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
|
|
Accelerated filer
|
|
Non-accelerated filer
(Do not check if a smaller reporting company)
|
|
Smaller reporting company
|
|
Emerging growth company
|
|
YES
|
NO
|
X
|
Part I. Financial Information
|
Page
|
|
Item 1.
|
Unaudited Financial Statements
|
|
3
|
||
4
|
||
5
|
||
6
|
||
7
|
||
Item 2.
|
24
|
|
Item 3.
|
31
|
|
Item 4.
|
32
|
|
Part II. Other Information
|
||
Item 1.
|
33
|
|
Item 1A.
|
33
|
|
Item 2.
|
38
|
|
Item 3.
|
38
|
|
Item 4.
|
38
|
|
Item 6.
|
39
|
|
40
|
Three Months Ended December 31,
|
||||||||
2017
|
2016
|
|||||||
Revenue
|
$
|
139,979
|
$
|
123,254
|
||||
Cost of goods sold
|
65,965
|
61,749
|
||||||
Gross profit
|
74,014
|
61,505
|
||||||
Operating expenses:
|
||||||||
Research, development and technical
|
12,151
|
13,396
|
||||||
Selling and marketing
|
5,836
|
7,552
|
||||||
General and administrative
|
18,915
|
12,496
|
||||||
Total operating expenses
|
36,902
|
33,444
|
||||||
Operating income
|
37,112
|
28,061
|
||||||
Interest expense
|
1,132
|
1,150
|
||||||
Other income, net
|
672
|
996
|
||||||
Income before income taxes
|
36,652
|
27,907
|
||||||
Provision for income taxes
|
39,735
|
5,676
|
||||||
Net income (loss)
|
$
|
(3,083
|
)
|
$
|
22,231
|
|||
Basic earnings (loss) per share
|
$
|
(0.12
|
)
|
$
|
0.90
|
|||
Weighted average basic shares outstanding
|
25,326
|
24,583
|
||||||
Diluted earnings (loss) per share
|
$
|
(0.12
|
)
|
$
|
0.88
|
|||
Weighted average diluted shares outstanding
|
25,326
|
25,072
|
||||||
Dividends per share
|
$
|
0.20
|
$
|
0.18
|
Three Months Ended December 31,
|
||||||||
2017
|
2016
|
|||||||
Net income (loss)
|
$
|
(3,083
|
)
|
$
|
22,231
|
|||
Other comprehensive income (loss), net of tax:
|
||||||||
Foreign currency translation adjustments
|
7,144
|
(17,574
|
)
|
|||||
Unrealized loss on available-for-sale securities
|
(46
|
)
|
-
|
|||||
Net unrealized gain on cash flow hedges
|
199
|
666
|
||||||
Other comprehensive income (loss), net of tax
|
7,297
|
(16,908
|
)
|
|||||
Comprehensive income
|
$
|
4,214
|
$
|
5,323
|
December 31, 2017
|
September 30, 2017
|
|||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
377,230
|
$
|
397,890
|
||||
Available-for-sale securities
|
48,272
|
-
|
||||||
Accounts receivable, less allowance for doubtful accounts of $1,785 at December 31, 2017, and $1,747 at September 30, 2017
|
69,871
|
64,793
|
||||||
Inventories
|
73,982
|
71,873
|
||||||
Prepaid expenses and other current assets
|
18,688
|
16,426
|
||||||
Total current assets
|
588,043
|
550,982
|
||||||
Property, plant and equipment, net
|
107,748
|
106,361
|
||||||
Goodwill
|
102,740
|
101,932
|
||||||
Other intangible assets, net
|
40,742
|
42,710
|
||||||
Deferred income taxes
|
7,649
|
21,598
|
||||||
Other long-term assets
|
11,077
|
10,517
|
||||||
Total assets
|
$
|
857,999
|
$
|
834,100
|
||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$
|
14,974
|
$
|
17,624
|
||||
Current portion of long-term debt
|
16,406
|
10,938
|
||||||
Accrued expenses, income taxes payable and other current liabilities
|
58,720
|
62,651
|
||||||
Total current liabilities
|
90,100
|
91,213
|
||||||
Long-term debt, net of current portion, less prepaid debt issuance cost of $378 at December 31, 2017 and $441 at September 30, 2017
|
124,310
|
132,997
|
||||||
Deferred income taxes
|
63
|
63
|
||||||
Other long-term liabilities
|
41,858
|
14,790
|
||||||
Total liabilities
|
256,331
|
239,063
|
||||||
Commitments and contingencies (Note 10)
|
||||||||
Stockholders' equity:
|
||||||||
Common Stock: Authorized: 200,000,000 shares, $0.001 par value; Issued: 35,471,403 shares at December 31, 2017, and 35,230,742 shares at September 30, 2017
|
35
|
35
|
||||||
Capital in excess of par value of common stock
|
593,258
|
580,938
|
||||||
Retained earnings
|
389,645
|
397,881
|
||||||
Accumulated other comprehensive income
|
11,246
|
3,949
|
||||||
Treasury stock at cost, 9,999,034 shares at December 31, 2017, and 9,948,190 shares at September 30, 2017
|
(392,516
|
)
|
(387,766
|
)
|
||||
Total stockholders' equity
|
601,668
|
595,037
|
||||||
Total liabilities and stockholders' equity
|
$
|
857,999
|
$
|
834,100
|
Three Months Ended December 31,
|
||||||||
2017
|
2016
|
|||||||
Cash flows from operating activities:
|
||||||||
Net income (loss)
|
$
|
(3,083
|
)
|
$
|
22,231
|
|||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Depreciation and amortization
|
6,492
|
6,696
|
||||||
Provision for doubtful accounts
|
28
|
46
|
||||||
Share-based compensation expense
|
5,861
|
2,913
|
||||||
Deemed repatriation transition tax
|
24,641
|
-
|
||||||
Deferred income tax expense
|
13,465
|
1,354
|
||||||
Tax benefit from share-based compensation expense
|
(2,806
|
)
|
-
|
|||||
Non-cash foreign exchange (gain)
|
(657
|
)
|
(922
|
)
|
||||
(Gain) on disposal of property, plant and equipment
|
-
|
(5
|
)
|
|||||
Other
|
2,545
|
919
|
||||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable
|
(4,733
|
)
|
(7,879
|
)
|
||||
Inventories
|
(1,669
|
)
|
(1,725
|
)
