<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. 1)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
ALPHA INDUSTRIES, INC
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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<PAGE>
[LOGO OF ALPHA INDUSTRIES, INC. APPEARS HERE]
ALPHA INDUSTRIES, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS OF
ALPHA INDUSTRIES, INC. TO BE HELD ON SEPTEMBER 14, 1998
The Annual Meeting of Stockholders of ALPHA INDUSTRIES, INC. (the "Company")
will be held on Monday, September 14, 1998, at 2:00 p.m. at the Wyndham Garden
Hotel, 30 Wheeler Road, Burlington, Massachusetts for the following purposes:
1. To elect two Class 3 directors, each to hold office until the 2001
Annual Meeting of Stockholders and until their respective successors are
elected and qualified;
2. To consider and act upon a proposal to amend the Alpha Industries, Inc.
1996 Long-Term Incentive Plan; and
3. To consider and act upon any other matters which may properly come
before the Meeting or any adjourned session thereof.
The Board of Directors has fixed July 16, 1998, as the record date for
determining the stockholders entitled to notice of, and to vote at, the
Meeting.
You are cordially invited to attend the Meeting.
By Order of the Board of Directors
James C. Nemiah, Secretary
Boston, Massachusetts
July 30, 1998
YOUR VOTE IS IMPORTANT
YOU ARE URGED TO DATE, SIGN AND PROMPTLY RETURN THE ACCOMPANYING FORM OF
PROXY SO THAT IF YOU ARE UNABLE TO ATTEND THE ANNUAL MEETING YOUR SHARES MAY
NEVERTHELESS BE VOTED.
<PAGE>
ALPHA INDUSTRIES, INC.
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 14, 1998
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Alpha Industries, Inc., a Delaware
corporation with its executive offices at 20 Sylvan Road, Woburn,
Massachusetts 01801 (the "Company"), for use at the Annual Meeting of
Stockholders to be held on Monday, September 14, 1998, and at any adjournment
or adjournments thereof (the "Meeting"). The enclosed proxy relating to the
Meeting is solicited on behalf of the Board of Directors of the Company and
the cost of such solicitation will be borne by the Company. It is expected
that this proxy statement and the accompanying proxy will be mailed to
stockholders on or about July 30, 1998. Certain of the officers and regular
employees of the Company may solicit proxies by correspondence, telephone or
in person, without extra compensation. The Company may also pay to banks,
brokers, nominees and certain other fiduciaries their reasonable expenses
incurred in forwarding proxy material to the beneficial owners of securities
held by them. In addition, the Company intends to retain a proxy solicitor at
a cost to the Company of approximately $20,000.
Only holders of Common Stock of the Company of record on its books at the
close of business on July 16, 1998 will be entitled to receive notice of, and
to vote at, the Meeting. As of such date, there were issued and outstanding
10,506,910 shares of Common Stock. Each stockholder is entitled to one vote
for each share of Common Stock and may vote such shares either in person or by
proxy.
The enclosed proxy, if executed and returned, will be voted as directed on
the proxy or, in the absence of such direction, for the election of each of
the nominees as a director and for the proposal to amend the Alpha Industries,
Inc. 1996 Long-Term Incentive Plan (the "1996 Plan"). If any other matters
shall properly come before the Meeting, the enclosed proxy will be voted by
the proxies in accordance with their best judgment. The proxy may be revoked
at any time prior to exercise by filing with the Secretary of the Company a
written revocation, by executing a proxy with a later date, or by attending in
person and voting at the Meeting.
PROPOSAL 1
ELECTION OF DIRECTORS
The Company's Restated Certificate of Incorporation and Amended and Restated
By- Laws, provide for the division of the Board of Directors into three
classes, each having a three-year term of office. The term of one class
expires each year. The terms of two directors, Mr. George S. Kariotis and Mr.
Timothy R. Furey, expire at the Meeting. Mr. Kariotis and Mr. Furey have been
renominated as Class 3 directors to hold office until the 2001 Annual Meeting
of Stockholders and until their successors have been duly elected and
qualified.
There have been several changes to the composition of the Board of Directors
since the 1997 Annual Meeting of Stockholders. In December 1998, Mr. Charles
A. Zraket, a Class 3 Director since 1995, passed away. Mr. Timothy R. Furey
was elected to the Board of Directors in January 1998 to replace Mr. Zraket.
In addition to the loss of Mr. Zraket and the addition of Mr. Furey, Mr.
Martin J. Reid, former President and Chief Executive Officer of the Company,
resigned as a Class 1 member of the Board of Directors in January 1998.
It is the intention of the persons named as proxies to vote for the election
of each of the two nominees as a Class 3 director. In the unanticipated event
that a nominee should be unable to serve, the persons named as proxies will
vote the proxy for such substitute, if any, as the present Board of Directors
may designate or to reduce the number of directors. The nominees have not been
nominated pursuant to any arrangement or understanding with any person.
<PAGE>
The following table sets forth certain information with respect to the
nominees, including the year in which each nominee's term would expire, if
elected, and with respect to each of the two classes of directors whose terms
will continue after the Meeting. The nominees for Class 3 directors are
indicated by asterisks.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION, YEAR TERM
BUSINESS EXPERIENCE DIRECTOR EXPIRES
NAME AGE AND OTHER DIRECTORSHIPS SINCE AND CLASS
---- --- ----------------------- -------- ---------
<S> <C> <C> <C> <C>
*George S. Kariotis(1).. 75 Chairman of the Board and Director of the 1962 2001
Company. Class 3
*Timothy R. Furey(2).... 40 Chairman and Chief Executive Officer of 1998 2001
Oxford Associates, a professional service Class 3
firm specializing in sales and marketing
performance measurement and improvement.
Thomas C. Leonard(3).... 63 President and Chief Executive Officer of 1996 2000
the Company. Class 2
Arthur Pappas........... 62 Founder of Datel Systems, Inc., a 1988 2000
manufacturer of data conversion products, Class 2
Power General Corporation, a manufacturer
of switching power supplies, and Metra-
Byte Corporation, a manufacturer of
measurement and control products for
personal computers, and President and
Chairman of Astrodyne Corp., a
manufacturer of power supplies.
Raymond Shamie(4)....... 77 Former President, Shamie Management 1985 2000
Corporation, an investment management and Class 2
consulting company.
Sidney Topol(5)......... 73 Director of Wandel and Golterman 1992 1999
Technologies, Inc., a manufacturer of test Class 1
instruments, and Public Broadcasting
System, and President of The Topol Group,
Inc., a consulting and investment company.
</TABLE>
- --------
(1) Mr. Kariotis was Chairman of the Board and Chief Executive Officer of the
Company from 1962 when the Company was founded until 1978. From 1979 to
1983, Mr. Kariotis was the Secretary of Manpower Development and Economic
Affairs for the Commonwealth of Massachusetts. He was re-elected Chairman
of the Board in 1983 and Chief Executive Officer in 1985. Mr. Kariotis
resigned as Chief Executive Officer in July 1986 while he campaigned for
public office. He was re-elected Chief Executive Officer in November 1986
and served in that capacity until May 1991.
(2) Mr. Furey founded Oxford Associates in 1991 and has been its Chairman and
Chief Executive Officer since then. Prior to 1991, Mr. Furey worked as a
consultant with Boston Consulting Group, Inc., Strategic Planning
Associates, Inc., Kaiser Associates and the Marketing Science Institute.
(3) Mr. Leonard was elected President and Chief Executive Officer of the
Company in July 1996 and was elected a Director in August 1996. Mr.
Leonard joined the Company in 1992 as General Manager of its Components
and Subsystems Division. In 1994, he became the General Manager of
Operations for the Alpha Microwave Division and was elected a Vice
President. Mr. Leonard has over 30 years experience in the microwave
industry, having held a variety of executive and senior level management
and marketing positions at M/A-COM, Inc., Varian Associates, Inc. and
Sylvania.
(4) Mr. Shamie was President of Shamie Management Corporation from 1986 to
1995. Prior to 1986, Mr. Shamie was Chairman of the Board and Chief
Executive Officer of Metal Bellows Corporation.
(5) Mr. Topol was President of Scientific-Atlanta, Inc. from 1971 to 1983,
Chief Executive Officer from 1975 to 1987 and Chairman of the Board from
1978 to 1990. Prior to 1971, Mr. Topol held various executive positions
with Raytheon Company.
2
<PAGE>
MEETINGS OF THE BOARD OF DIRECTORS
During the fiscal year ended March 29, 1998, the Board of Directors held
five meetings. Each director attended at least 75% of the aggregate number of
meetings of the Board of Directors and of committees of which they were
members.
During the fiscal year ended March 29, 1998, the Audit Committee of the
Board of Directors, currently composed of Mr. Pappas (Chairman) and Mr. Furey
(member since January 1998), held two meetings. The functions performed by the
Audit Committee included recommending to the Board of Directors the engagement
of the independent auditors, reviewing the scope of the proposed audit,
reviewing the scope of internal controls and reviewing the implementation by
management of recommendations made by the independent auditors.
The Board of Directors also has a Compensation Committee, currently composed
of Mr. Topol (Chairman), Mr. Furey (member since January 1998) and Mr. Shamie.
The Compensation Committee held two meetings during the fiscal year ended
March 29, 1998. The functions of the Compensation Committee included making
recommendations to the Board of Directors concerning executive compensation,
incentive compensation and incentive plans for key employees.
The Board of Directors does not have a nominating committee. Changes in
directors are considered by the Board of Directors.
3
<PAGE>
SECURITIES BENEFICIALLY OWNED BY CERTAIN PERSONS
On July 16, 1998, there were 10,506,910 issued and outstanding shares of the
Common Stock of the Company.
The following table sets forth the beneficial holdings of the Company's
Common Stock as of July 16, 1998, of each of the directors of the Company,
each of the executive officers named under the heading "Executive
Compensation," below, all directors and executive officers as a group and each
person known by the Company to be the beneficial owner of 5% or more of the
Company's Common Stock, based on information received from or on behalf of the
persons named. Unless noted otherwise, the beneficial owners have sole voting
and investment power with respect to the shares listed.
