date?
|
|
A:
If the total number of shares to be issued on any particular exercise date is greater than the maximum number of shares that may be issued under the Plan, the Plan administrator will:
|
|
Q:
When can I sell the shares I’ve purchased?
|
|
A:
As a general rule, participants who are not executive officers or have not been identified as a “key employee” as it relates to CMC’s Insider Trading Policy can sell their shares at any time, as long as you are in compliance with the provisions of the Policy and are not in possession of any material non public information regarding CMC. Those who are executive officers or have been identified as “key” employees may only make changes outside the designated blackout periods, and after receiving pre-clearance from CMC’s General Counsel, as per the Policy. All employees must comply with CMC’s Insider Trading and Nondisclosure Policy and applicable company procedures.
|
|
Q:
Are there exercise transaction fees?
|
|
A:
There is no charge for certificate issuance; however the following transaction fees are charged by Computershare.
|
Commission | |||||
Fee Type | Fee | (up to 1000) | (1000 - 5000) | 5001 & above | |
Sales- Web/IVR | $ 24.95 | $ 0.03 | |||
Sales - Representative Assisted | $ 39.95 | $ 0.07 | $ 0.05 | $ 0.03 | |
Handling Fee | $ 5.35 | ||||
Foreign Currency Check | $ 35.00 | ||||
Outgoing Wire | $ 35.00 | ||||
Stop Payment of Check | $ 25.00 | ||||
Share Delivery | $ 30.00 | ||||
Overnight Check Delivery | $ 25.00 |
|
Account Statements
|
|
Q:
Who is the Plan’s recordkeeper?
|
|
A:
Computershare is the Plan’s recordkeeper. Computershare performs recordkeeping services for a wide range of clients and is independent of Cabot Microelectronics Corporation. Computershare is also Cabot Microelectronics Corporation’s “transfer agent” for all stock-related transactions. Computershare’s address is:
|
|
Computershare Trust Company, N.A.
|
|
P. O. Box 43021
|
|
E-mail:
espp@computershare.com
|
|
Q:
Will I receive a statement indicating the amount and status of my account?
|
|
A:
Yes. After the exercise date for each offering period, you’ll receive a statement indicating:
|
|
• Your account balance;
|
|
• The amount of payroll contributions you made during the offering period;
|
|
• The number of shares purchased in your name;
|
|
• The purchase price per share;
|
|
• The fair market value on the date of purchase; and
|
|
• A summary of year-to-date activity.
|
|
Q:
Where do my shares of stock go after they’re purchased?
|
|
A:
As soon as practicable after each exercise date, your account at Computershare will be credited with the shares purchased on your behalf. Stock certificates for shares you purchase under the Plan will be issued to you if you so request, at no cost, but you do not need a stock certificate to have full rights as a stockholder.
|
|
Ending Your Participation
|
|
Q:
If I wish to stop participating in the Plan, how do I do so?
|
|
A:
To discontinue your participation in the Plan, complete the ESPP Notice of Withdrawal Form and return it to the Corporate Human Resources Department or your designated HR representative. If you are not an executive officer or have not been identified as a “key employee” as it relates to CMC’s Insider Trading Policy, you may discontinue your contribution percentage at any time during the offering period. Those who are executive officers or identified as “key” employees may only elect to discontinue outside the designated blackout periods, and after receiving pre-clearance from CMC’s General Counsel. Changes take effect on the pay period following the processing of your Enrollment/Change Form. Any accumulated deductions during that offering period may be held to purchase stock or employees may elect to have these deductions reimbursed. Reimbursements take place on the pay period following processing of the employee’s Withdrawal Form.
NOTE
:
When you stop your deductions during an offering period, you may not re-enroll until the next offering period.
|
|
Q:
How do I rejoin the Plan if I stop participating in it?
|
|
A:
Complete the appropriate form, available on the CMC Intranet, if you wish to re-enroll. The completed form should be returned to the Corporate Human Resources Department or your designated HR representative by the enrollment deadline.
|
|
Q:
What happens if I leave Cabot Microelectronics Corporation?
|
|
A:
• If you leave Cabot Microelectronics Corporation and the next exercise date will occur within 3 months of your termination date, your accumulated payroll deductions will be used to purchase Cabot Microelectronics Corporation common stock on the first exercise date after your departure unless you elect to have your accumulated payroll deductions returned to you. Any cash balance remaining after the purchase of shares, together with cash in lieu of any deemed fractional shares, will be returned to you.
|
|
• If you leave Cabot Microelectronics Corporation and the next exercise date will occur more than 3 months after your termination date, no shares will be purchased on your behalf, and all of your accumulated payroll deductions and cash in lieu of deemed fractional shares will be returned to you.
|
|
Q:
If I die, what happens to my payroll deductions?
|
|
A:
Your accumulated payroll deductions and cash in lieu of deemed fractional shares will be refunded to your estate in the event of your death.
|
|
Stockholder Rights
|
|
Q:
When do I receive rights as a stockholder?
|
|
A:
Once shares are purchased in your name, you’ll have all rights as a stockholder with respect to those shares, including voting rights, even if you don’t have physical possession of a stock certificate.
|
|
Q:
Will fractional shares be purchased under the Plan?
|
|
A:
Deemed fractional shares will be allocated to participants in the Plan, but fractional shares of
|
|
Cabot Microelectronics Corporation common stock will never be issued under the Plan. Rather, deemed fractional shares purchased in one offering period will be added to deemed fractional shares purchased in future offering periods, and then whole shares will be issued for these deemed fractional shares. Deemed fractional shares will always be paid in cash.