|
||||
Prepaid expenses and other assets
|
(2,190
|
)
|
(368
|
)
|
||||
Accounts payable
|
(2,847
|
)
|
2,734
|
|||||
Accrued expenses, income taxes payable and other liabilities
|
(4,429
|
)
|
(869
|
)
|
||||
Net cash provided by operating activities
|
30,618
|
25,125
|
||||||
Cash flows from investing activities:
|
||||||||
Additions to property, plant and equipment
|
(4,175
|
)
|
(4,937
|
)
|
||||
Proceeds from the sale of property, plant and equipment
|
-
|
5
|
||||||
Purchases of available-for-sale securities
|
(50,174
|
)
|
-
|
|||||
Proceeds from the sale and maturities of available-for-sale securities
|
1,851
|
-
|
||||||
Net cash used in investing activities
|
(52,498
|
)
|
(4,932
|
)
|
||||
Cash flows from financing activities:
|
||||||||
Repayment of long-term debt
|
(3,281
|
)
|
-
|
|||||
Repurchases of common stock
|
(4,741
|
)
|
(3,002
|
)
|
||||
Proceeds from issuance of stock
|
6,464
|
12,489
|
||||||
Dividends paid
|
(5,057
|
)
|
(4,431
|
)
|
||||
Tax benefits associated with share-based compensation expense
|
-
|
2,544
|
||||||
Net cash provided by (used in) financing activities
|
(6,615
|
)
|
7,600
|
|||||
Effect of exchange rate changes on cash
|
7,835
|
(9,558
|
)
|
|||||
Increase (decrease) in cash and cash equivalents
|
(20,660
|
)
|
18,235
|
|||||
Cash and cash equivalents at beginning of period
|
397,890
|
287,479
|
||||||
Cash and cash equivalents at end of period
|
$
|
377,230
|
$
|
305,714
|
||||
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
|
$
|
1,539
|
$
|
2,229
|
Amortized
Cost
|
Unrealized
Losses
|
Estimated
Fair Value
|
||||||||||
Available-for-sale securities:
|
||||||||||||
Asset backed securities
|
$
|
4,460
|
$
|
(2
|
)
|
$
|
4,458
|
|||||
Certificates of deposit
|
6,303
|
(4
|
)
|
6,299
|
||||||||
Commercial paper
|
3,083
|
(1
|
)
|
3,082
|
||||||||
Corporate debt securities
|
25,491
|
(36
|
)
|
25,455
|
||||||||
U.S. Treasuries
|
8,483
|
(2
|
)
|
8,481
|
||||||||
U.S. government agency securities
|
498
|
(1
|
)
|
497
|
||||||||
Total available-for-sale securities
|
$
|
48,318
|
$
|
(46
|
)
|
$
|
48,272
|
Amortized
Cost
|
Estimated Fair Value
|
|||||||
Mature in one year or less
|
$
|
30,587
|
$
|
30,568
|
||||
Mature after one year through four years
|
17,731
|
17,704
|
||||||
$
|
48,318
|
$
|
48,272
|
December 31, 2017
|
Level 1
|
Level 2
|
Level 3
|
Total
Fair Value
|
||||||||||||
Assets:
|
||||||||||||||||
Cash and cash equivalents
|
$
|
377,230
|
$
|
-
|
$
|
-
|
$
|
377,230
|
||||||||
Other long-term investments
|
1,157
|
-
|
-
|
1,157
|
||||||||||||
Available-for-sale securities:
|
||||||||||||||||
Asset Backed Securities
|
-
|
4,458
|
-
|
4,458
|
||||||||||||
Certificates of Deposit
|
-
|
6,299
|
-
|
6,299
|
||||||||||||
Commercial Paper
|
-
|
3,082
|
-
|
3,082
|
||||||||||||
Corporate debt securities
|
-
|
25,455
|
-
|
25,455
|
||||||||||||
U.S. Treasuries
|
-
|
8,481
|
-
|
8,481
|
||||||||||||
U.S. government agency securities
|
-
|
497
|
-
|
497
|
||||||||||||
Derivative financial instruments
|
-
|
379
|
-
|
379
|
||||||||||||
Total assets
|
$
|
378,387
|
$
|
48,651
|
$
|
-
|
$
|
427,038
|
||||||||
Liabilities:
|
||||||||||||||||
Derivative financial instruments
|
-
|
6,046
|
-
|
6,046
|
||||||||||||
Total liabilities
|
$
|
-
|
$
|
6,046
|
$
|
-
|
$
|
6,046
|
September 30, 2017
|
Level 1
|
Level 2
|
Level 3
|
Total
Fair Value
|
||||||||||||
Assets:
|
||||||||||||||||
Cash and cash equivalents
|
$
|
397,890
|
$
|
-
|
$
|
-
|
$
|
397,890
|
||||||||
Other long-term investments
|
929
|
-
|
-
|
929
|
||||||||||||
Derivative financial instruments
|
-
|
263
|
-
|
263
|
||||||||||||
Total assets
|
$
|
398,819
|
$
|
263
|
$
|
-
|
$
|
399,082
|
||||||||
Liabilities:
|
||||||||||||||||
Derivative financial instruments
|
-
|
1,881
|
-
|
1,881
|
||||||||||||
Total liabilities
|
$
|
-
|
$
|
1,881
|
$
|
-
|
$
|
1,881
|
December 31, 2017
|
September 30, 2017
|
|||||||
Raw materials
|
$
|
38,413
|
$
|
36,415
|
||||
Work in process
|
6,698
|
7,365
|
||||||
Finished goods
|
28,871
|
28,093
|
||||||
Total
|
$
|
73,982
|
$
|
71,873
|
December 31, 2017
|
September 30, 2017
|
|||||||||||||||
Gross
Carrying
Amount
|
Accumulated
Amortization
|
Gross
Carrying
Amount
|
Accumulated
Amortization
|
|||||||||||||
Other intangible assets subject to amortization:
|
||||||||||||||||
Product technology
|
$
|
46,351
|
$
|
18,904
|
$
|
42,287
|
$
|
17,604
|
||||||||
Acquired patents and licenses
|
8,270
|
8,244
|
8,270
|
8,241
|
||||||||||||
Trade secrets and know-how
|
2,550
|
2,550
|
2,550
|
2,550
|
||||||||||||
Customer relationships, distribution rights and other
|
28,459
|
16,380
|
28,229
|
15,421
|
||||||||||||
Total other intangible assets subject to amortization
|
85,630
|
46,078
|
81,336
|
43,816
|
||||||||||||
Other intangible assets not subject to amortization:
|
||||||||||||||||
In-process technology
|
-
|
4,000
|
||||||||||||||
Other indefinite-lived intangibles*
|
1,190
|
1,190
|
||||||||||||||
Total other intangible assets not subject to amortization
|
1,190
|
5,190
|
||||||||||||||
Total other intangible assets
|
$
|