<TABLE>
<CAPTION>
BENEFICIAL PERCENT
NAME OF BENEFICIAL OWNER OWNERSHIP(1) OF CLASS
------------------------ ------------ --------
<S> <C> <C>
David J. Aldrich...................................... 45,105 (2)
Timothy R. Furey...................................... -- (2)
Jean Pierre Gillard................................... 28,483 (2)
George S. Kariotis.................................... 4,913 (2)
Richard Langman....................................... 20,240 (2)
Thomas C. Leonard..................................... 127,611 1.2%
Arthur Pappas......................................... 4,000 (2)
Raymond Shamie........................................ 16,000 (2)
Sidney Topol.......................................... 35,000 (2)
Paul E. Vincent....................................... 22,259 (2)
Executive Officers and Directors
as a group (11 persons).............................. 306,307 2.9%
Harvey Kaylie and Gloria W. Kaylie(3)................. 1,541,200 14.7%
13 Neptune Avenue,
Brooklyn NY 11235
Westport Asset Management(4).......................... 635,250 6.0%
253 Riverside Avenue,
Westport, CT 06880
Merrill Lynch & Co., Inc.,(5)......................... 619,300 5.9%
250 Vesey Street,
World Financial Center, North Tower,
New York, New York 10281
</TABLE>
- --------
(1) Includes certain shares for each listed individual and group as follows:
Aldrich--1,105 shares in his account under the Company's Savings and
Retirement Plan (hereinafter referred to as the "401(K) Plan") and 39,000
shares subject to currently exercisable stock options; Gillard--1,261
shares in his account under the 401(K) Plan and 12,001 shares subject to
currently exercisable stock options; Kariotis--3,745 shares in his account
under the Company's 401(K) Plan; Leonard--1,742 shares in his account
under the 401(K) Plan and 95,000 shares subject to currently exercisable
stock options; Pappas--4,000 shares subject to currently exercisable stock
options; Shamie--4,000 shares subject to currently exercisable stock
options; Topol--1,000 shares subject to currently exercisable stock
options; Vincent--2,509 shares in his account under the 401(K) Plan and
7,500 shares subject to currently exercisable stock options; Executive
Officers and Directors as a Group--11,198 shares in accounts under the
401(K) Plan and 182,501 shares subject to
4
<PAGE>
currently exercisable stock options. Directors and officers have voting
power over the shares listed in accounts under the 401(K) Plan.
(2) Less than one percent.
(3) As reported in a Schedule 13D, as amended, dated September 19, 1990,
Scientific Components Corporation ("Scientific"), as of September 19,
1990, was the record and beneficial owner of 1,508,300 shares of the
Company's Common Stock, and the pension and profit sharing plans of
Scientific were the record and beneficial owners of 32,900 shares. Harvey
Kaylie and his wife, Gloria W. Kaylie, are each directors, officers and
principal stockholders of Scientific and trustees of the pension and
profit sharing plans, and may be deemed to be the beneficial owners of the
shares held of record by Scientific and its pension and profit sharing
plans. Mr. and Mrs. Kaylie have shared power to vote and dispose of all of
the aforementioned shares. See "CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS."
(4) As reported in a Schedule 13G dated February 19, 1998, in which Westport
Asset Management, Inc. claimed sole voting and dispositive power with
respect to 4,100 shares and shared voting and dispositive power with
respect to 631,150 shares. Westport Asset Management, Inc. disclaims
beneficial ownership with respect to the shares reported in the filing.
(5) As reported in a Schedule 13G dated January 14, 1998. Merrill Lynch & Co.,
Inc. ("ML&Co."), Merrill Lynch Group, Inc. ("ML Group"), and Princeton
Services, Inc. ("PSI") are parent holding companies. ML Group and PSI,
which is the general partner of Fund Asset Management, L.P. ("FAM"), are
subsidiaries of ML&Co. FAM acts as an investment advisor to Merrill Lynch
Special Value Fund, Inc., which is the beneficial owner of 606,400 shares.
Each of FAM and Merrill Lynch Special Value Fund, Inc. claimed shared
voting and dispositive power in 606,400 shares. ML&Co., ML Group and PSI
each claimed shared voting and dispositive power in 619,300 shares.
ML&Co., ML Group, PSI and FAM disclaim beneficial ownership with respect
to the shares reported in the filing. The address of ML Group is the same
as ML&Co., and the address of PSI, FAM and Merrill Lynch Special Value
Fund, Inc. is 800 Scudders Mill Road, Plainsboro, New Jersey 08536.
5
<PAGE>
EXECUTIVE COMPENSATION
The following Summary Compensation Table sets forth the compensation of the
Chief Executive Officer and each of the four most highly compensated executive
officers of the Company for each of the Company's last three fiscal years.
Information with respect to certain of the executive officers does not appear
for all three fiscal years because such officers were not executive officers
during all such fiscal years. All of the executive officers listed in the
Table are collectively referred to as the "Named Executive Officers".
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
------------------- ---------------------
SECURITIES
NAME AND FISCAL RESTRICTED UNDERLYING ALL OTHER
PRINCIPAL YEAR SALARY BONUS STOCK OPTIONS COMPENSATION
POSITION ENDED ($) ($)(1) AWARDS (#)(2) ($)(3)
--------- ------- --------- --------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Thomas C. Leonard......... 3/29/98 $ 260,768 $ 165,000 -- 50,000 $15,892
President, Chief 3/30/97 $ 216,923 -- -- 50,000 $ 6,347
Executive Officer 3/31/96 $ 160,577 -- -- -- $ 1,633
David J. Aldrich.......... 3/29/98 $ 187,693 $ 100,000 -- 25,000 $ 4,791
Vice President 3/30/97 $ 166,538 -- -- 10,000 --
3/31/96 $ 135,577 -- -- 35,000 $ 1,883
Richard Langman(4)........ 3/29/98 $ 200,000 $ 100,000 -- -- $32,214(5)
Vice President, 3/30/97 $ 30,769 -- -- 100,000 $33,333(5)
President of Trans-Tech, 3/31/96 -- -- -- -- --
Inc.
Paul E. Vincent(6)........ 3/29/98 $ 130,000 $ 80,000 -- -- $ 6,462
Vice President, 3/30/97 $ 107,530 -- -- 24,000 $ 260
Treasurer, Chief 3/31/96 -- -- -- -- --
Financial Officer
Jean Pierre Gillard(7).... 3/29/98 $ 158,847 $ 80,000 -- -- $ 6,114
Vice President 3/30/97 $ 148,293 -- -- 20,000 --
3/31/96 -- -- -- -- --
</TABLE>
- --------
(1) Payments to the Named Executive Officers under the Alpha Incentive
Compensation Program are based on a system of incentive compensation for
superior performance as determined by the Compensation Committee. Bonuses
for fiscal 1998 were accrued, but were not distributed until fiscal 1999.
(2) Represents options to purchase shares of Common Stock granted under the
1986 Long-Term Incentive Plan (the "1986 Plan") and the 1996 Plan.
(3) Represents premiums paid by the Company for various term life and whole
life insurance policies for the Named Executive Officers and the Company's
contributions in fiscal 1996 to the employee's account under the 401(K)
Plan. The Company's contribution to the 401(K) Plan for fiscal 1998 was
accrued and included above, but was not distributed until fiscal 1999.
(4) Mr. Langman joined the Company and became an executive officer of the
Company on January 28, 1997.
(5) Includes $28,291 and $33,333 for relocation expenses paid by the Company
to Mr. Langman during fiscal 1998 and fiscal 1997, respectively.
(6) Mr. Vincent became an executive officer of the Company on January 28,
1997.
(7) Mr. Gillard became an executive officer of the Company on June 27, 1996.
6
<PAGE>
The following table sets forth certain information with respect to stock
options granted to the Named Executive Officers during the fiscal year ended
March 29, 1998.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
-------------------------------------------
POTENTIAL REALIZABLE
NUMBER OF VALUE AT ASSUMED
SECURITIES % OF TOTAL ANNUAL RATES OF STOCK
UNDERLYING OPTIONS EXERCISE PRICE APPRECIATION FOR
OPTIONS GRANTED TO OR BASE OPTION TERM (2)
GRANTED EMPLOYEES IN PRICE EXPIRATION -----------------------
NAME (#)(1) FISCAL YEAR ($/SH) DATE 5% 10%
---- ---------- ------------ -------- ---------- -- ------------
<S> <C> <C> <C> <C> <C> <C>
Thomas C. Leonard....... 50,000 19.2% $15.00 08/07/07 $ 471,671 $ 1,195,307
David J. Aldrich........ 25,000 9.6% $8.375 06/27/07 $ 131,675 $ 333,690
Richard Langman......... -- -- -- -- -- --
Paul E. Vincent......... -- -- -- -- -- --
Jean Pierre Gillard..... -- -- -- -- -- --
</TABLE>
- --------
(1) The options were granted under the 1996 Plan, and are subject to a vesting
schedule pursuant to which, in general, the options become exercisable at
a rate of 20% per year commencing one year after the date of grant
provided the holder of the option remains employed by the Company. Options
may not be exercised beyond 90 days after the holder ceases to be employed
by the Company, except in the event of termination by reason of death,
retirement or permanent disability, in which event the option may be
exercised for up to one year following termination.
(2) The assumed rates are compounded annually for the full term of the
options.
The following table sets forth certain information with respect to the
exercise of stock options and the aggregate number and value of stock options
exercisable and unexercisable by the Named Executive Officers as of March 29,
1998.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
<TABLE>
<CAPTION>
SHARES NUMBER OF SECURITIES
ACQUIRED ON VALUE UNDERLYING VALUE OF UNEXERCISED
EXERCISE REALIZED UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
NAME (#) ($) MARCH 29, 1998 (#) MARCH 29, 1998 ($)(1)
---- ----------- -------- ------------------------- -------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Thomas C. Leonard....... -- -- 85,000 90,000 $1,050,000 $340,000
David J. Aldrich........ -- -- 25,000 75,000 $ 146,375 $481,125
Richard Langman......... -- -- 20,000 80,000 $ 160,000 $640,000
Paul E. Vincent......... 2,000 $23,375 8,400 20,100 $ 40,550 $158,075
Jean Pierre Gillard..... 6,332 $87,431 4,000 26,669 $ 24,500 $165,349
</TABLE>
- --------
(1) Based upon the $15.50 closing price of the Company's Common Stock on March
29, 1998 on the American Stock Exchange minus the respective option
exercise price.
