Second Amended and Restated Cabot Microelectronics Corporation 2000 Equity Incentive Plan [Initial][Annual] Non-Qualified Stock Option Grant Agreement for Directors
Exhibit 10.2
Second
Amended and Restated Cabot Microelectronics Corporation 2000 Equity Incentive
Plan
[Initial][Annual]
Non-Qualified Stock Option Grant Agreement for Directors
[AWARD
DATE]
[Director
Name]
[Director
Address]
Dear
[Director First Name]:
I am
pleased to inform you (the “Participant) that the Board of Directors (the
“Board”) of Cabot Microelectronics Corporation (the “Company”), based on the
recommendation of the Nominating and Corporate Governance Committee of the
Board, has approved your participation in the Second Amended and Restated Cabot
Microelectronics Corporation 2000 Equity Incentive Plan, as amended and restated
September 23, 2008 (the "Plan") in consideration of your [initial][annual]
service as a Director of the Company. A Non-qualified Stock Option (“NQSO”)
award (the “Award”) is hereby granted to the Participant pursuant to the terms
of the Plan and this Non-Qualified Stock Option Agreement (the
“Agreement”). A copy of the Plan is enclosed.
|
Participant
|
Type
of Grant
|
Number
of Option Shares Granted
|
Exercise
Price Per Share on Grant Date, [Annual Meeting Date for Annual; Date of
Election/ Appointment for Initial]
|
Optionee
ID Number
|
|
[Director
Name]
|
Non-Qualified
Stock Option
|
[_____]
|
[FMV/closing
price on Grant Date, which is Annual Meeting Date for Annual; Date of
Election/ Appointment for Initial]
|
[xxx-xx-xxxx]
|
|
Grant
Date [GD]
|
Vesting
Dates
|
Expiration
Date
|
Grant
Number
|
|
|
[Annual
Meeting Date for Annual; Date of Election/ Appointment for Initial
]
|
[for
annual grant:
25% 1st
anniv. GD
25% 2d
anniv. GD
25% 3d
anniv. GD
25% 4th
anniv. GD]
[for
initial grant:
25%
GD
25%
1st
anniv. GD
25%
2d anniv. GD
25%
3d anniv. GD]
|
10th
anniv. GD
|
[xxxxxx]
|
This
Agreement provides the Participant with the terms of the option (the “Option”)
granted to the Participant. The Option is not intended to qualify as
an incentive stock option pursuant to Section 422 of the Internal Revenue Code
(the “Code”). The terms specified in this Agreement are governed by
the provisions of the Plan, which are incorporated herein by reference. The
Compensation Committee of the Board (the “Committee”) has the exclusive
authority to interpret and apply the Plan and this Agreement. Any
interpretation of the Agreement by the Committee and any decision made by it
with respect to the Agreement are final and binding on all
persons. To the extent that there is any conflict between the terms
of this Agreement and the Plan, the Plan shall govern. Capitalized terms used
herein will have the same meaning as under the Plan, unless stated
otherwise.
In
consideration of the foregoing and the mutual covenants hereinafter set forth,
it is agreed by and between the Company and the Participant as
follows:
|
|
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%
|
For
annual/initial:
1st
anniv. GD/GD
2d
anniv. GD/1st
anniv. GD
3d
anniv. GD/2d anniv. GD
4th
anniv. GD/3d anniv. GD
|
The Award
will be fully vested and exercisable in the event of a Change in Control, as
defined in the Plan. In the event of a Change in Control that
constitutes a Covered Transaction (as defined in Section 7.3(c) of the Plan),
the Committee may, in its sole discretion, terminate any or all outstanding
Options 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 Award
became fully exercisable, and (ii) the date on which the Participant received
written notice of the Covered Transaction.
Unless
otherwise provided in this Agreement or the Plan, if the date of Participant’s
termination of Service as a Director of 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.
1
|
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2.
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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, or the Company’s By-laws or
Articles of Incorporation, as
applicable;
|
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(b)
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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;
|
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(c)
|
unauthorized
disclosure of any confidential/proprietary information of the Company to
any third party;
|
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.
|
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3.
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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:
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(a)
|
[Ten
Years from GD];
|
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(b)
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If
the Participant’s termination of Service as a Director of the Company
occurs by reason of Cause, the date preceding the date of such
termination;
|
|
(c)
|
If
the Participant’s termination of Service as a Director of the Company is
for any reason other than (b) above, all Options vested and exercisable as
of the date of termination will remain exercisable until [ten years from
GD]. In such case of termination of Service as a Director of
the Company occurring by reason of death or Disability, then any Options
unvested prior to the date of such termination shall be fully vested and
exercisable as of such date of termination. For purposes hereof,
Disability shall have the meaning of permanent and total disability
provided within the meaning of Section 22 (e)(3) of the Internal Revenue
Code.
|
In the
event that the Participant dies on or following the Participant’s termination
date and prior to the Expiration Date without having fully exercised the
Participant’s Options, then the authorized representative of the Participant’s
estate shall be entitled to exercise the Award within such limits specified in
subparagraphs (a) or (c).
To the
extent that the Participant does not exercise the Option to the extent the
Participant is entitled within the time specified in subparagraph (a) or (c)
above, the Option shall immediately terminate.
|
4.
|
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:
|
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(a)
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in
cash;
|
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(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;
|
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(c)
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partly
in cash and partly in such shares of Stock;
or
|
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(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”).
|
Anything
to the contrary herein notwithstanding, the Option cannot be exercised and the
Company shall not be obligated to issue any shares of Stock hereunder if the
Company determines that the issuance of such shares would violate the provision
of any applicable law, including the rules and regulations of any securities
exchange on which the Stock is traded. Please refer to Section 6.2(d)
of the Plan for additional information.
2
|
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5.
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Taxes.
|
|
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(a)
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All
deliveries and distributions under this Agreement are subject to all
applicable taxes. As a Director of the Company, the Participant
is subject to Section 16 (an “Insider”), of the Securities Exchange Act of
1934 (“Exchange Act”), as well as other relevant securities laws, and any
surrender of previously owned shares to satisfy tax withholding
obligations arising upon exercise of an Option, or a ‘cashless exercise’
must comply with the requirements of Rule 16b-3 promulgated under the
Exchange Act (“Rule 16b-3”), and other relevant law, regulations and
Company guidelines.
|
|
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(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 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 taxes. The
income will be reported to the Participant as part of the Participant’s
compensation on the Participant’s annual Form 1099 issued by the
Company.
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(c)
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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.
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EACH
PARTICIPANT IS URGED TO CONSULT WITH HIS OWN TAX ADVISOR TO DETERMINE THE
PARTICULAR TAX CONSEQUENCES INCLUDING THE APPLICABILITY AND EFFECT OF FEDERAL,
LOCAL AND OTHER TAX LAWS.
|
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6.
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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.
|
|
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7.
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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.
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|
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8.
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Not an Employment
Contract; Shareholder Rights. The grant of an Option
does not confer on the Participant any contractual employment or
shareholder rights. 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.
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9.
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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.
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10.
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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.
|
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11.
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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.
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12.
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Governing
Law. This Agreement shall be construed under the laws of
the State of Illinois.
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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.
CABOT
MICROELECTRONICS CORPORATION
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇
Chairman and Chief Executive Officer
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