86,820
|
$
|
46,078
|
$
|
86,526
|
$
|
43,816
|
Fiscal Year
|
Estimated
Amortization
Expense
|
||||
Remainder of 2018
|
$
|
5,521
|
|||
2019
|
7,119
|
||||
2020
|
7,115
|
||||
2021
|
7,108
|
||||
2022
|
7,108
|
December 31, 2017
|
September 30, 2017
|
|||||||
Auction rate securities (ARS)
|
$
|
5,319
|
$
|
5,319
|
||||
Long-term contract assets
|
2,333
|
2,115
|
||||||
Other long-term assets
|
2,268
|
2,154
|
||||||
Other long-term investments
|
1,157
|
929
|
||||||
Total
|
$
|
11,077
|
$
|
10,517
|
December 31, 2017
|
September 30, 2017
|
|||||||
Accrued compensation
|
$
|
21,303
|
$
|
35,332
|
||||
Income taxes payable
|
14,055
|
9,717
|
||||||
Dividends payable
|
5,337
|
5,314
|
||||||
Goods and services received, not yet invoiced
|
4,968
|
2,172
|
||||||
Deferred revenue and customer advances
|
2,491
|
1,559
|
||||||
Warranty accrual
|
236
|
247
|
||||||
Taxes, other than income taxes
|
1,858
|
1,688
|
||||||
Current portion of long-term contract liability
|
1,500
|
1,500
|
||||||
Other accrued expenses
|
6,972
|
5,122
|
||||||
Total
|
$
|
58,720
|
$
|
62,651
|
Fiscal Year
|
Principal
Repayments
|
||||
Remainder of 2018
|
7,656
|
||||
2019
|
133,438
|
||||
Total
|
$
|
141,094
|
Asset Derivatives
|
Liability Derivatives
|
||||||||||||||||
|
Consolidated Balance Sheet Location
|
December 31, 2017
|
September 30, 2017
|
December 31, 2017
|
September 30, 2017
|
||||||||||||
Derivatives designated as hedging instruments
|
|||||||||||||||||
Interest rate swap contracts
|
Prepaid expenses and other current assets
|
$
|
181
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||
|
Other long-term assets
|
$
|
173
|
$
|
117
|
$
|
-
|
$
|
-
|
||||||||
|
Accrued expenses, income taxes payable and other current liabilities
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
31
|
||||||||
Foreign exchange contracts designated as net investment hedge
|
Other long-term liabilities
|
$
|
-
|
$
|
-
|
$
|
5,814
|
$
|
1,442
|
||||||||
Derivatives not designated as hedging instruments
|
|||||||||||||||||
Foreign exchange contracts
|
Prepaid expenses and other current assets
|
$
|
25
|
$
|
146
|
$
|
-
|
$
|
-
|
||||||||
|
Accrued expenses, income taxes payable and other current liabilities |
$
|
-
|
$
|
-
|
$
|
232
|
$
|
408
|
||||||||
Loss Recognized in
Statements of Income (Loss)
|
||||||||||
|
Three Months Ended
|
|||||||||
|
Statements of Income(Loss) Location
|
December 31, 2017
|
December 31, 2016
|
|||||||
Derivatives not designated as hedging instruments
|
||||||||||
Foreign exchange contracts
|
Other income, net
|
$
|
(809
|
)
|
$
|
(1,794
|
)
|
Balance at September 30, 2017
|
$
|
920
|
||
Loss on net investment hedge
|
4,372
|
|||
Tax benefit
|
(1,131
|
)
|
||
Balance at December 31, 2017
|
$
|
4,161
|
Foreign
Currency
Translation
|
Cash Flow
Hedges
|
Pension and
Other
Postretirement
Liabilities
|
Available-for-Sale
Securities
|
Total
|
||||||||||||||||
Balance at September 30, 2017
|
$
|
5,239
|
$
|
46
|
$
|
(1,336
|
)
|
$
|
-
|
$
|
3,949
|
|||||||||
Foreign currency translation adjustment, net of tax of $(1,150)
|
7,144
|
-
|
-
|
-
|
7,144
|
|||||||||||||||
Unrealized loss on available-for-sale securities, net of tax of $0
|
-
|
-
|
-
|
(46
|
)
|
(46
|
)
|
|||||||||||||
Unrealized gain (loss) on cash flow hedges:
|
||||||||||||||||||||
Change in fair value, net of tax of $80
|
-
|
229
|
-
|
-
|
229
|
|||||||||||||||
Reclassification adjustment into earnings, net of tax of $(11)
|
-
|
(30
|
)
|
-
|
-
|
(30
|
)
|
|||||||||||||
Balance at December 31, 2017
|
$
|
12,383
|
$
|
245
|
$
|
(1,336
|
)
|
$
|
(46
|
)
|
$
|
11,246
|
Foreign
Currency
Translation
|
Cash Flow
Hedges
|
Pension and
Other
Postretirement
Liabilities
|
Total
|
|||||||||||||
Balance at September 30, 2016
|
$
|
11,985
|
$
|
(817
|
)
|
$
|
(1,612
|
)
|
$
|
9,556
|
||||||
Foreign currency translation adjustment, net of tax of $(2,444)
|
(17,574
|
)
|
-
|
-
|
(17,574
|
)
|
||||||||||
Unrealized gain (loss) on cash flow hedges:
|
||||||||||||||||
Change in fair value, net of tax of $440
|
-
|
785
|
-
|
785
|
||||||||||||
Reclassification adjustment into earnings, net of tax of $(66)
|
-
|
(119
|
)
|
-
|
(119
|
)
|
||||||||||
Balance at December 31, 2016
|
$
|
(5,589
|
)
|
$
|
(151
|
)
|
$
|
(1,612
|
)
|
$
|
(7,352
|
)
|
Three Months Ended
December 31,
|
||||||||
2017
|
2016
|
|||||||
Income statement classifications:
|
||||||||
Cost of goods sold
|
$
|
788
|
$
|
541
|
||||
Research, development and technical
|
529
|
419
|
||||||
Selling and marketing
|
342
|
339
|
||||||
General and administrative
|
4,202
|
1,614
|
||||||
Total share-based compensation expense
|
5,861
|
2,913
|
||||||
Tax benefit
|
(1,241
|
)
|
(947
|
)
|
||||
Total share-based compensation expense, net of tax
|
$
|
4,620
|
$
|
1,966
|
13. |
OTHER INCOME, NET
|
Three Months Ended
December 31,
|
||||||||
2017
|
2016
|
|||||||
Interest income
|
$
|
951
|
$
|
421
|
||||
Other income (expense)
|
(279
|
)
|
575
|
|||||
Total other income, net
|
$
|
672
|
$
|
996
|
15. |
EARNINGS PER SHARE
|
Three Months Ended
December 31,
|
||||||||
2017