7
<PAGE>
LONG-TERM COMPENSATION PLAN
The Company's Long-Term Compensation Plan (the "Long-Term Compensation
Plan") is a non-qualified supplemental executive retirement plan (SERP)
providing deferred compensation for senior executives designated by the
Compensation Committee. The following table illustrates the approximate level
of benefits payable to a participant under the Long-Term Compensation Plan who
retires at age 65 and receives his or her benefit in the form of a single life
annuity. The amounts shown do not reflect any reduction for Offset Amounts, as
defined below.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
HIGHEST 12 MONTHS YEARS OF SERVICE
BASE PAY DURING ---------------------------------------------------------------
FINAL 36 MONTHS 1 5 10 15 OR MORE
----------------- ------- ------- -------- ----------
<S> <C> <C> <C> <C>
$100,000 $ 3,333 $16,667 $ 33,333 $ 50,000
$150,000 $ 5,000 $25,000 $ 50,000 $ 75,000
$200,000 $ 6,667 $33,333 $ 66,667 $100,000
$250,000 $ 8,333 $41,667 $ 83,333 $125,000
$300,000 $10,000 $50,000 $100,000 $150,000
</TABLE>
The benefit payable under the Long-Term Compensation Plan is based upon a
straight life annuity beginning at age 65 equal to 50% of a participant's
regular base pay during the highest 12 consecutive months within the 36 month
period immediately preceding the participant's retirement. The benefit is
ratably reduced if the participant retires with less than 15 Years of Service
as a full time employee following October 1, 1990 or retires prior to age 65.
The cash benefit payable to a participant is offset by the sum of (i) certain
matching Company contributions to the 401(K) Plan and (ii) 50% of the value of
an annuity which could be purchased using the gain from exercised stock
options or, in certain cases, stock options which are then exercisable, which
have been designated by the Compensation Committee as options to be offset
(the "Offset Amounts"). The cash benefit is not subject to offset for social
security benefits.
If a participant elects to retire before age 65 and to begin receiving
benefits immediately, or if a participant elects a joint and survivor benefit,
the amount of the benefit is actuarially adjusted. Alternatively, the
participant may elect to take a lump sum distribution of an actuarially
equivalent amount. If a participant dies prior to retirement, his or her
beneficiary is entitled to a ten year annuity at a rate equal to 25% of the
participant's base pay, less the value of the Offset Amounts.
During the fiscal year ended March 29, 1998, only Mr. Leonard participated
in the Long-Term Compensation Plan. The compensation amount that would have
been included in base compensation for purposes of calculating the benefit
under the Long-Term Compensation Plan for Mr. Leonard was $260,768. At year
end, Mr. Leonard had three Years of Service under the Long-Term Compensation
Plan.
EXECUTIVE COMPENSATION PLAN
The Company's Executive Compensation Plan (the "Executive Compensation
Plan") is an unfunded, non-qualified deferred compensation plan for the
purpose of providing deferred compensation for selected management employees.
Participants may elect to defer a portion of their compensation, and the
Company, in its sole discretion, may make additional contributions to the
account of a participant on such terms as the Company specifies. All deferred
amounts are held in a trust. Participants defer recognizing taxable income on
the amount held for their benefit until the amounts are paid.
A participant elects the date at which the deferrals and vested Company
contributions will be paid to the participant. Special rules are provided for
distributions in the case of a participant's death or disability, a change in
control of the Company, early retirement, or in the event of unforeseen
emergencies, all as defined in the Executive Compensation Plan. During the
fiscal year ended March 29, 1998, Mr. Langman, Mr. Aldrich and
8
<PAGE>
Mr. Gillard participated in the Executive Compensation Plan. The Company did
not make any discretionary contributions to their accounts for fiscal 1998.
EMPLOYMENT AGREEMENTS
The Company has Severance Agreements with certain of the Named Executive
Officers, under which they are entitled to receive various benefits in the
event that they are terminated under specified circumstances, as described
below.
If Mr. Leonard is terminated or quits within two years after a change in
control of the Company, he will receive a lump sum payment equal to two times
his annual salary. If he is terminated without cause or quits for good reason
at any other time, he will receive two years of salary continuation. In all
such cases, all of his stock options will vest immediately. If Mr. Leonard
retires within twelve months after September 30, 1999, the Company will enter
into a two year consulting arrangement with him at a consulting fee equal to
his salary and all of his stock options will vest immediately. The term of Mr.
Leonard's severance agreement is indefinite.
If Mr. Aldrich is terminated or quits within two years after a change in
control of the Company, he will receive two years of salary continuation. If
he is terminated without cause at any other time, he will receive one year of
salary continuation. In all such cases, all of his stock options will vest
immediately. The term of Mr. Aldrich's agreement is indefinite.
If Mr. Langman is terminated or quits within two years after a change in
control of the Company, or if he is terminated at any time without good cause,
he will receive two years of salary continuation. In all such cases, all of
his stock options will vest immediately. The term of Mr. Langman's agreement
is indefinite.
If Mr. Vincent is terminated within one year after a change in control of
the Company, he will receive one year of salary continuation. Mr. Vincent's
Agreement expires on August 22, 1998.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company are paid a quarterly retainer
of $3,375 plus an additional $1,000 for each full-day meeting (including
separate committee meetings) attended. Directors who serve as Chairman of a
committee of the Board of Directors receive an additional quarterly retainer
of $250. In addition, each new non-employee director receives an option to
purchase 15,000 shares of Common Stock immediately following the earlier of
the Company's Annual Meeting of Stockholders at which said director is first
elected by the stockholders or following his appointment by the Board of
Directors. In addition, following each Annual Meeting of Stockholders each
director who is continuing in office receives an option to purchase 5,000
shares of Common Stock. The exercise price of stock options granted to
Directors is fair market value on the day of grant.
In August 1992, the Company entered into a consulting arrangement with Mr.
Topol pursuant to which Mr. Topol will provide consulting services to the
Company in return for a fee of $7,000 per quarter.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors consists of Mr. Topol,
Mr. Furey and Mr. Shamie. No member of the Compensation Committee is a former
or current officer or employee of the Company or any of its subsidiaries. See
"Compensation Committee Report on Executive Compensation."
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is responsible for
developing and making recommendations to the Company with respect to policies
for executive officer compensation. The Compensation Committee determines the
compensation to be paid to the Chief Executive Officer and each of the other
executive officers of the Company.
9
<PAGE>
The Company, based on the recommendations of the Compensation Committee, has
entered into severance agreements with each of Mr. Leonard, Mr. Aldrich, Mr.
Langman and Mr. Vincent. Such agreements do not guarantee salary, position or
benefits, but provide salary continuation in the event of a termination after
a change in control or certain other terminations, as described under the
heading "Employment Agreements" in this Proxy Statement.
The objective of the Compensation Committee in determining the type and
amount of executive compensation is to provide a level of compensation that
allows the Company to attract and retain superior talent, to achieve its
business objectives, and to align the financial interests of the executive
officers with the stockholders of the Company. The elements of compensation
for the executives are base salary, short-term cash incentives, long-term
stock-based incentives, and retirement plans.
Compensation for the Company's Chief Executive Officer and the other
executives, including salary and short and long-term incentives, is
established at levels that are competitive with the compensation of comparable
executives in similar companies. The Compensation Committee periodically
utilizes studies from Watson Wyatt Worldwide and other compensation experts on
executive compensation in comparable high technology and manufacturing
companies, especially those located in the Greater Boston area and the east
coast of the United States. Based on these studies, the Compensation Committee
establishes base salaries, and expected short-term and long-term incentive
compensation, so as to set the combined value near the median of the range
indicated by the studies. In establishing individual compensation, the
Compensation Committee also considers the individual experience and
performance of the executive, as well as the performance of the Company. The
Compensation Committee also relies on the recommendations of the Chief
Executive Officer for determining the salaries for the other executives.
Short-term incentive compensation for each executive is established annually
by the Compensation Committee, by tying a percentage of each executive's total
cash compensation to the accomplishment of specific financial objectives for
the Company and for each division.
Long-term, stock-based incentive compensation has been provided under the
1986 Long Term Incentive Plan (the "1986 Plan") and the 1996 Plan
(collectively, the "Option Plans"). The 1986 Plan expired in December 1996,
and the 1996 Plan was approved by the Company's stockholders in September
1996. Under the Option Plans, the Committee has, in the past, awarded
nonqualified stock options, incentive stock options and restricted stock
awards. Restricted stock awards involve the issuance of shares of Common Stock
which may not be transferred or otherwise encumbered, subject to certain
exceptions, for varying amounts of time, and which will be forfeited, in whole
or in part, if the employee leaves the Company. Options and restricted share
awards provide a method of tying the value of the executive's compensation to
the value of the Company's Common Stock.
The Company also permits executives and other employees to purchase Company
Common Stock through the Employee Stock Purchase Plan at a discount. Under the
401(K) Plan, the Company can also match a portion of the contributions of
executives and other employees with grants of Company Common Stock.
The stock ownership afforded under the 1996 Plan, the Stock Purchase Plan
and the 401(K) Plan allows executives to acquire a significant, long-term
stock ownership position in the Company, which serves to align the executives'
interests with stockholders' interests.
The final component of executive compensation provides executives with
deferred income. Executives designated by the Compensation Committee
participate in the Long-Term Compensation Plan and the Executive Compensation
Plan which are discussed under "Long-Term Compensation Plan" and "Executive
Compensation Plan" above. Executives may also participate in the 401(K) Plan.
During fiscal 1998, Mr. Leonard and Mr. Aldrich were the only Named Executive
Officers to participate in the Long-Term Compensation Plan, each of whom
received, as Offset Amounts under the 1996 Plan, options to purchase 50,000
and 25,000 shares of Common Stock, respectively, at exercise prices of $15.00
and $8.375 per share, respectively. During fiscal 1998, Mr. Langman, Mr.
Aldrich and Mr. Gillard participated in the Executive Compensation Plan.
10
<PAGE>
During fiscal 1998, the Compensation Committee established the compensation
of Thomas C. Leonard, the President and Chief Executive Officer of the
Company, using the same criteria that were used to determine the compensation
of the other executive officers, as described above. Mr. Leonard received a
salary of $260,768 and received the options to purchase 50,000 shares of
Common Stock at an exercise price of $15.00 per share under the Long-Term
Compensation Plan. Based on a study prepared by Watson Wyatt Wordwide, Mr.
Leonard's total compensation for fiscal 1998 was in the middle range of
executives of similar companies.
