1
ALPHA INDUSTRIES, INC.
EXECUTIVE OFFICES
00 Xxxxxx Xxxx, X.X. Xxx 0000, Xxxxxx XX 00000 * (000)000-0000 * Fax: (000) 000-0000
[ALPHA LOGO]
April 1, 2001
Mr. Xxxxx Xxxxxxx
00 Xxxxx Xxxxxx
Xxxxxxx, XX 00000
Re: Severance Agreement
Dear Xxxx:
This letter sets out the severance arrangements concerning your employment with
Alpha Industries, Inc. ("Alpha").
1. CHANGE IN CONTROL
1.1 If: (i) a Change in Control occurs while you are employed by Alpha as
Chief Executive Officer, and (ii) your employment with Alpha is
voluntarily or involuntarily terminated within two (2) years after the
Change in Control, then you will receive the benefits provided in Section
1.3 below.
1.2 A "Change of Control" shall mean the Continuing Directors cease for any
reason to constitute a majority of the Board of Directors of Alpha. For
this purpose, a "Continuing Director" will include and be limited to any
member of the Board of Directors of Alpha as of the date of this letter
and any Director elected or nominated for election to the Board of
Directors of Alpha by at least 75% of the then Continuing Directors.
1.3 On the date of any termination described in Section 1.1, (i) Alpha will
pay you a lump sum equal to two times your total annual compensation for
the twelve month period prior to the Change in Control, including all
wages, salary, bonus and incentive compensation, whether or not
includable in gross income for federal income tax purposes; and (ii) all
of your Alpha stock options will become immediately exercisable and,
except as otherwise stated in this agreement, remain exercisable for a
period of one year after the termination date, subject to their other
terms and conditions.
2
Xxxxx Xxxxxxx
April 1, 2001
Page 2
2. TERMINATION WITHOUT CAUSE OR FOR GOOD REASON
2.1. If, while you are employed by Alpha as Chief Executive Officer, (i) your
employment with Alpha is involuntarily terminated without Cause, or (ii)
you terminate your employment with Alpha for Good Reason, then you will
receive the benefits specified in Section 2.4 below. If your employment
is terminated involuntarily by Alpha for Cause, you will not be entitled
to receive the benefits specified in Section 2.4 below.
2.2. "Cause" will mean: (i) deliberate dishonesty significantly detrimental
to the best interests of Alpha or any subsidiary or affiliate; (ii)
conduct on your part constituting an act of moral turpitude; (iii)
willful disloyalty to Alpha or refusal or failure to obey the
directions of the Board of Directors; (iv) incompetent performance or
substantial or continuing inattention to or neglect of duties assigned
to you. Any determination of Cause must be made by the full Board of
Directors at a meeting duly called, with you present and voting and,
if you wish, with your legal counsel present.
2.3 "Good Reason" will mean you're no longer assigned the duties of Chief
Executive Officer or you've been assigned duties inconsistent in any
respect with your position as Chief Executive Officer of Alpha.
2.4 On the date of any termination described in Section 2.1, (i) Alpha will
begin to pay you a continuing stream of salary payments for two years at
an annual rate equal to your total annual compensation for the twelve
month period prior to the termination, including all wages, salary, bonus
and incentive compensation, whether or not includable in gross income for
federal income tax; and (ii) all of your Alpha stock options, whether or
not by their terms then exercisable, will become immediately exercisable
and, except as otherwise stated in this agreement, remain exercisable for
a period of one year after the termination date, subject to their other
terms and conditions.
3. NON-COMPETITION
During the term of your employment with Alpha and for the first
twenty-four (24) months after the date on which your employment with
Alpha is voluntarily or involuntarily terminated (the "Noncompete
Period"), you will not engage in any employment, consulting or other
activity that competes with the business of Alpha or any subsidiary or
affiliate of Alpha (collectively, the "Company"). You acknowledge and
agree that your direct or indirect participation in the conduct of a
competing business alone or with any other person will materially impair
the business and prospects of Alpha. During the Noncompete Period, you
will not (i) attempt to hire any director, officer, employee or agent of
Alpha, (ii) assist in such hiring by any other person, (iii) encourage
any person to terminate his or her employment or business relationship
with Alpha, (iv) encourage any customer or supplier of Alpha to terminate
its relationship with Alpha, or (v) obtain, or assist in
3
Xxxxx Xxxxxxx
April 1, 2001
Page 3
obtaining, for your own benefit (other than indirectly as an employee
of the Company) any customer of Alpha. If any of the restrictions in
this Section 3 are adjudicated to be excessively broad as to scope,
geographic area, time or otherwise, said restriction shall be reduced
to the extent necessary to make the restriction reasonable and shall
be binding on you as so reduced. Any provisions of this section not so
reduced will remain in full force and effect.
It is understood that during the Noncompete Period, you will make
yourself available to the Company for consultation on behalf of the
Company, upon reasonable request and at a reasonable rate of compensation
and at reasonable times in light of any commitment you may have to a new
employer.
You understand and acknowledge that the Company's remedies at law for
breach of any of the restrictions in this Section are inadequate and that
any such breach will cause irreparable harm to Alpha. You therefore agree
that in addition and as a supplement to such other rights and remedies as
may exist in Alpha's favor, Alpha may apply to any court having
jurisdiction to enforce the specific performance of the restrictions in
this Section, and may apply for injunctive relief against any act which
would violate those restrictions.
4. PAYMENTS UNDER SECTIONS 2.4
Payments provided for in Section 2.4 of this letter will: (i) be paid in
equal periodic installments at such intervals as Alpha will generally pay
its officers, and (ii) be reduced by the amount of any compensation that
you receive from any person for services rendered during the period in
which you are receiving such payments. Payments provided for in Section
2.4 of this letter are further conditional upon your continued and
faithful compliance with the restrictions stated in Section 3.
5. DEATH OR DISABILITY
In the event of your death or disability at any time during your
employment by Alpha, all of your then outstanding Company stock options,
whether or not by their terms then exercisable, will become immediately
exercisable and remain exercisable so long as you remain an employee or
officer of Alpha and for a period of one year thereafter, subject to
their other terms and conditions.
6. MISCELLANEOUS
Notwithstanding anything in this letter to the contrary, no provision of
this letter will operate to extend the term of any option beyond the ten
(10) year term originally stated in the applicable option grant or option
agreement. Further, and notwithstanding anything in this letter to the
contrary, the provisions in this letter to the effect that your options
shall remain exercisable for a period of one year after the termination
date, shall only apply to those options issued to you during and after
the fiscal year in which you were promoted to become President of the
Company (i.e., these provisions shall only apply to those options issued
to you after April 1,
4
Xxxxx Xxxxxxx
April 1, 2001
Page 4
1999; the terms governing the exercise period of your other options
shall not be affected by this letter).
This agreement contains the entire understanding of the parties
concerning its subject matter. This agreement may be modified only by a
written instrument executed by both parties. This agreement replaces and
supersedes all prior agreements relating to your employment or severance.
This agreement will be governed by and construed in accordance with the
laws of the Commonwealth of Massachusetts.
Please sign both copies of this letter and return one to Alpha.
Sincerely,
----------------------------------------
AGREED TO:
/s/ Xxxxxx X. Xxxxxxx /s/ Xxxxx X. Xxxxxxx
---------------------------------- ----------------------------
Xxxxxx X. Xxxxxxx, Xxxxx X. Xxxxxxx
Chairman of the Board
Date: 5/7/01
----------------------
----------------------------------------