|
2016
|
|||||||
Numerator:
|
||||||||
Net Income (Loss)
|
$
|
(3,083
|
)
|
$
|
22,231
|
|||
Less: (income) loss attributable to participating securities
|
11
|
(102
|
)
|
|||||
Earnings available to common shares
|
$
|
(3,072
|
)
|
$
|
22,129
|
|||
Denominator:
|
||||||||
Weighted average common shares
|
25,325,757
|
24,582,688
|
||||||
(Denominator for basic calculation)
|
||||||||
Weighted average effect of dilutive securities
|
-
|
489,477
|
||||||
Diluted weighted average common shares
|
25,325,757
|
25,072,165
|
||||||
(Denominator for diluted calculation)
|
||||||||
Earnings (loss) per share:
|
||||||||
Basic
|
$
|
(0.12
|
)
|
$
|
0.90
|
|||
Diluted
|
$
|
(0.12
|
)
|
$
|
0.88
|
Three Months Ended December 31,
|
||||||||
Revenue:
|
2017
|
2016
|
||||||
Tungsten slurries
|
$
|
62,877
|
$
|
55,301
|
||||
Dielectric slurries
|
31,732
|
29,282
|
||||||
Polishing pads
|
18,879
|
16,209
|
||||||
Other Metals slurries
|
16,468
|
15,780
|
||||||
Engineered Surface Finishes
|
8,530
|
5,024
|
||||||
Data storage slurries
|
1,493
|
1,658
|
||||||
Total revenue
|
$
|
139,979
|
$
|
123,254
|
·
|
Research related to fundamental CMP technology;
|
·
|
Development of new and enhanced CMP consumable products, including collaboration on joint development projects with technology-leading customers and suppliers;
|
·
|
Process development to support rapid and effective commercialization of new products;
|
·
|
Technical support of CMP products in our customers' research, development and manufacturing facilities; and,
|
·
|
Development of 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
|
|||||||||||||||
Long-term debt
|
$
|
141.1
|
$
|
16.4
|
$
|
124.7
|
$
|
-
|
$
|
-
|
||||||||||
Interest expense and fees on long-term debt
|
5.3
|
3.8
|
1.5
|
-
|
-
|
|||||||||||||||
Purchase obligations
|
43.1
|
35.7
|
5.4
|
2.0
|
-
|
|||||||||||||||
Operating leases
|
21.9
|
3.6
|
5.3
|
3.8
|
9.2
|
|||||||||||||||
Severance agreements
|
3.0
|
2.4
|
0.6
|
-
|
-
|
|||||||||||||||
Other long-term liabilities
*
|
35.0
|
-
|
4.3
|
4.0
|
26.7
|
|||||||||||||||
Total contractual obligations
|
$
|
249.4
|
$
|
61.9
|
$
|
141.8
|
$
|
9.8
|
$
|
35.9
|
||||||||||
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, 2017
|
5,975
|
$
|
84.98
|
5,975
|
$
|
121,485
|
||||||||||
Nov. 1 through Nov. 30, 2017
|
6,106
|
$
|
98.18
|
5,775
|
$
|
120,918
|
||||||||||
Dec. 1 through Dec. 31, 2017
|
39,313
|
$
|
92.66
|
5,500
|
$
|
120,401
|
||||||||||
Total
|
51,394
|
$
|
92.42
|
17,250
|
$
|
120,401
|
Exhibit
Number
|
Description
|
Form of Cabot Microelectronics Corporation 2012 Omnibus Incentive Plan Non-Qualified Stock Option Award Agreement (employees (including executive officers))*
|
|
Form of Cabot Microelectronics Corporation 2012 Omnibus Incentive Plan Restricted Stock Unit Award Agreement (
employees (including executive officers))*
|
|
Form of Cabot Microelectronics Corporation 2012 Omnibus Incentive Plan Performance Share Unit Award Agreement
(employees (including executive officers))*
|
|
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
|
|
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
|
|
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
101.INS
|
XBRL Instance Document
|
101.SCH
|
XBRL Taxonomy Extension Schema
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase
|
CABOT MICROELECTRONICS CORPORATION
|
||
[Registrant]
|
||
Date: February 7, 2018
|
By:
|
/s/ SCOTT D. BEAMER
|
Scott D. Beamer
|
||
Vice President and Chief Financial Officer
|
||
[Principal Financial Officer]
|
||
Date: February 7, 2018
|
By:
|
/s/ THOMAS S. ROMAN
|
Thomas S. Roman
|
||
Corporate Controller
|
||
[Principal Accounting Officer]
|
PARTICIPANT
|
Type of Award
|
Number of Option Shares Awarded
|
Exercise Price Per Share on [Grant Date]
|
Participant ID Number
|
«FIRST_NAME» «LAST_NAME»
|
Non-Qualified Stock Option
|
X,XXX
|
$XX.XX
|
«SOCIAL_SECURITY»
|
Grant Date
|
Vesting Dates
|
Expiration Date
|
Award Number
|
|
[Grant Date (Month, Day, Year)]
|
25% [1
st
Anniversary of Grant Date (Month, Day, Year)]
25% [2
nd
Anniversary of Grant Date (Month, Day, Year)]
25% [3
rd
Anniversary of Grant Date (Month, Day, Year)]
25% [4
th
Anniversary of Grant Date (Month, Day, Year)]
|
[Grant Date plus ten years (Month, Day, Year)]
|
«GRANT_ID»
|
1. |
Vesting and Exercise
. The Option shall become vested and exercisable in accordance with the following table:
|
(a)
|
Notwithstanding the foregoing, the Option shall become fully vested and exercisable in the event of a Change in Control. In the event of a Change in Control that constitutes a Covered Transaction, the Committee may, in its sole discretion, terminate any or all of the outstanding portions of the Option as of the effective date of the Covered Transaction,
provided that the Committee may not terminate an Option outstanding under this Agreement earlier than twenty (20) days following the later of (i) the date on which the Option became fully exercisable, and (ii) the date on which the Participant received written notice of the Covered Transaction.