Report Submitted
Compensation Committee
By: _________________________________
Sidney Topol, Timothy R. Furey
and Raymond Shamie
11
<PAGE>
PERFORMANCE GRAPH
The following graph shows the yearly change in the Company's cumulative
total stockholder return for fiscal years ended April 3, 1994, April 2, 1995,
March 31, 1996, March 30, 1997 and March 29, 1998, based upon the market price
of the Company's Common Stock, compared with: (i) the cumulative total return
on the Standard & Poor's 500 Index and (ii) the Standard & Poor's Technology
500 Index.
COMPARISON OF CUMULATIVE TOTAL RETURN
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C>
Alpha Industries Inc. $100 $108.70 $391.30 $302.16 $213.04 $530.43
S&P 500 Index $100 $101.47 $117.27 $154.92 $185.63 $274.73
Technology-500 $100 $117.62 $148.84 $200.95 $271.66 $410.57
</TABLE>
The above graph assumes a total initial investment of $100 as of March 28,
1993, and shows a "Total Return" that assumes reinvestment of dividends and is
based on market capitalization at the beginning of each period.
On June 2, 1998, the Company ceased trading on the American Stock Exchange
and began trading on the Nasdaq National Market.
12
<PAGE>
PROPOSAL 2
APPROVAL OF PROPOSAL TO AMEND THE ALPHA INDUSTRIES, INC.
1996 LONG-TERM INCENTIVE PLAN
The Alpha Industries, Inc. 1996 Long-Term Incentive Plan (the "1996 Plan")
was adopted by the Company's Board of Directors and approved by the Company's
stockholders in September 1996. A total of 600,000 shares are authorized for
issuance under the 1996 Plan, as approved. As of the date of this Proxy
Statement, there were stock options outstanding under the 1996 Plan covering
553,400 shares of Common Stock, 4,043 restricted shares had been issued, and
52,707 shares remained available for future awards under the 1996 Plan.
Proposed Amendments
Because of the shortage of shares remaining available for future awards
under the 1996 Plan, on April 23, 1998, the Company's Board of Directors
adopted amendments to the 1996 Plan to: (i) increase the number of shares
issuable under the 1996 Plan by 800,000, (ii) require that the exercise price
of all stock options issued under the 1996 Plan be not less than the greater
of the fair market value as of the date of grant or par value of the shares of
Common Stock, (iii) limit to a total of 200,000 the number of restricted
shares that may be issued under the 1996 Plan, all subject to approval by the
Company's stockholders, (iv) change the requirements for membership on the
Committee which administers the 1996 Plan (the "Committee" as defined below)
to non-employee directors to comport with the current rules under Section
16(b) of the Securities Exchange Act of 1934, as amended (the "Exchange Act");
and (v) eliminate the requirement of stockholder approval for certain
amendments to the 1996 Plan which approval is no longer required under the
current rules under Section 16(b) of the Exchange Act.
The Board of Directors believes that it is in the best interests of the
Company and its stockholders to have an adequate number of shares of Common
Stock available for awards under the 1996 Plan to provide equity incentives to
key employees. The 1996 Plan currently does not require that nonqualified
stock options be priced at fair market value. The Board of Directors believes
that nonqualified stock options would not provide appropriate incentives to
employees if they have exercise prices at below fair market value.
Consequently, the proposed amendments to the 1996 Plan require that the
exercise price of all stock options issued under the 1996 Plan be not less
than the greater of fair market value on the date of grant or par value of the
Common Stock. The 1996 Plan permits two forms of awards, stock options and
restricted shares as more fully described under "Summary of 1996 Plan", below.
The Board of Directors believes that stock options will be the appropriate
form of award more often than restricted shares. Therefore, in connection with
increasing the number of shares of Common Stock available for issuance under
the 1996 Plan, it is limiting the total number of restricted shares which may
be issued under the 1996 Plan. The Board of Directors also determined that
since the Company is seeking the approval of stockholders for these amendments
to the 1996 Plan for additional shares of Common Stock, it is also in the best
interest of the Company and its stockholders to amend the 1996 Plan to comport
with the current rules under Section 16(b) of the Exchange Act which provide
more flexibility in the administration of the 1996 Plan than under the prior
rules.
Competition for highly qualified individuals within the wireless
semiconductor industry is intense, and to successfully attract and retain the
best candidates, the Company must continue to offer a competitive equity
incentive program as an essential component of its compensation packages.
Without the proposed increase in shares available for grant, the Company will
be unable to continue to attract and retain the best individuals on a world-
wide basis.
The 1996 Plan is intended to offer a significant incentive by enabling key
employees to acquire options to purchase Common Stock at a price equal to its
fair market value on the date the option is granted. The options will become
valuable to the recipients only if the price of the Company's Common Stock
appreciates following the grant and when such options have vested. By
providing key employees with the opportunity to acquire an
13
<PAGE>
equity interest in the Company over time and because benefit is only received
through improved stock performance, the Company believes that stock options
serve to align the interests of key employees closely with other stockholders.
Summary of 1996 Plan
The following summary of the 1996 Plan, as proposed to be amended, is
qualified in its entirety by reference to the full text of the 1996 Plan, as
so amended, which is set forth as Exhibit A.
Purposes. The 1996 Plan is intended to provide employees and other persons
who are in a position to contribute to the long-term success of the Company
with long-term incentives and rewards, to assist the Company in attracting and
retaining executives and key employees with requisite experience and ability
and to associate more closely the interests of such executives and key
employees with those of the Company's stockholders.
Administration. The 1996 Plan is administered by the Compensation Committee
(the "Committee"). The Committee serves at the pleasure of the Board of
Directors which may discharge any member, appoint new members or fill
vacancies. Subject to stockholder approval, to the extent required by Rule
16b-3 under the Exchange Act, each member of the Committee while a member
thereof must be a Non-Employee Director as defined in Rule 16b-3 of the
Exchange Act.
Stock Available for Awards. Subject to stockholder approval, a maximum of
1,400,000 shares of Common Stock will be available for issuance under the 1996
Plan. Of that amount, subject to stockholder approval, only 200,000 shares of
Common Stock will be available for restricted share awards under the 1996
Plan. The shares of Common Stock to be delivered under the 1996 Plan may be
either authorized but unissued shares or treasury shares. Any shares subject
to an option under the 1996 Plan which for any reason terminates, is canceled
or otherwise expires unexercised, any shares reacquired by the Company due to
restrictions imposed on the shares, shares returned because payment is made
under the 1996 Plan in Common Stock of equivalent value rather than in cash,
and shares reacquired from a recipient for any other reason, shall no longer
count towards the aggregate number of shares which may be the subject of stock
options or restricted share awards and such number of shares may be subject to
further awards under the 1996 Plan.
Eligibility; Grant of Awards. Subject to the terms of the 1996 Plan, the
Committee has the authority and sole discretion to determine those key
employees and other individuals eligible to participate in the 1996 Plan,
select to whom awards will be granted, determine the size and form of awards
and the times that awards are to be granted, establish the terms under which
awards will be made and make or alter any restrictions or conditions on any
award and adopt such rules and regulations, establish, define and interpret
other terms and conditions and make all other determinations necessary or
desirable for the administration of the 1996 Plan. Under the 1996 Plan, the
Company may grant incentive stock options intended to qualify under Section
422 of the Internal Revenue Code of 1986, as amended ("incentive stock
options"), other options which are not qualified as incentive stock options
("nonqualified stock options") and restricted share awards. Incentive stock
options may only be granted to employees.
Stock Option Awards; Price; Exercise; Restrictions. Stock options are rights
to purchase shares of the Company's Common Stock at a fixed price for a
predetermined period of time. The 1996 Plan authorizes the Committee to
determine the number of shares of Common Stock to be covered by each option,
the purchase or exercise price of Common Stock subject to such options and the
term of each option, which may not be longer than ten (10) years after the
date of grant. Subject to stockholder approval, the exercise price of all
options granted under the 1996 Plan may not be less than the greater of fair
market value on the date of grant of such option or par value of the shares of
Common Stock. The purchase price must be paid in full upon exercise either in
cash or, at the Committee's discretion, by delivery of shares of Common Stock,
any other property or any combination of cash, stock and other property. No
stock option or any rights or interests of the recipient therein may be
assignable or transferable by such recipient except by will or the laws of
descent and distribution. During
14
<PAGE>
the lifetime of a recipient, a stock option may be exercisable only by the
recipient thereof. The aggregate fair market value of the Common Stock (at the
time of grant of any incentive stock option) with respect to which incentive
stock options are exercisable for the first time by any employee during any
calendar year under all plans of the Company and any subsidiaries may not
exceed $100,000. At the Committee's discretion, the Common Stock issued
pursuant to stock options granted under the 1996 Plan may be subject to
restrictions on vesting or transferability.
Stock Option Awards; Rights in the Event of Termination or Death. In the
event of the death, retirement or permanent disability of the recipient of a
stock option, the stock option may be exercised by the recipient or the
recipient's estate, to the extent exercisable on the date of death, disability
or retirement, provided that the period during which an incentive stock option
may be exercised shall not extend beyond the earlier of one year from the date
of such death, disability or retirement or the expiration date of the stock
option. If the recipient's employment is terminated for reasons other than
death, retirement or permanent disability, the period during which an
incentive stock option may be exercised shall not extend beyond three months
after the recipient leaves the Company, to the extent such stock option was
exercisable on the date of termination.
Restricted Share Awards. Restricted share awards are grants of restricted
shares. Restricted shares may be issued for any lawful consideration and on
such other terms as the Committee may determine. Restricted shares are held by
the recipient subject to certain restrictions on disposition which lapse over
time. With the consent of the Committee, restricted shares as to which
restrictions have not yet lapsed may be pledged or otherwise encumbered to
secure borrowing. Subject to stockholder approval, the total number of
restricted shares awarded under the 1996 Plan may not exceed 200,000.
Restricted Share Awards; Rights in the Event of Termination or Death. In the
event of the recipient's termination of employment for any reason except
death, retirement or permanent disability, the Company may repurchase all or a
portion of the restricted shares as to which restrictions have not already
lapsed for the recipient's original acquisition price, if any. The
restrictions against disposition and the obligation of resale to the Company
will lapse as to any restricted shares that the Company declines to purchase.
