EXHIBIT 10.38
[CABOT MICROELECTRONICS LOGO]
November 2, 2003
Mr. William P. Noglows
204 Ocean Avenue
Marblehead, MA 01945
Re: Offer of Employment
Dear Bill:
We are all very excited about your interest in Cabot Microelectronics
Corporation ("CMC") and the prospects for a great future for CMC under your
leadership. Accordingly, we are offering employment to you on the following
terms:
1. Position. You would become CMC's Chairman, President and Chief
Executive Officer, reporting to the Board of Directors of CMC.
2. Employment Date. Your first date of employment ("Employment Date") is
tentatively planned for November 3, 2003.
3. Change in Control Agreement. CMC also will offer you a Change in
Control Severance Protection Agreement that includes payment for three
times salary and bonus and three years of certain benefits coverage and
vesting of options with terms similar to the agreements CMC provides to
other senior executive officers, including a gross-up provision in the
event that penalty tax is assessed as a result of a payment.
4. Annual Salary. Your annual base salary would be $450,000. Following the
close of each fiscal year, beginning with the end of Fiscal Year 2004,
the Compensation Committee of the Board will meet to consider an
increase in your annual base salary in accordance with its normal
practices. CMC will pay your base salary in accordance with its normal
payroll practices.
5. Annual Incentive Bonus. You would be eligible for a cash bonus for each
fiscal year based on CMC's achieving performance levels specified by
the Board at the start of each fiscal year. For the Fiscal Year 2004,
beginning October 1, 2003, this bonus will not be less than $160,000.
6. Equity Award. CMC will award you a non-qualified option to purchase
250,000 shares of CMC's common stock (the "Initial Option") in
accordance with the terms of the Cabot Microelectronics Corporation
Amended and Restated 2000 Equity Incentive Plan. The grant date of the
Initial Option will be your Employment Date. The exercise price of the
Mr. William P. Noglows
November 2, 2003
Page 2
Initial Option will be the closing price of CMC's common stock on the
grant date, as per the terms of the Equity Incentive Plan. The Initial
Option will vest 25% on the first anniversary of your Employment Date
and 25% on each subsequent anniversary of your Employment Date, so that
it is fully vested on the fourth anniversary of your Employment Date,
as long as you remain continuously employed by CMC on each such
anniversary and pursuant to the terms of the Equity Incentive Plan and
grant agreement for your Initial Option award, and as modified and/or
otherwise affected by the Change in Control Severance Protection
Agreement dated effective as of November 3, 2003 between the Company
and you. The Initial Option will expire ten years from the grant date,
unless sooner exercised or terminated pursuant to the Equity Incentive
Plan and the applicable award agreement. Upon a termination of your
employment, any vested options of the Initial Option would continue to
be exercisable for the six-month period following such termination. You
will be eligible for future equity awards at the discretion of the
Board.
7. Severance. If CMC terminates your employment without cause or you
terminate employment because CMC breaches the terms of your employment,
CMC will continue your annual base salary for twelve (12) months and
any options vesting in accordance with your vesting schedule shall vest
during such period.
8. Benefits. Effective on your Employment Date, you will be entitled to
participate in all employee benefit plans, programs and arrangements,
including, without limitation, vacation (four weeks for executives),
medical, dental, short-term and long-term disability, life, and 401(k)
plan, according to the terms of such plans and on terms no less
favorable than those available to other senior executive officers.
9. Relocation Expenses. You and your family will relocate to the greater
Chicago metropolitan area by June 1, 2004, where CMC is headquartered.
Pursuant to the terms of CMC's standard relocation policy, CMC will
reimburse your and your family's reasonable expenses in relocating to
the greater Chicago metropolitan area from Marblehead, Massachusetts.
CMC will reimburse you for temporary living arrangements until June 1,
2004. CMC will reimburse you on a "grossed up basis" in the event any
tax is assessed upon you with respect to such reimbursement.
10. Financial Advisor. CMC will reimburse you annually for the expenses of
a financial advisor, chosen by you solely at your discretion up to
$10,000 per year.
11. Insurance and Indemnification. CMC will maintain you as an insured
party on all directors' and officers' insurance maintained by CMC for
the benefit of its directors and officers on at least the same basis as
all other covered individuals and provide you with at least the same
corporate indemnification as its other senior executive officers and
directors.
12. CMC will reimburse you for normal business, travel and entertainment
expenses in accordance with its written policies. You will be
authorized to fly first class at your discretion.
Mr. William P. Noglows
November 2, 2003
Page 3
13. Employee Confidentiality, Intellectual Property and Non-Competition
Agreement; Code of Business Conduct. You will need to sign CMC's
standard Employee Confidentiality, Intellectual Property and
Non-Competition Agreement by your Employment Date. You also will need
to certify to CMC's Code of Business Conduct as of your Employment
Date.
14. CMC will pay for all reasonable attorneys' fees, costs and expenses
incurred by you in connection with the negotiation, execution and
delivery of this offer letter, up to $10,000.
15. You confirm to CMC that you are not subject to or bound by any
agreement, covenant, or order that limits your ability to assume the
role or perform the duties of Chairman, President and Chief Executive
Officer of CMC.
16. Miscellaneous. In accordance with federal immigration laws, please
provide CMC with documentary evidence of your identity and eligibility
for employment in the United States (e.g., U.S. Passport) by your
Employment Date. Subject to Section 7 above, your employment will be on
an "at will" basis, which means you will be free to resign at any time,
for any reason or for no reason, as you deem appropriate. Similarly,
CMC will have a similar right to terminate your employment at any time,
with or without cause.
Bill, I believe this offer reflects our understanding of your
expectations and I look forward to hearing from you. In that regard, you can
indicate your acceptance of the terms of this offer letter by signing below and
returning one copy to me.
Cordially yours,
Ronald L. Skates
Chairman of the Compensation Committee
Board of Directors
Accepted and Agreed this 2nd day
of November 2003.
____________________________________
William P. Noglows