|
(b)
|
Unless otherwise provided in this Agreement or the Plan, if the date of Participant's termination of Service with the Company precedes the relevant Vesting Date, an installment shall not vest on the otherwise applicable Vesting Date and any portion of the Option subject to such installment shall immediately terminate as of the date of such termination of Service. Notwithstanding the foregoing, (i) if the Participant's termination of Service occurs 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; (ii) if the Participant's termination of Service occurs by reason of Retirement, then any unvested portion of the Option shall continue to vest in accordance with the terms of this Agreement; (iii) if the Participant's Service is terminated involuntarily due to Position Elimination ("Position Elimination Termination"), then any unvested portion of the Option shall vest as of the date of such Position Elimination Termination, prorated based on a fraction, the numerator of which is the number of days in which the Participant was in Service from the Grant Date through the date of such Position Elimination Termination, and the denominator of which is the total number of days in the vesting period (i.e., from the Grant Date through the four (4) year anniversary of the Grant Date); and (iv) if the Participant's Service is terminated involuntarily for any reason other than Cause, the Committee may, in its sole discretion, accelerate the vesting of all or any portion of the Option.
|
(c)
|
For purposes hereof, "Disability" shall have the meaning provided under: (i) first, an employment agreement between the Participant and the Company; (ii) second, if no such employment agreement exists, the long-term disability program maintained by the Company or any governmental entity covering the Participant; or (iii) third, if no such agreement or program exists, permanent and total disability within the meaning of Section 22(e)(3) of the Code.
|
(d)
|
For purposes hereof, "Position Elimination" shall mean the involuntary termination of the Participant's Service by the Company due to the Company's determination that the Participant's position with the Company will be eliminated because of a staffing adjustment or other organizational change, expense reduction considerations, office closings or relocations (including but not limited to adjustments in the number of staff in a department or unit or the elimination of all or some of the functions of a department or unit), in which the Participant will not be replaced by another person in the same position.
|
(e)
|
For purposes hereof, "Retirement" shall mean the termination of the Participant's Service following the Participant's attainment of a combination of age and years of Service of at least seventy (70), with a minimum of 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.
|
2. |
Termination / Cancellation / Rescission/Recovery/Revocation.
The Company may terminate, cancel, rescind, recover, or revoke the Option immediately under certain circumstances, including, but not limited to, the Participant's:
|
(a)
|
actions constituting Cause, as defined in the Plan, or the Company's By-laws or Articles of Incorporation, and as enforceable under local laws, as applicable;
|
(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;
|
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 Option 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. |
Expiration
. The Option, including the vested portion of an Option, 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)
|
The tenth (10
th
) anniversary of the Grant Date;
|
(b) |
If the Participant's termination of Service occurs by reason of death or Disability, the portion of the Option that is vested and exercisable as of the date of such termination (and any portion of the Option that becomes vested and exercisable in connection with such termination) will remain exercisable until the three (3) year anniversary of the date of such termination;
|
(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;
|
(f) |
If the Participant experiences a Position Elimination Termination, the portion of the Option that is vested and exercisable as of the date of such Position Elimination Termination (and any portion of the Option that becomes vested and exercisable in connection with such Position Elimination Termination) will remain exercisable until the one (1) year anniversary of the date of such Position Elimination Termination; or
|
(g) |
If the Participant's termination of Service is for any reason other than (b), (c), (d), (e) or (f) above, or if the Committee exercises its discretion pursuant to Section 1(b)(iv) above to accelerate the vesting of all or any portion of the Option in the event that the Participant's Service is terminated involuntarily for any reason other than Cause, any portion of the Option that is vested and exercisable as of the date of termination will remain exercisable for one (1) month after the termination date, after which the unexercised portion of the Option is 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:
|
(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.
|
Taxes.
|
(a) |
All deliveries and distributions under this Agreement are subject to withholding of all applicable taxes based on country specific tax requirement. The various methods and manner by which the tax withholding may be satisfied are set forth in the Plan. If the Participant is subject to Section 16 (an "Insider"), of the Securities Exchange Act of 1934 ("Exchange Act") and other securities laws, any surrender of previously owned shares to satisfy tax withholding obligations arising upon exercise of an Option must comply with the requirements of Rule 16b-3 promulgated under the Exchange Act ("Rule 16b-3") and other relevant law, rules and regulations and Company guidelines.
|
(b) |
If the Fair Market Value of a share of Stock on the date the Participant exercises the Option is greater than the Exercise Price, the Participant will generally be taxed on the difference multiplied by the number of shares purchased with cash at the date of exercise. This income is taxed as ordinary income and subject to various withholding taxes. The Company is required to withhold and remit these taxes to the appropriate tax authorities. If the exercise of the Option results in no cash payment to the Participant from which the Company could withhold the income and FICA taxes, 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, which in most instances can be done through the services provided by a broker. If the Participant does not pay the amount of required withholding to the Company, the Company will withhold from the shares delivered or from other amounts payable to the Participant, the amount of funds required to cover all applicable federal, state and local income and employment taxes required to be withheld by the Company by reason of such exercise of the Option. The income will be reported to the Participant as part of the Participant's employment compensation on the Participant's annual earnings statement.
|
(c) |
If the Participant sells the shares acquired under the Option, a long-term or short-term capital gain or loss may also result depending on: (i) the Participant's holding period for the shares, and (ii) the difference between the Fair Market Value of the shares at the time of the sale and the Participant's tax basis in the shares. The holding period is determined from the date the Option is exercised. Under current law, the capital gain or loss is long term if the property is held for more than one (1) year, and short term if the property is held for less than one (1) year. If the Exercise Price of an Option is paid in cash, the tax basis of the shares thereby acquired is the sum of (i) the Exercise Price paid for the shares, and (ii) the ordinary income, if any, determined by the difference between the Fair Market Value of the shares when exercised and the Exercise Price.
|
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 that is a Share Change or a Corporate Transaction, each as 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 or may be adjusted, as applicable, as set forth in Section 8.6 of the Plan.
|
9. |
Shareholder Rights.