Upon the death, retirement or permanent disability of the recipient of a
restricted share award, the restrictions against disposition and the
obligation of resale to the Company of the restricted shares as to which such
restrictions and obligations have not otherwise lapsed will immediately lapse.
Indemnity. Neither the Board of Directors nor the Committee, nor any members
of either, nor any employees of the Company or any parent, subsidiary or other
affiliate, shall be liable for any act, omission, interpretation, construction
or determination made in good faith in connection with their responsibilities
with respect to the 1996 Plan. The Company will indemnify the members of the
Board of Directors, the members of the Committee and the employees of the
Company and its parent or subsidiaries in respect of any claim, loss, damage
or expense (including reasonable counsel fees) arising from any such act,
omission, interpretation, construction or determination to the full extent
permitted by law.
Amendment or Termination of the 1996 Plan. The Board of Directors may at any
time, amend, suspend or terminate the 1996 Plan; provided, however, if
Proposal 2 is approved by stockholders at the Meeting, in the case of
incentive stock options, and to the extent required by the Internal Revenue
Code, as amended, neither the Board of Directors nor the Committee may
increase the number of shares of Common Stock reserved for purposes of the
1996 Plan, or amend or modify the requirements to be a participant in the 1996
Plan without stockholder approval in compliance with the Internal Revenue
Code. No amendment, suspension or termination of the 1996 Plan may affect the
rights of a participant to whom an award has been granted without such
participant's consent.
Share Adjustments. If there is any change in the Common Stock through
merger, consolidation, reorganization, recapitalization, stock dividend, stock
split or other change in the corporate structure of the Company, appropriate
adjustments may be made by the Committee (or if the Company is not the
surviving Corporation in any transaction, the Board of Directors of the
surviving Corporation, or its designee) in the
15
<PAGE>
aggregate number and kind of shares subject to the 1996 Plan, and the number
and kind of shares and the price per share subject to outstanding options and
restricted shares.
Duration of the 1996 Plan. Awards may be made under the 1996 Plan for a
period of ten years commencing with the original adoption of the 1996 Plan and
ending on June 14, 2006. The period during which a stock option or other award
may be exercised, however, may extend beyond that time.
FEDERAL INCOME TAX CONSEQUENCES OF THE 1996 PLAN. The following general
discussion of the Federal income tax consequences of options and restricted
share awards granted under the 1996 Plan is based upon the provisions of the
Internal Revenue Code as in effect on the date hereof, current regulations
thereunder, and existing public and private administrative rulings of the
Internal Revenue Service (the "IRS"). This discussion is not intended to be a
complete discussion of all of the Federal income tax consequences of the 1996
Plan or of all of the requirements that must be met in order to qualify for
the tax treatment described herein. Changes in the law and regulations may
modify the discussion, and in some cases the changes may be retroactive. No
information is provided as to state tax laws. The 1996 Plan is not qualified
under Section 401 of the Code, nor is it subject to the provisions of the
Employee Retirement Income Security Act of 1974, as amended.
Nonqualified Stock Options Under the 1996 Plan. An option holder will not
recognize any taxable income upon the grant of a nonqualified stock option
under the 1996 Plan. Generally, an option holder recognizes ordinary taxable
income at the time a nonqualified stock option is exercised in an amount equal
to the excess of the fair market value of the shares of Common Stock on the
date of exercise over the exercise price. However, if (a) the Company imposes
restrictions on the shares which do not permit the recipient to transfer the
shares to others and which require the recipient to return the shares to the
Company at less than fair market value upon termination of employment prior to
a specified date, or (b) the recipient is an executive officer or director of
the Company subject to Section 16(b) of the Exchange Act ("Section 16(b)")
upon their sale of shares of Common Stock, then there may be a different tax
result. In either case, the recognition of income by the option holder may be
postponed. In general, the date on which taxable income (if any) is recognized
(the "Recognition Date") will be the date on which the shares of Common Stock
become "freely transferable" or not subject to "risk of forfeiture" in the
case of stock on which the Company has imposed restrictions. The IRS
regulations have not yet been amended to conform with the latest rules under
Section 16(b). However, it is generally anticipated that the Recognition Date
will be the earlier of (i) six months after the date the option was granted,
or (ii) the first day on which the sale of the shares would not subject the
individual to liability under Section 16(b), unless that date occurs before
the option is exercised, in which case the date of exercise will be the
Recognition Date. It is possible that the six month period will instead run
from the option holder's most recent grant or purchase of Common Stock prior
to his or her exercise of the option. The option holder will generally
recognize ordinary taxable income on the Recognition Date in an amount equal
to the excess of the fair market value of the shares at that time over the
exercise price.
Despite this general rule, if the Recognition Date is after the date of
exercise, then the option holder may make an election pursuant to Section
83(b) of the Code. In this case, the option holder will recognize ordinary
taxable income (if any) at the time the option is exercised and not on the
later date.
The Company will generally be entitled to a compensation deduction for
Federal income tax purposes in an amount equal to the taxable income
recognized by the option holder, provided the Company reports the income on a
form W-2 or 1099, whichever is applicable, that is timely provided to the
option holder and filed with the IRS.
When an option holder subsequently disposes of the shares of Common Stock
received upon exercise of a nonqualified stock option, he or she will
recognize long-term or short-term capital gain or loss (depending upon the
holding period), in an amount equal to the difference between the sale price
and the fair market value on the date on which the option holder recognized
ordinary taxable income as a result of the exercise of the nonqualified stock
option.
16
<PAGE>
An option holder who pays the exercise price for a nonqualified stock
option, in whole or in part, by delivering shares of Common Stock already
owned by him or her will recognize no gain or loss for Federal income tax
purposes on the shares surrendered, but otherwise will be taxed according to
the rules described above. To the extent the shares acquired upon exercise are
equal in number to the shares surrendered, the basis of the shares received
will be equal to the basis of the shares surrendered. The basis of shares
received in excess of the shares surrendered upon exercise will be equal to
the fair market value of the shares on the date of exercise, and the holding
period for the shares received will commence on that date.
Incentive Stock Options Under the 1996 Plan. An option holder generally will
not recognize taxable income upon either the grant or the exercise of an
incentive stock option. However, under certain circumstances, there may be
alternative minimum tax or other tax consequences, as discussed below.
An option holder will recognize taxable income upon the disposition of the
shares of Common Stock received upon exercise of an incentive stock option.
Any gain recognized upon a disposition that is not a "disqualifying
disposition" (as defined below) will be taxable as long-term capital gain.
A "disqualifying disposition" means any disposition of shares of Common
Stock acquired on the exercise of an incentive stock option within two years
of the date the option was granted or within one year of the date the shares
were issued to the option holder. The use of shares acquired pursuant to the
exercise of an incentive stock option to pay the option price under another
incentive stock option is treated as a disposition for this purpose. In
general, if an option holder makes a disqualifying disposition, an amount
equal to the excess of (a) the lesser of (i) the fair market value of the
shares on the date of exercise or (ii) the amount actually realized over (b)
the option exercise price will be taxable as ordinary income and the balance
of the gain recognized, if any, will be taxable as either long-term or short-
term capital gain, depending on the option holder's holding period for the
shares. In the case of a gift or certain other transfers, the amount of
ordinary income taxable to the option holder is not limited to the amount of
gain which would be recognized in the case of a sale. Instead, it is equal to
the excess of fair market value of the shares on the date of exercise over the
option exercise price.
As noted previously, the tax result may change if (a) the Company imposes
restrictions on the shares of Common Stock which do not permit the recipient
to transfer the shares to others and which require the recipient to return the
shares to the Company at less than fair market value upon termination of
employment prior to a specified date, or (b) the recipient is an executive
officer or director of the Company subject to Section 16(b). In the case of a
disqualifying disposition of shares acquired pursuant to the exercise of such
an incentive stock option, the date on which the fair market value of the
shares is determined will be postponed, and the tax consequences will be
similar to the treatment that applies to shares purchased pursuant to
nonqualified stock options granted under the 1996 Plan, including the ability
to make a Section 83(b) election.
In general, in the year an incentive stock option is exercised, the holder
must include the excess of the fair market value of the shares issued upon
exercise over the exercise price in the calculation of alternative minimum
taxable income. The application of the alternative minimum tax rules for an
option holder subject to Section 16(b) or who receives shares that are not
"substantially vested" are more complex and may depend upon whether the holder
makes a Section 83(b) election, as described above.
The Company will not be entitled to any deduction with respect to the grant
or exercise of an incentive stock option provided the holder does not make a
disqualifying disposition. If the option holder does make a disqualifying
disposition, the Company will generally be entitled to a deduction for Federal
income tax purposes in an amount equal to the taxable income recognized by the
holder, provided the Company reports the income on a form W-2 or 1099,
whichever is applicable, that is timely provided to the option holder and
filed with the IRS.
Restricted Share Awards Under the 1996 Plan. The 1996 Plan provides for
restrictions on the Restricted Shares which do not permit the recipient to
transfer the shares to others and which require the recipient to return the
shares to the Company at less than fair market value upon termination of
employment prior to a specified
17
<PAGE>
date. In addition, the recipient may be an executive officer or director of
the Company subject to Section 16(b). In either of these situations, the tax
treatment will be delayed until the restrictions lapse, as described above for
nonqualified stock options. At that time, the recipient will generally
recognize ordinary taxable income in an amount equal to the excess of the fair
market value of the shares on the date the restrictions lapse over the amount
that the recipient is required to pay (if anything). It is possible that if
the Company permits the holder of Restricted Shares to pledge the shares as
security for a loan, then the restrictions will be considered to have lapsed
at the time of such a pledge.
Alternatively, the recipient will be eligible to file a Section 83(b)
election to be taxed at the time the shares are received, rather than when the
restrictions lapse. The rules for making a Section 83(b) election are
described above in the section discussing nonqualified stock options.
Upon a subsequent sale of the shares, long-term or short-term gain or loss
(depending upon the holding period) will generally be recognized equal to the
difference between the amount realized and the fair market value of the shares
on the date they were acquired (if a Section 83(b) election was filed) or the
date the restrictions lapse (if no election was filed).
The Company will generally be entitled to a compensation deduction for
Federal income tax purposes in an amount equal to the taxable income
recognized by the recipient, provided the Company reports the income on a form
W-2 or 1099, whichever is applicable, that is timely provided to the option
holder and filed with the IRS.