|
|
Q:
Can I assign or transfer any of my Plan rights?
|
|
A:
No. Your rights under the Plan (including the right to purchase shares under the Plan) cannot be assigned or transferred to anyone else, except by will or the laws of inheritance following your death.
|
|
Q:
Does participating in the Plan affect the terms of my employment?
|
|
A:
Participating in the Plan doesn’t provide you with any right to any continued employment by Cabot Microelectronics Corporation.
|
|
Q:
What restrictions apply if I become an “affiliate” or a “Section 16 insider/executive officer”?
|
|
A:
Only certain members of top management are “affiliates” or “Section 16 insiders/executive officers.” Cabot Microelectronics Corporation will notify you if you are or become an affiliate or a Section 16 insider/executive officers and will provide you with further information on the following restrictions.
|
|
In general, Rule 144 of the Securities Act of 1933, as amended, and Section 16 of the Securities Exchange Act of 1934, as amended, restrict the transfer of stock by affiliates of Cabot Microelectronics Corporation and Section 16 insiders/executive officers under certain circumstances. If you are, or become, an affiliate or a Section 16 insider/executive officer, you may be subject to, among other rules, special notice and reporting requirements, time and volume limitations with respect to the number of shares you can sell and the short-swing profit recovery rules of Section 16.
|
|
Plan Administration and General Plan Provisions
|
|
Q:
Who administers the Plan?
|
|
A:
The Plan is administered by the Compensation Committee of the Board of Directors. In this capacity, the Board or the Committee is also called the “Plan administrator.” Committee members serve as long as the Board thinks it appropriate and may be removed by the Board at any time. If Rule 16b-3 of the Securities Exchange Act of 1934, as amended, or any later provision provides specific requirements for the administrators of Plans of this type, the Plan will comply with those requirements. The daily administration of the Plan has been delegated to the Human Resources Department.
|
|
You should address any inquiries you may have to the Human Resources Department at Cabot Microelectronics’ Corporation headquarters in Aurora, Illinois.
|
|
Q:
What powers does the Plan administrator have?
|
|
A:
The Plan administrator has broad discretion to set and change the terms and conditions of participation in the Plan and to construe and interpret the Plan. For example, the Plan administrator may change the length of the offering periods, the maximum number of shares that can be purchased in any offering period, and the discount offered under the Plan.
|
|
Q:
What is the maximum number of shares of common stock that may be issued under the Plan?
|
|
A:
No more than 500,000 shares plus the number of shares previously reserved for issuance under the Plan but not issued (7,222 as of September 30, 2010) may be issued as part of the Plan (subject to adjustment as discussed in “What happens if there’s a change in Cabot Microelectronics Corporation’s capital structure?” below). The shares may be unissued shares or reacquired shares, including shares purchased on the open market.
|
|
Q:
What is the maximum “lifetime” of the Plan?
|
|
A:
The Plan will terminate when all shares available for issuance under it have been sold, unless the board terminates the Plan earlier.
|
|
Q:
What happens if there’s a change in Cabot Microelectronics Corporation’s capital structure?
|
|
A:
If there is any change in the shares of Cabot Microelectronics Corporation as the result of a merger, consolidation, reorganization, recapitalization, declaration of stock dividends, stock split-up, combination of shares, exchange of shares, change in corporate structure or similar event, the Committee may make appropriate adjustments to the class and number of shares the Plan can issue, the class and number of shares each Plan participant can purchase and the class and number of shares and the price per share under each outstanding purchase right. These adjustments are intended to prevent any dilution or enlargement of the rights and benefits of Plan participants. The Committee’s determinations on these matters are binding and conclusive.
|
|
Q:
What happens if there is a change in control of Cabot Microelectronics Corporation?
|
|
A:
If there is a change in control of Cabot Microelectronics Corporation, the offering period in which the change in control will occur will accelerate to the last U.S. deduction date before the date of the change in control. That last payday will then become the exercise date for that offering period.
|
|
Q:
Can the Plan be amended?
|
|
A:
The Board may amend or suspend the Plan at any time. However, no such action may, without stockholder approval:
|
|
• Increase the number of shares that may be issued under the Plan;
|
|
• Change the employees who are eligible to participate in the Plan; or
|
|
• Make any other change that in the Board’s determination requires stockholder approval under applicable law or regulatory standards.
|
|
Q:
When can Cabot Microelectronics Corporation terminate the Plan?
|
|
A:
The Board may terminate the Plan at any time. If it does, the Plan will terminate in its entirety, and no further purchase rights will be granted or exercised and no further payroll deductions will be collected.
|
|
Q:
What else do I need to know?
|
|
A:
Cabot Microelectronics Corporation is a corporation organized and existing under the laws of the State of Delaware and currently maintains its principal executive offices at 870 N. Commons Drive, Aurora, Illinois 60504. You may contact Cabot Microelectronics Corporation at this address or at the telephone number provided below for further information concerning the Plan and its administration.
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Cabot Microelectronics Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors:
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: February 8, 2011
|
/s/ WILLIAM P. NOGLOWS
|
William P. Noglows
|
|
Chief Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Cabot Microelectronics Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors:
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: February 8, 2011
|
/s/ WILLIAM S. JOHNSON
|
William S. Johnson
|
|
Chief Financial Officer
|
Date: February 8, 2011
|
/s/ WILLIAM P. NOGLOWS
|
William P. Noglows
|
|
Chief Executive Officer
|
|
Date: February 8, 2011
|
/s/ WILLIAM S. JOHNSON
|
William S. Johnson
|
|
Chief Financial Officer
|