The grant of an Option does not confer on the Participant any shareholder rights or any contractual or other rights of service or employment with the Company. The Participant will not have shareholder rights 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. |
Data Privacy
. In order to perform its requirements under this Plan, the Company may process sensitive personal data about the Participant. Such data includes but is not limited to the information provided in this grant package and any changes thereto, other appropriate personal and financial data about the Participant, and information about the Participant's participation in the Plan and shares exercised under the Plan from time to time. By signing the attached acceptance form, the Participant hereby gives explicit consent to the Company to process any such data. The Participant also hereby gives explicit consent to the Company
to transfer any personal data outside the country in which the Participant is employed and to the United States. The legal persons for whom the personal data is intended includes the Company and any of its subsidiaries, the outside plan administrator as selected by the Company from time to time and any other person that the Company may find appropriate in its administration of the Plan. The Participant may review and correct any personal data by contacting his local Human Resources Representative. The Participant understands that the transfer of the information outlined here is important to the administration of the Plan and failure to consent to the transmission of such information may limit or prohibit 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
. Except as otherwise provided in Section 14, 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 Delaware.
|
PARTICIPANT
|
Type of Award
|
Number of Option Shares Awarded
|
Exercise Price Per Share on [Grant Date]
|
Participant ID Number
|
«FIRST_NAME» «LAST_NAME»
|
Non-Qualified Stock Option
|
X,XXX
|
$XX.XX
|
«SOCIAL_SECURITY»
|
Grant Date
|
Vesting Dates
|
Expiration Date
|
Award Number
|
|
[Grant Date (Month, Day, Year)]
|
25% [1
st
Anniversary of Grant Date (Month, Day, Year)]
25% [2
nd
Anniversary of Grant Date (Month, Day, Year)]
25% [3
rd
Anniversary of Grant Date (Month, Day, Year)]
25% [4
th
Anniversary of Grant Date (Month, Day, Year)]
|
[Grant Date plus ten years (Month, Day, Year)]
|
«GRANT_ID»
|
Participant Name / ID Number
|
Type of Award
|
Number of Shares
Subject to RSUs
|
Fair Market Value of Shares Subject to RSUs on Award Date
|
«FIRST_NAME» «LAST_NAME»
«SOCIAL_SECURITY»
|
Restricted Stock Units
|
X,XXX
|
$[FMV / closing price on Award Date]
|
Award Date
|
Vesting Date(s)
|
Award Number
|
|
[Award Date(Month, day, year)]
|
25% 1st anniversary of Award Date
25% 2nd anniversary of Award Date
25% 3rd anniversary of Award Date
25% 4th anniversary of Award Date
|
«GRANT_ID»
|
1.
|
Award
. The Award shall become vested and the Participant shall be entitled to receive one share of Stock for each vested RSU in accordance with the following table:
|
Number of Shares
|
Vesting Date(s)
|
25%
25%
25%
25%
|
1st anniversary of Award Date
2nd anniversary of Award Date
3rd anniversary of Award Date
4th anniversary of Award Date
|
2.
|
Termination / Cancellation / Rescission / Recovery / Revocation
. The Company may terminate, cancel, rescind, recover, or revoke the Award immediately under certain circumstances, including, but not limited to, the Participant's:
|
(a)
|
actions constituting Cause, as defined in the Plan
, or the Company's By-laws or Articles of Incorporation, 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
; or
|
(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 Underlying Stock
.
|
(a)
|
As of the Award Date, and until such time as the Participant becomes vested in an RSU and receives a share of Stock as provided in Section 5 of this Agreement, the Participant shall have no
rights of a shareholder (including, to the extent applicable, voting rights) as to each share of Stock subject to an RSU, except as provided in Section 4(b) of this Agreement.
|
(b)
|
If the Company declares a cash dividend on its shares of Stock, then, on the payment date of the dividend, the Participant will be credited with dividend equivalents equal to the amount of such cash dividend per share of Stock, multiplied by the number of RSUs credited to the Participant through the record date. The dollar amount credited to the Participant under the preceding sentence will be credited to an account ("Account") established for the Participant for bookkeeping purposes only on the books of the Company. The balance in the Account will be subject to the same terms regarding vesting and forfeiture as the Participant's RSUs awarded under this Agreement, and will be paid in cash at the time(s) that the corresponding shares of Stock associated with the Participant's RSUs are delivered (or forfeited at the time that the Participant's RSUs are forfeited).
|
5.
|
Delivery of Stock
. As soon as reasonably practicable following each vesting date, one or more stock certificates for the appropriate number of shares of Stock 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 generally be taxed on the Fair Market Value of the shares of Stock subject to the Award on the date(s) such shares of Stock are payable to the Participant according to the vesting terms above. This income will be taxed as ordinary income and will be 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 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 shall remain subject to the terms of the Plan.
|
9.
|
Adjustment of Shares
. In the event of any transaction that is a Share Change or a Corporate Transaction, each as 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 or may be adjusted, as applicable, 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
. Except as provided in Section 13, 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.
|
Electronic Delivery
. The Company may, in its sole discretion, decide to deliver any documents related to the RSUs or other awards granted to the Participant under the Plan by electronic means. The Participant hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.
|
14.
|
Section 409A
. The RSUs are intended to be exempt from the requirements of Section 409A. The Plan and this Agreement shall be administered and interpreted in a manner consistent with this intent. If the Company determines that this Agreement is subject to Section 409A and that it has failed to comply with the requirements of Section 409A, the Company may, at the Company's sole discretion, and without the Participant's consent, amend this Agreement to cause it to comply with Section 409A or be exempt from Section 409A.
|
15.
|
Governing Law
. This Agreement shall be construed under the laws of the State of Delaware.
|
[Name]
President and Chief Executive Officer
|
Participant Name / ID Number
|
Type of Award
|
Number of Shares
Subject to RSUs
|
Fair Market Value of Shares Subject to RSUs on Award Date
|
«FIRST_NAME» «LAST_NAME»
«SOCIAL_SECURITY»
|
Restricted Stock Units
|
X,XXX
|
$[FMV / closing price on Award Date]
|
Award Date
|
Vesting Date(s)
|
Award Number
|
|
[Award Date (Month, Day, Year)]
|
25% 1st anniversary of Award Date
25% 2nd anniversary of Award Date
25% 3rd anniversary of Award Date
25% 4th anniversary of Award Date
|
«GRANT_ID»
|
·
|
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 my 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) ___________.
|
Participant Name / ID Number
|
Type of Award
|
Target Number of Shares
Subject to PSUs
|
Award Number
|
«FIRST_NAME» «LAST_NAME»
«SOCIAL_SECURITY»
|
Performance Share Units
|
X,XXX
|
«GRANT_ID»
|
Award Date
|
Performance Period
|
||
[Award Date (Month, Day, Year)]
|
October 1, [20xx] through September 30, [(Award Date FY plus next two, for three FY's)20xx]
|
1.
|
Award; Performance Goals
. As of the Award Date, the Company hereby grants the Participant an Award of PSUs, consisting of the target number of PSUs specified above (the "Target PSUs"). Each earned PSU is a notional amount that represents one unvested share of Stock and constitutes the right, subject to the terms and conditions of the Plan and this Agreement, to distribution of a share of Stock following the vesting of such PSU and satisfaction of the other requirements contained herein.