AWARDS GRANTED UNDER THE 1996 PLAN
All of the stock options which were granted under the 1996 Plan during the
fiscal year ended March 29, 1998, are subject to a vesting schedule pursuant
to which, in general, the options become exercisable at a rate of 20% per year
commencing one year after the date of grant provided the holder of the options
remains employed by the Company.
Of the approximately 840 employees of the Company who are all entitled to
participate in the 1996 Plan, approximately 142 employees held options under
the 1996 Plan.
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<PAGE>
The following table sets forth the amounts that were granted to each of the
following under the 1996 Plan during the fiscal year ended March 29, 1998.
ALPHA INDUSTRIES, INC.
1996 LONG-TERM INCENTIVE PLAN
AWARDS GRANTED DURING THE FISCAL YEAR ENDED
MARCH 29, 1998(1)
<TABLE>
<CAPTION>
NUMBER OF SHARES
OF COMMON STOCK
NAME AND POSITION DOLLAR VALUE(2) SUBJECT TO OPTIONS
- ----------------- --------------- ------------------
<S> <C> <C>
Thomas C. Leonard.......................... 0 50,000
President, Chief Executive Officer
David J. Aldrich........................... 0 25,000
Vice President
Richard Langman............................ 0 0
Vice President,
President of Trans-Tech, Inc.
Paul E. Vincent............................ 0 0
Vice President, Treasurer,
Chief Financial Officer
Jean Pierre Gillard........................ 0 0
Vice President
Executive Officers as a Group.............. 0 90,000
Current Non-Employee Directors as a Group.. 0 0
All Employees who are not Executive Offi- 0 185,000
cers as a Group...........................
</TABLE>
- --------
(1) Since the grant of options under the 1996 Plan is within the authority and
control of the Committee, the benefits or amounts that may be received by
those listed in the table in the future are not determinable.
(2) Based upon the difference between the market value of the underlying
shares on the date of grant and the exercise price of the stock options.
This valuation does not take into account any appreciation in the market
value of the underlying shares which may occur over the term of the
options.
The closing price on the Nasdaq National Market on July 23, 1998 for shares
of the Company's Common Stock was $14.6875 per share.
VOTE REQUIRED TO APPROVE THE PROPOSAL TO AMEND THE 1996 LONG-TERM INCENTIVE
PLAN
An affirmative vote by the holders of a majority of the Common Stock present
in person or represented by proxy at the Meeting and entitled to vote is
required to approve the proposal to amend the 1996 Plan.
The Board of Directors recommends that the stockholders vote "FOR" the
proposal to amend the 1996 Plan.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Scientific Components Corporation, currently the record holder of 14.7% of
the Company's Common Stock, is a customer of the Company. During the fiscal
year ended March 29, 1998, Scientific Components Corporation purchased
approximately $8.9 million of the Company's products in the ordinary course of
business. See "Securities Beneficially Owned by Certain Persons".
19
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OTHER PROPOSED ACTION
As of the date hereof, the management of the Company knows of no business to
come before the Meeting other than the election of directors and the proposal
to amend the 1996 Plan. However, if any other business should properly be
presented to the Meeting, the proxies will be voted in respect thereof in
accordance with the judgment of the person or persons holding the proxies.
OTHER MATTERS
VOTING PROCEDURES
The votes of stockholders present in person or represented by proxy at the
Meeting will be tabulated by an inspector of elections appointed by the
Company. The representation in person or by proxy of at least a majority of
the shares of Common Stock outstanding on the record date is necessary to
constitute a quorum at the Meeting. Abstentions and broker "non-votes" are
each counted as present in determining whether a quorum is present. The two
nominees for director of the Company who receive the greatest number of votes
cast by stockholders present in person or represented by proxy at the Meeting
and entitled to vote thereon will be elected directors of the Company. The
affirmative vote of a majority of the shares of Common Stock present in person
or represented by proxy and entitled to vote at the meeting is required to
approve the proposal to amend the 1996 Plan.
Abstentions and broker "non-votes" will have no effect on the outcome of the
vote for the election of directors, but will have the effect of being cast
against the proposal to amend the 1996 Plan even though the stockholders so
abstaining intend a different interpretation. Shares of Common Stock held of
record by brokers who do not return a signed and dated proxy will not be
considered present at the Meeting, will not be counted towards a quorum and
will not be voted in the election of directors or on the proposal to amend the
1996 Plan.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed KPMG Peat Marwick LLP as the
independent certified public accountants to audit the consolidated financial
statements of the Company for the fiscal year ending March 28, 1999. Such firm
and its predecessors have served continuously in that capacity since 1974.
A representative of KPMG Peat Marwick LLP will be present at the Meeting and
will be afforded the opportunity to make a statement if he or she desires to
do so. Such representative is expected to be available to respond to
appropriate questions.
INCORPORATION BY REFERENCE
To the extent that this Proxy Statement has been or will be specifically
incorporated by reference into any filing by the Company under the Securities
Act of 1933, as amended, or the Exchange Act, the sections of the Proxy
Statement entitled "Compensation Committee Report on Executive Compensation"
and "Performance Graph" shall not be deemed to be so incorporated, unless
specifically otherwise provided in any such filing.
ANNUAL REPORT ON FORM 10-K
COPIES OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED
MARCH 29, 1998 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ARE
AVAILABLE TO STOCKHOLDERS WITHOUT CHARGE UPON WRITTEN REQUEST ADDRESSED TO
INVESTOR RELATIONS, ALPHA INDUSTRIES, INC., 20 SYLVAN ROAD, WOBURN,
MASSACHUSETTS 01801.
STOCKHOLDER PROPOSALS
Proposals which stockholders wish to include in the Company's proxy
materials relating to its 1999 Annual Meeting of Stockholders pursuant to Rule
14a-8 promulgated under the Exchange Act, must be received by the
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Company no later than April 1, 1999. If a proponent fails to notify the
Company by June 14, 1999 of a non-Rule 14a-8 shareholder proposal which it
intends to submit at the Company's 1999 Annual Meeting of Stockholders, the
proxy solicited by the Board of Directors with respect to such meeting may
grant discretionary authority to the proxies named therein to vote with
respect to such matter.
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EXHIBIT A
ALPHA INDUSTRIES, INC.
1996 LONG-TERM INCENTIVE PLAN
Section I. Purpose of the Plan.
The purposes of this Alpha Industries, Inc. 1996 Long-term Incentive Plan
(the "1996 Plan") are (i) to provide long-term incentives and rewards to those
key employees (the "Employee Participants") of Alpha Industries, Inc. (the
"Corporation") and its subsidiaries (if any), and any other persons other than
non-employee directors (the "Non-employee Participants") who are in a position
to contribute to the long-term success and growth of the Corporation and its
subsidiaries, (ii) to assist the Corporation in retaining and attracting
executives and key employees with requisite experience and ability, and (iii)
to associate more closely the interests of such executives and key employees
with those of the Corporation's stockholders. Notwithstanding the foregoing,
if Section 16, as defined in Section II, is applicable to the Corporation,
then any director of the Corporation who is, or within the past year was, a
member of the Committee, as defined in paragraph (a) of Section III, shall not
be eligible to receive any Stock Options.
Section II. Definitions.
"Code" is the Internal Revenue Code of 1986, as it may be amended from time
to time.
"Common Stock" is the $.25 par value common stock of the Corporation.
"Committee" is defined in Section III, paragraph (a).
"Corporation" is defined in Section I.
"Corporation ISOs" are all stock options (including 1996 Plan ISOs) which
(i) are Incentive Stock Options and (ii) are granted under any plans
(including this 1996 Plan) of the Corporation, a Parent Corporation and/or a
Subsidiary Corporation.
"Employee Participants" is defined in Section I.
"Fair Market Value" of any property is the value of the property as
reasonably determined by the Committee.
"Free Shares" are Restricted Shares as to which the restrictions against
disposition and the obligation of resale to the Corporation have lapsed.
"Incentive Stock Option" is a stock option which is treated as an incentive
stock option under Section 422 of the Code.
"1996 Plan" is defined in Section I.
"1996 Plan ISOs" are Stock Options which are Incentive Stock Options.
"Non-employee Participants" is defined in Section I.
"Non-qualified Option" is a Stock Option which does not qualify as an
Incentive Stock Option or for which the Committee provides, in the terms of
such option and at the time such option is granted, that the option shall not
be treated as an Incentive Stock Option.
"Parent Corporation" has the meaning provided in Section 424(e) of the Code.
"Participants" are all persons who are either Employee Participants or Non-
employee Participants.
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"Permanent and Total Disability" has the meaning provided in Section
22(e)(3) of the Code.
"Restricted Share Awards" are grants of Restricted Shares.
"Restricted Shares" are shares of Common Stock acquired by a Participant
subject to the restrictions set forth in Section IV.
"Section 16" means Section 16 of the Securities Exchange Act of 1934, as
amended, or any similar or successor statute, and any rules, regulations, or
policies adopted or applied thereunder.
"Stockholder Approval" means the affirmative vote of at least a majority of
the shares of Common Stock present and entitled to vote at a duly held meeting
of the stockholders of the Corporation, unless a greater vote is required by
state law or Section 16, if applicable to the Corporation, in which case such
greater requirement shall apply. Stockholder approval may be obtained by
written consent or other means, to the extent permitted by applicable state
law. Awards may be made hereunder prior to the date of, but subject to, such
approval.
"Stock Options" are rights granted pursuant to this 1996 Plan to purchase
shares of Common Stock at a fixed price.
"Subsidiary Corporation" has the meaning provided in Section 424(f) of the
Code.
"Ten Percent Stockholder" means, with respect to a 1996 Plan ISO, any
individual who directly or indirectly owns stock possessing more than 10% of
the total combined voting power of all classes of stock of the Corporation or
any Parent Corporation or any Subsidiary Corporation at the time such 1996
Plan ISO is granted.
Section III. Administration.
(a) The Committee. This 1996 Plan shall be administered by a compensation
committee designated by the Board of Directors of the Corporation, which may
include any persons (including any or all of the directors) designated by the
Board of Directors (the administering body is hereafter referred to as the
"Committee"). The Committee shall serve at the pleasure of the Board of
Directors, which may from time to time, and in its sole discretion, discharge
any member, appoint additional new members in substitution for those
previously appointed and/or fill vacancies however caused. A majority of the
Committee shall constitute a quorum and the acts of a majority of the members
present at any meeting at which a quorum is present shall be deemed the action
of the Committee. No person shall be eligible to be a member of the Committee
if that person's membership would prevent the plan from complying with Section
16, if applicable to the Corporation. At such time as any class of equity
security of the Corporation is registered pursuant to Section 12 of the
Securities Exchange Act of 1934, as amended (the "Act"), (i) the Committee
shall consist of at least two members of the Board of Directors and (ii) to
the extent required by Rule 16b-3 promulgated under the Act, each member of
the Committee while a member thereof shall be a "Non-Employee Director" as
defined in Rule 16b-3.
(b) Authority and Discretion of the Committee. Subject to the express
provisions of this 1996 Plan and provided that all actions taken shall be
consistent with the purposes of this 1996 Plan, and subject to ratification by
the Board of Directors only if required by applicable law, the Committee shall
have full and complete authority and the sole discretion to: (i) determine
those persons who shall constitute key employees eligible to be Employee
Participants; (ii) select the Participants to whom awards shall be granted
under this 1996 Plan; (iii) determine the size and the form of the award or,
if any, to be granted to any Participant; (iv) determine the time or times
such awards shall be granted including the grant of Stock Options and
Restricted Share Awards in connection with other awards made, or compensation
paid, to the Participant; (v) establish the terms and conditions upon which
such awards may be exercised and/or transferred, including the exercise of
Stock Options in connection with other awards made, or compensation paid, to
the Participant; (vi) make or alter any restrictions and conditions upon such
awards; and (vii) adopt such rules and regulations, establish, define and/or
interpret these and any other terms and conditions, and make all
determinations (which may be on a case-by-case basis)
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deemed necessary or desirable for the administration of this 1996 Plan.
Notwithstanding any provision of this 1996 Plan to the contrary, only Employee
Participants shall be eligible to receive 1996 Plan ISOs.
(c) Applicable Law. This 1996 Plan, and all awards shall be governed by the
law of the state in which the Corporation is incorporated.
Section IV. Awards.
Awards under this 1996 Plan may include Stock Options and Restricted Share
Awards, all as described herein.
(a) Stock Options.
(i) Form of Agreement. Stock Options shall be evidenced by a written
agreement between the Corporation and the Participant awarded the Stock
Option. This agreement shall be in such form, and contain such terms and
conditions (not inconsistent with this 1996 Plan) as the Committee may
determine. If the Stock Option described therein is not intended to be an
Incentive Stock Option, but otherwise qualifies as an Incentive Stock Option,
the agreement shall include the following, or a similar, statement: "This
stock option is not intended to be an Incentive Stock Option, as that term is
described in Section 422 of the Internal Revenue Code of 1986, as amended."
(ii) Period of Exercisability. Stock Options shall be for such periods as
may be determined by the Committee, provided that in the case of 1996 Plan
ISOs, the term of any such 1996 Plan ISO shall not extend beyond three months
after the time the Participant ceases to be an employee of the Corporation.
Notwithstanding the foregoing, the Committee may provide in a 1996 Plan ISO
that in the event of the Permanent and Total Disability or Death of the
Participant, the 1996 Plan ISO may be exercised by the Participant or his
estate (if applicable) for a period of up to one year after the date of such
Permanent and Total Disability or Death. In no event may a 1996 Plan ISO be
exercisable (including provisions, if any, for exercise in installments)
subsequent to ten years after the date of grant, or, in the case of 1996 Plan
ISOs granted to Ten Percent Stockholders, more than five years after the date
of grant.
(iii) Purchase Price and Payment. The purchase price of shares purchased
pursuant to any Stock Option shall be determined by the Committee, and shall
be paid by the Participant or other person permitted to exercise the Stock
Option in full upon exercise, (A) in cash, (B) by delivery of shares of Common
Stock (valued at their Fair Market Value on the date of such exercise), (C)
any other property (valued at its Fair Market Value on the date of such
exercise), or (D) any combination of cash, stock and other property, with any
payment made pursuant to clauses (B), (C) or (D) only as permitted by the
Committee, in its sole discretion. In no event will the purchase price of
Common Stock be less than the greater of Fair Market Value on the date of
issuance of the Stock Option or the par value of the Common Stock, provided
that in the case of 1996 Plan ISOs granted to Ten Percent Stockholders, the
purchase price shall not be less than 110% of the Fair Market Value of the
Common Stock on the date of issuance of the 1996 Plan ISO.
(iv) Incentive Options Over $100,000. To the extent that the aggregate Fair
Market Value of Common Stock with respect to which Corporation ISOs
(determined without regard to this section) are exercisable for the first time
by any Employee Participant during any calendar year exceeds $100,000, such
Corporation ISOs shall be treated as options which are not Incentive Stock
Options. For the purpose of this limitation, options shall be taken into
account in the order granted, and the Committee may designate that portion of
any Corporation ISO that shall be treated as not an Incentive Stock Option in
the event that the provisions of this paragraph apply to a portion of any
option, unless otherwise required by the Code or regulations of the Internal
Revenue Service. The designation described in the preceding sentence may be
made at such time as the Committee considers appropriate, including after the
issuance of the Stock Option or at the time of its exercise. For the purpose
of this section, Fair Market Value shall be determined as of the time the
option with respect to such stock is granted. For the purposes of this
limitation, options shall be taken into account in the order granted.
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<PAGE>
(v) Vesting and Transferability. At the discretion of the Committee, the
Common Stock issued pursuant to the Stock Options granted hereunder may be
subject to restrictions on vesting or transferability.
(b) Restricted Share Awards. Restricted Shares may be issued for any lawful
consideration and on such terms as may be determined by the Committee, subject
to the restrictions described in the following subsections.
(i) Nontransferability and Repurchase. Shares may not be sold, transferred
or otherwise disposed of, pledged or otherwise encumbered, except (A) if they
become Free Shares in accordance with their terms and the terms of this 1996
Plan, (B) if the Corporation declines to repurchase such shares, as provided
in this paragraph, or (C) as provided in paragraph (g) of Section VII. In the
event of the recipient's termination of employment for any reason except
death, retirement or permanent disability, Restricted Shares which have not
become Free Shares shall be delivered to the Corporation within 30 days
following such termination. Within 60 days following a timely delivery of said
shares, the Corporation may repurchase all or a portion of said shares by
paying to the recipient the original acquisition price, if any, for the number
of shares that the Corporation elects to purchase, and the Corporation will
return to the recipient any shares not so purchased. The restrictions against
disposition and the obligation of resale to the Corporation shall lapse as to
any shares which the Corporation declines to purchase. Any of such shares
which are not delivered to the Corporation within 30 days following the
termination of employment shall be deemed void for all corporate purposes, and
shall remain subject to the restrictions imposed thereon which restrictions
shall not lapse as otherwise provided. Nothing in this Section shall require
the Company to repurchase Restricted Shares issued to Participants under the
1996 Plan.
(ii) Transferability after Death, Retirement or Disability. Upon the
occurrence of the earlier of the death, retirement or permanent disability of
the recipient of a Restricted Share Award, the restrictions against
disposition and the obligation of resale to the Corporation of shares as to
which such restrictions and obligations have not otherwise lapsed shall
immediately lapse.
(iii) Terms of Restricted Shares Discretionary with Committee. In addition
to or in lieu of the terms provided in paragraph (b)(ii) above, the Committee
may, in its discretion, provide terms pursuant to which Restricted Shares
issued to a Participant shall become Free Shares. In this regard, the
Committee may, in its discretion, provide that the Restricted Shares shall
immediately become Free Shares upon issuance. Such terms shall be incorporated
into the terms of the Restricted Share Award at the time of the granting of
the award, and may also be made a part of an agreement between the Corporation
and the recipient at the time of the transfer of the Restricted Shares.
(iv) Registration and Legend. Certificates issued in respect of Restricted
Shares awarded under the 1996 Plan shall be registered in the name of the
recipient but shall bear the following legend if such Restricted Shares do not
immediately become Free Shares:
"The transferability of this certificate and the shares of stock
represented hereby is restricted and the shares are subject to the
further terms and conditions contained in the Alpha Industries, Inc.
1996 Long-Term Incentive Plan and in a repurchase agreement executed
pursuant thereto. Copies of said plan and agreement are on file in the
office of the Treasurer of the Company at the Company's offices in
Woburn, Massachusetts."
(v) Deposit of Restricted Shares. In order to enforce the restrictions,
terms and conditions on Restricted Shares, the Committee may in its discretion
require each recipient thereof, immediately upon receipt of a certificate or
certificates representing such shares, to deposit such certificates together
with stock powers and other instructions of transfer as the Committee may
require, appropriately endorsed in blank, with the Corporation as Escrow Agent
under an escrow agreement in such form as shall be determined by the
Committee.
(vi) Restricted Shares Subject to the Plan. Notwithstanding the provisions
of Section VI below, the total number of Restricted Shares which may be
awarded under this 1996 Plan shall not exceed 200,000.
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Section V. Amendment and Termination; Adjustments Upon Changes in Stock.
(a) Power to Amend and Restrictions on Amendment. The Board of Directors of
the Corporation may at any time, and from time to time, amend, suspend or
terminate this 1996 Plan in whole or in part; provided, however, that, in the
case of Incentive Stock Options, to the extent required by the Internal
Revenue Code, as amended, neither the Board of Directors nor the Committee may
amend or modify the definition of Employee Participants, or increase the
number of shares of Common Stock reserved for purposes of this 1996 Plan,
without Stockholder Approval in compliance with the Code and the rules and
regulations thereunder. Except as provided herein, no amendment, suspension or
termination of this 1996 Plan may affect the rights of a Participant to whom
an award has been granted without such Participant's consent. The Committee is
specifically authorized to convert, in its discretion, the unexercised portion
of any 1996 Plan ISO granted to an Employee Participant to a Non-qualified
Option at any time prior to the exercise, in full, of such 1996 Plan ISO.
(b) Merger or Consolidation. If the Corporation is a party to any merger or
consolidation, any purchase or acquisition of property or stock, or any
separation, reorganization or liquidation, the Board of Directors (or, if the
Corporation is not the surviving corporation, the board of directors of the
surviving corporation) shall have the power to make arrangements, which shall
be binding upon the holders of Restricted Shares and unexpired Stock Options,
for the substitution of new options for, or the assumption by another
corporation of, any Restricted Shares or unexpired Stock Options then
outstanding hereunder.