|
TABLE 1 – PERFORMANCE GOALS [(FY18 example)]
|
||||
Performance At:
|
Three-Year Average Revenue Growth (weighted xx%)
|
Three-Year Cumulative Earnings per Share (weighted yy%)
|
||
Stretch (g%)
Target (h%)
Threshold (i%)
|
x%
y%
z%
|
|
$a
$b
$c
|
TABLE 2 – INITIAL EARNED PSUs [(FY18 example)]
|
||
Performance At:
|
Three-Year Average Revenue Growth (weighted xx%)
|
Three-Year Cumulative Earnings per Share (weighted yy%)
|
Stretch (g%)
Target (h%)
Threshold (i%)
|
[
jx the Target PSUs
]
[
kx the Target PSUs
]
[
lx the Target PSUs
]
|
[
jx the Target PSUs
]
[
kx the Target PSUs
]
[
lx the Target PSUs
]
|
(a)
|
"Beginning Stock Price" means the average closing price of a share of Stock for the period of thirty (30) trading days ending the day before the first day of the Performance Period.
|
(b)
|
"Ending Stock Price" means the average closing price of a share of Stock for the last thirty (30) trading days during the Performance Period, with all dividends deemed reinvested.
|
(c)
|
"Peer Group" means the companies in the S&P SmallCap 600 Index.
|
(d)
|
"Relative Total Shareholder Return" means the Company's total shareholder return performance (i.e., (Ending Stock Price – Beginning Stock Price) divided by Beginning Stock Price), relative to the total shareholder return performance of the Peer Group.
|
(e)
|
"Three-Year Average Revenue Growth" means the three-year average of the annual change in the Company's revenue over the Performance Period, as reported in the Company's Annual Report on Form 10-K ("Form 10-K") for each completed fiscal year of the Company during the Performance Period.
|
(f)
|
"Three-Year Cumulative Earnings per Share" means the sum of the Company's diluted earnings per share for each completed fiscal year of the Company during the Performance Period, as reported in the Company's Form 10-K for each such year.
|
2.
|
Termination of Service; Change in Control
. Except as otherwise provided in this Section 2, the Participant must remain continuously in Service through the last day of the Performance Period for the PSUs to vest (if at all) in accordance with Section 1.
|
(a)
|
Death
. In the event of the Participant's death prior to the end of the Performance Period, the Award shall become fully vested and the Participant's beneficiary, surviving spouse or estate, as applicable, shall be entitled to receive the corresponding number of shares of Stock underlying the Target PSUs as soon as reasonably practicable following the date of the Participant's death.
|
(b)
|
Disability; Retirement; Position Elimination Termination
. In the event of the Participant's Disability, Retirement or an involuntary termination of Service due to Position Elimination ("Position Elimination Termination"), in each case, prior to the end of the Performance Period, the Participant shall be entitled to receive, at the same time as the PSU awards for the same Performance Period held by other participants in the Plan are settled, the corresponding number of shares of Stock underlying the Final Earned PSUs based on actual performance through the end of the Performance Period, prorated based on a fraction, the numerator of which is the number of days in which the Participant was in Service during the Performance Period through the date of such Disability, Retirement, or Position Elimination Termination, and the denominator of which is the total number of days in the Performance Period.
|
(c)
|
Any Other Termination of Service
.
Unless otherwise specifically provided herein, upon the Participant's termination of Service with the Company prior to the end of the Performance Period for any reason other than death, Disability, Retirement or Position Elimination Termination, the Participant shall immediately forfeit the Award. Notwithstanding the foregoing, upon the Participant's termination of Service with the Company for Cause prior to or after the end of the Performance Period (but before settlement of the PSUs), the Participant shall immediately forfeit the Award.
|
(d)
|
Committee Discretion
. Notwithstanding anything herein to the contrary, in the event of an involuntary termination of Service for any reason other than Cause, the Committee may, in its sole discretion, accelerate the vesting of all or any portion of the Award.
|
(e)
|
Change in Control
.
|
i.
|
In the event that a Change in Control is consummated prior to the end of the Performance Period and the Award is assumed by the acquirer or surviving corporation, as applicable, the Award will be converted upon the Change in Control to a time-vested Restricted Stock Unit ("RSU") award, based on the Target PSUs, and such RSU award will vest in full, based on the passage of time, at the end of the Performance Period (provided that the Participant does not experience a termination of Service prior to such vesting date, except as otherwise set forth herein). If the Participant experiences an involuntary termination of Service without Cause or terminates Service for Good Reason (or experiences any other type of termination that would qualify the Participant to receive payment of benefits pursuant to his or her Change in Control Severance Protection Agreement with the Company, if and to the extent the Participant has such an agreement in place), in each case, within the twelve (12) months following the Change in Control, such RSU award will immediately vest in full, to the extent not already vested. For purposes of this Agreement, "Good Reason" shall have the meaning given to such term in the Participant's Change in Control Severance Protection Agreement with the Company (if and to the extent the Participant has such an agreement in place).
|
ii.
|
If the Award is not assumed by the acquirer or surviving corporation, as applicable, upon a Change in Control, the Award shall vest as of the date of such Change in Control, and the Participant shall be entitled to receive, within thirty (30) days following the Change in Control, the corresponding number of shares of Stock underlying the Target PSUs.
|
(f)
|
Certain Definitions
. For purposes hereof:
|
i.
|
The definition of "Change in Control" shall be deemed modified, only to the extent necessary, to avoid the imposition of an excise tax under Section 409A, to mean a "change in control event" as such term is defined for purposes of Section 409A. For purposes of clarity, if an Award would, for example, vest and be paid on a Change in Control, but payment of such Award would violate the provisions of Section 409A, then the Award shall vest but will not be paid until the Participant experiences a "separation from service" within the meaning of Section 409A.
|
ii.
|
"Disability" shall have the meaning provided under: (a) first, an employment agreement between the Participant and the Company; (b) second, if no such employment agreement exists, the terms of the Plan. In addition, for purposes of this Agreement, the Participant's date of termination of Service (for any reason other than death or Disability) shall be the earlier of: (i) the date on which the Participant ceases to render Service to or be employed by the Company, as determined by the Company in its sole discretion; (ii) the date on which the Company first provides notice of termination of Service; or (iii) the first date of any statutory notice period provided under local law.
|
iii.
|
"Position Elimination" shall mean
the involuntary termination of the Participant's Service by the Company due to the Company's determination that the Participant's position with the Company will be eliminated because of a staffing adjustment or other organizational change, expense reduction considerations, office closings or relocations (including but not limited to adjustments in the number of staff in a department or unit or the elimination of all or some of the functions of a department or unit), in which the Participant will not be replaced by another person in the same position.