(c) Adjustment of Exercise Price after Corporate Event. If by reason of
recapitalization, reclassification, stock split-up, combination of shares,
separation (including a spin-off) or dividend on the stock payable in shares
of Common Stock, the outstanding shares of Common Stock are increased or
decreased or changed into or exchanged for a different number or kind of
shares or other securities of the Corporation, the Board of Directors shall
conclusively determine the appropriate adjustment in the exercise prices of
outstanding Stock Options and repurchase price of outstanding Restricted
Shares and in the number and kind of shares as to which outstanding Stock
Options shall be exercisable.
(d) Adjustment of Number of Shares after Corporate Event. In the event of a
transaction of the type described in paragraphs (b) and (c) above, the total
number of shares of Common Stock on which Stock Options or as to which
Restricted Shares may be granted under this 1996 Plan shall be appropriately
adjusted by the Board of Directors.
Section VI. Shares of Stock Subject to the Plan.
The number of shares of Common Stock that may be the subject of awards under
this 1996 Plan shall not exceed an aggregate of 1,400,000 shares. Shares to be
delivered under this 1996 Plan may be either authorized but unissued shares of
Common Stock or treasury shares. Any shares subject to a Stock Option
hereunder which for any reason terminates, is canceled or otherwise expires
unexercised, shares reacquired by the Corporation because restrictions do not
lapse and any shares reacquired by the Corporation due to restrictions imposed
on the shares, shares returned because payment is made hereunder in stock of
equivalent value rather than in cash, and/or shares reacquired from a
recipient for any other reason shall, at such time, no longer count towards
the aggregate number of shares which have been the subject of Stock Options
and Restricted Shares issued hereunder, and such number of shares shall be
subject to further awards under this 1996 Plan.
Section VII. Miscellaneous Provisions.
(a) Indemnity. Neither the Board of Directors nor the Committee, nor any
members of either, nor any employees of the Corporation or any parent,
subsidiary, or other affiliate, shall be liable for any act, omission,
interpretation, construction or determination made in good faith in connection
with their responsibilities with respect to this 1996 Plan, and the
Corporation hereby agrees to indemnify the members of the Board of Directors,
the members of the Committee, and the employees of the Corporation and its
parent or subsidiaries in respect of any claim, loss, damage, or expense
(including reasonable counsel fees) arising from any such act, omission,
interpretation, construction or determination to the full extent permitted by
law.
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(b) Participation by Foreigners. Without amending this 1996 Plan, except to
the extent required by the Code in the case of Incentive Stock Options, the
Committee may modify grants made to participants who are foreign nationals or
employed outside the United States so as to recognize differences in local
law, tax policy, or custom.
(c) Rights of Recipients of Awards. The holder of any Stock Option granted
under the 1996 Plan shall have no rights as a stockholder of the Corporation
with respect thereto unless and until certificates for shares are issued.
Except as otherwise provided herein, the holder of Restricted Shares will be
entitled to receive any dividends on such shares in the same amount and at the
same time as declared on shares of Common Stock of the Company and shall be
entitled to vote such shares as a stockholder of record.
(d) Assignment of Stock Options. No Stock Option or Restricted Shares or any
rights or interests of the recipient therein shall be assignable or
transferable by such recipient except by will or the laws of descent and
distribution. During the lifetime of the recipient, such Stock Option shall be
exercisable only by, or payable only to, the recipient thereof.
(e) Legal and Other Requirements. No shares of Common Stock shall be issued
or transferred upon grant or exercise of any award under the 1996 Plan unless
and until all legal requirements applicable to the issuance or transfer of
such shares and such other requirements as are consistent with the 1996 Plan
have been complied with to the satisfaction of the Committee. Furthermore, the
Corporation is not obligated to register or qualify Restricted Shares or the
shares of Common Stock to be issued upon exercise of a Stock Option under
federal or state securities laws (or to register them at any time thereafter),
and it may refuse to issue such shares if, in its sole discretion,
registration or exemption from registration is not practical or available. The
Committee may require that prior to the issuance or transfer of Common Stock
hereunder, the recipient thereof shall enter into a written agreement to
comply with any restrictions on subsequent disposition that the Committee or
the Company deem necessary or advisable under any applicable law, regulation
or official interpretation thereof. Certificates of stock issued hereunder may
be legended to reflect such restrictions.
(f) Withholding of Taxes. Pursuant to applicable federal, state, local or
foreign laws, the Corporation may be required to collect income or other taxes
upon the grant of awards to, or exercise of a Stock Option by, a holder. The
Corporation may require, as a condition to the issuance of Restricted Shares
or the exercise of a Stock Option, or demand, at such other time as it may
consider appropriate, that the Participant pay the Corporation the amount of
any taxes which the Corporation may determine is required to be withheld or
collected, and the Participant shall comply with the requirement or demand of
the Corporation. In its discretion, the Corporation may withhold shares to be
received upon exercise of a Stock Option if it deems this an appropriate
method for withholding or collecting taxes.
(g) Pledge of Shares. Notwithstanding restrictions against disposition of
any award made pursuant to the 1996 Plan, the Committee, in its discretion,
may permit any shares acquired under the 1996 Plan to be pledged or otherwise
encumbered to secure borrowing by the recipient thereof solely for the purpose
of obtaining the acquisition price to be paid for such shares, provided, that
the amount of such borrowing may not exceed the acquisition price of such
shares, and the recipient must provide the Corporation with a copy of the
documents executed in connection with such borrowing. Any borrowing made by
the recipient of an award pursuant to this paragraph (g) must permit the
Corporation to repay the outstanding indebtedness and reacquire the pledged
shares in the event of a default by the recipient under the borrowing
documents. Nothing in this paragraph (g) shall require the Corporation to
repay any indebtedness of a Participant or reacquire shares pledged hereunder.
(h) Right to Awards. No employee of the Corporation or other person shall
have any claim or right to be a Participant in this 1996 Plan or to be granted
an award hereunder. Neither this 1996 Plan nor any action taken hereunder
shall be construed as giving any Participant any right to be retained in the
employ of the Corporation. Nothing contained hereunder shall be construed as
giving any Participant or any other person any equity or interest of any kind
in any assets of the Company or creating a trust of any kind or a fiduciary
relationship of any kind between the Company and any such person. As to any
claim for any unpaid amounts under the 1996 Plan, any Participant or any other
person having a claim for payments shall be an unsecured creditor.
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Section VIII. Effective Date and Term of this Plan.
Provided there is Stockholder Approval on or before June 14, 1997, the
effective date of this 1996 Plan is June 14, 1996 (the "Effective Date") and
awards under this 1996 Plan may be made for a period of ten years commencing
on the Effective Date. The period during which a Stock Option or other award
may be exercised may extend beyond that time as provided herein.
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ALPHA INDUSTRIES, INC.
PROXY
The undersigned hereby appoints George S. Kariotis and James C. Nemiah, and each
of them, with full power of substitution, attorneys and proxies to represent the
undersigned at the Annual Meeting of Stockholders of Alpha Industries, Inc. to
be held on September 14, 1998, and at any adjournment or adjournments thereof,
with all power which the undersigned would possess if personally present, and to
vote all shares of stock which the undersigned may be entitled to vote at said
meeting upon the election of directors, and the proposal to amend the Alpha
Industries, Inc. 1996 Long-Term Incentive Plan, as more fully described in the
notice of and proxy statement for the meeting, in accordance with the following
instructions and with discretionary authority upon such other matters as may
come before the meeting. All previous proxies are hereby revoked.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. IT WILL BE VOTED AS
DIRECTED BY THE UNDERSIGNED AND IF NO DIRECTION IS INDICATED, IT WILL BE VOTED
FOR THE ELECTION OF THE NOMINEES AS DIRECTORS AND IN FAVOR OF PROPOSAL 2.
-----------
Continued, and to be signed on reverse side SEE REVERSE
(Please fill in the reverse side and mail in enclosed envelope) SIDE
-----------
_______________________________________________________________________________
[REVERSE SIDE]
[X] Please mark your votes as in this example.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES AS DIRECTORS AND FOR
PROPOSAL 2.
WITHHOLD AUTHORITY
FOR FROM BOTH Nominees:
BOTH NOMINEES NOMINEES George S. Kariotis
1. Election of [_] [_] Timothy R. Furey
Directors.
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW)
- ---------------------------------------------
2. Proposal to amend the Alpha Industries, Inc. 1996 Long Term Incentive Plan
FOR AGAINST ABSTAIN
[_] [_] [_]
MARK HERE MARK HERE
FOR ADDRESS IF YOU PLAN
CHANGE AND [_] TO ATTEND [_]
NOTE AT LEFT THE MEETING
Signature: ______________ Date ______ Signature _______________ Date _______
(Signature should be the same as the name printed hereon. Executors,
administrators, trustees, guardians, attorneys and officers of corporations
should add their names when signing)
<PAGE>
July 27, 1998
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, NW
Washington, D.C. 20549
Re: Alpha Industries, Inc.
Commission File No. 1-5560
Definitive Proxy Material
-------------------------
Ladies and Gentlemen:
On behalf of Alpha Industries, Inc. (the "Company"), attached hereto for
filing with the Securities and Exchange Commission via the EDGAR System is the
Company's Definitive Proxy Statement and form of Proxy to be used in connection
with the Company's Annual Meeting of Stockholders to be held on September 14,
1998 (the "Annual Meeting").
The enclosed Proxy Statement includes a proposal to amend the Company's
1996 Long-Term Incentive Plan. The Company intends to register under the
Securities Act of 1933, as amended, the additional shares of Common Stock
covered by the amendment shortly after the Annual Meeting.
The enclosed Definitive Proxy Statement and form of Proxy, along with the
Company's 1998 Annual Report to Stockholders, will be mailed to stockholders on
or around July 30, 1998.
Copies of the 1998 Annual Report to Stockholders will be submitted to the
Securities and Exchange Commission under separate cover.
If you have any questions regarding the enclosed Definitive Proxy Statement
and form of Proxy Statement, please call the undersigned at (617) 856-8313.
Very truly yours,
BROWN, RUDNICK, FREED & GESMER, P.C.
By: /s/Steven R. London
----------------------------------------------
Steven R. London
SRL: dmv
Enclosures
cc: James C. Nemiah, Esq.