|
iv.
|
"Retirement" shall mean the termination of the Participant's Service following the Participant's attainment of a combination of age and years of Service of at least seventy (70), with a minimum of 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.
|
v.
|
A "termination of Service" shall be deemed to occur only if it is a "separation from service" within the meaning of Section 409A.
|
3.
|
Termination / Cancellation / Rescission / Recovery / Revocation
. The Company may terminate, cancel, rescind, recover, or revoke the Award immediately under certain circumstances, including, but not limited to, the Participant's:
|
(a)
|
actions constituting Cause, as defined in the Plan
, or the Company's By-laws or Articles of Incorporation, 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
; or
|
(f)
|
violation of the Cabot Microelectronics Corporation Code of Business Conduct, including those provisions related to financial reporting.
|
4.
|
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.
|
5.
|
Rights and Restrictions Governing Underlying Stock
.
|
(a)
|
As of the Award Date, and until such time as the Participant becomes vested in a PSU and receives a share of Stock as provided in Section 6 of this Agreement, the Participant shall have no
rights of a shareholder (including, to the extent applicable, voting rights) as to each share of Stock subject to a PSU, except as provided in Section 5(b) of this Agreement.
|
(b)
|
If the Company declares a cash dividend on its shares of Stock, then, on the payment date of the dividend, the Participant will be credited with dividend equivalents equal to the amount of such cash dividend per share of Stock, multiplied by the number of Target PSUs credited to the Participant through the record date. The dollar amount credited to the Participant under the preceding sentence will be credited to an account ("Account") established for the Participant for bookkeeping purposes only on the books of the Company. The balance in the Account will be subject to the same terms regarding vesting and forfeiture as the Participant's PSUs awarded under this Agreement. The balance in the Account, adjusted to correspond to the Final Earned PSUs, will be paid, if at all, in cash at the time that the corresponding shares of Stock associated with the Participant's Final Earned PSUs are delivered (or forfeited at the time that the Participant's PSUs are forfeited). For purposes of clarity, any accrued dividend equivalents that become payable to the Participant pursuant to this Section 5(b) will be paid with respect to the Final Earned PSUs, which may be a greater or smaller amount than the dividend equivalents originally credited to the Account with respect to the Target PSUs.
|
6.
|
Timing and Form of Payment; Delivery of Stock
.
|
(a)
|
Except as otherwise provided in Section 2, after the Committee has certified attainment of the Performance Goals following the end of the Performance Period, the Participant will be entitled to receive a number of shares of Stock equal to the total number of Final Earned PSUs, if any, that are earned and vested as determined in Sections 1 or 2. The Committee shall automatically include or exclude, as applicable, each of the following items in evaluating the level of attainment of the Performance Goals, to the extent that any such item affects a Performance Goal and depending on which approach results in a higher number of Final Earned PSUs (subject to any exercise of "negative discretion" by the Committee): any unusual or non-recurring events, including, but not limited to, exogenous events, financing activities, acquisitions, divestitures, recapitalizations (including stock splits and dividends), impact of charges for restructurings, discontinued operations, the cumulative effects of accounting or tax changes, and other items determined to be unusual in nature and/or infrequent in occurrence, each as defined by generally accepted accounting principles or as identified in the Company's financial statements, notes to the financial statements, management's discussion and analysis or other Company filings with the Securities and Exchange Commission.
|
(b)
|
As soon as reasonably practicable following the Committee's certification of the attainment of the Performance Goals, or, as applicable, upon such earlier termination of Service to the extent set forth in Section 2 (and in any event, no later than December 15 next following the end of the Performance Period), one or more stock certificates for the appropriate number of shares of Stock 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.
|
7.
|
Tax Treatment
. The Participant will generally be taxed on the Fair Market Value of the shares of Stock subject to the Award on the date(s) such shares of Stock are payable to the Participant according to the vesting terms above. This income will be taxed as ordinary income and will be 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.
|
8.
|
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").
|
9.
|
Transferability
. The Award 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 shall remain subject to the terms of the Plan.
|
10.
|
Adjustment of Shares
. In the event of any transaction that is a Share Change or a Corporate Transaction, each as 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 or may be adjusted, as applicable, as set forth in Section 8.6 of 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
. Except as provided in Section 14, 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.
|
Electronic Delivery
. The Company may, in its sole discretion, decide to deliver any documents related to the PSUs or other awards granted to the Participant under the Plan by electronic means. The Participant hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.
|
15.
|
Section 409A
. The PSUs are intended to be exempt from the requirements of Section 409A. The Plan and this Agreement shall be administered and interpreted in a manner consistent with this intent. If the Company determines that this Agreement is subject to Section 409A and that it has failed to comply with the requirements of Section 409A, the Company may, at the Company's sole discretion, and without the Participant's consent, amend this Agreement to cause it to comply with Section 409A or be exempt from Section 409A.
|
16.
|
Governing Law
. This Agreement shall be construed under the laws of the State of Delaware.
|
[Name]
President and Chief Executive Officer
|
Participant Name / ID Number
|
Type of Award
|
Target Number of Shares
Subject to PSUs
|
Award Number
|
«FIRST_NAME» «LAST_NAME»
«SOCIAL_SECURITY»
|
Performance Share Units
|
X,XXX
|
«GRANT_ID»
|
Award Date
|
Performance Period
|
||
[Award Date (Month, Day, Year)]
|
October 1, [20xx] through September 30, [(Award Date FY plus next two, for three FY's)20xx] ("Performance Period")
|
·
|
Providing a personal check, bank draft or money order payable to the Company at the time of vesting (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 vesting ("withhold to cover") to satisfy my 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 vesting (instructions for doing so will be provided in advance of vesting) ___________.
|
|
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 (the registrant's fourth fiscal quarter in the case of an annual report) 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 7, 2018 |
/s/ DAVID H. LI
|
David H. Li
|
|
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;
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3.
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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;
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4.
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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:
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(a)
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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;
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(b)
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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;
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(c)
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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
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(d)
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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 (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
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5.
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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:
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(a)
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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
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(b)
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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.
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Date: February 7, 2018
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/s/ SCOTT D. BEAMER
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Scott D. Beamer
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Chief Financial Officer
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Date: February 7, 2018
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/s/ DAVID H. LI
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David H. Li
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Chief Executive Officer
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Date: February 7, 2018
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/s/ SCOTT D. BEAMER
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Scott D. Beamer
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Chief Financial Officer
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