<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC. 20549
FORM 10-Q
(MARK ONE)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended AUGUST 27, 1995
or
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from - to -
----------- ------------
Commission File Number 0-10558
ALPHA MICROSYSTEMS
(Exact name of registrant as specified in its charter)
CALIFORNIA 95-3108178
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2722 S. FAIRVIEW STREET, SANTA ANA, CA 92704
(Address of principal executive offices)
Registrant's telephone number, including area code: (714) 957-8500
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
As of October 4, 1995, there were 6,595,453 shares of the registrant's common
stock outstanding.
<PAGE> 2
ALPHA MICROSYSTEMS
INDEX
<TABLE>
<CAPTION>
Page
Number
------
<S> <C>
PART I--FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
at August 27, 1995 (Unaudited) and
February 26, 1995 3
Condensed Consolidated Statements of
Operations (Unaudited) for the Three
and Six Months Ended August 27, 1995 and
August 28, 1994 4
Condensed Consolidated Statements of Cash Flows
(Unaudited) for the Six Months Ended August 27,
1995 and August 28, 1994 5
Notes to Condensed Consolidated
Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
PART II--OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security-Holders 13
Item 6. Exhibits and Reports on Form 8-K 13
SIGNATURES 14
EXHIBIT INDEX 15
</TABLE>
-2-
<PAGE> 3
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ALPHA MICROSYSTEMS
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
(Unaudited)
August 27, February 26,
1995 1995
----------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 1,919 $ 3,289
Accounts receivable, net 5,234 4,844
Inventories 1,435 1,948
Subsidiary held for sale -- 269
Notes receivable 261 --
Prepaid expenses and other current assets 496 564
-------- --------
Total current assets 9,345 10,914
-------- --------
Property and equipment at cost 15,991 14,824
Less accumulated depreciation and amortization 11,649 11,220
-------- --------
Net property and equipment 4,342 3,604
Service contracts, net 935 1,039
Software costs, net 1,545 1,302
Goodwill, net 757 864
Other assets, net 171 179
-------- --------
$ 17,095 $ 17,902
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,350 $ 1,863
Deferred revenue 2,515 2,775
Other accrued liabilities 1,308 1,857
Accrued salaries and wages 394 836
Current portion of long-term debt 346 395
-------- --------
Total current liabilities 6,913 7,726
Long-term debt 82 140
Commitments and contingencies
Shareholders' equity:
Preferred stock, no par value; 5,000,000
shares authorized; none issued -- --
Common stock, no par value; 20,000,000 shares
authorized; 6,565,403 and 6,557,403 shares
issued and outstanding at August 27, 1995
and February 26, 1995, respectively 21,231 21,224
Accumulated deficit (11,026) (11,119)
Unamortized restricted stock plan expense (16) (19)
Foreign currency translation adjustment (89) (50)
-------- --------
Total shareholders' equity 10,100 10,036
-------- --------
$ 17,095 $ 17,902
======== ========
</TABLE>
See accompanying notes.
-3-
<PAGE> 4
ALPHA MICROSYSTEMS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
---------------------- ----------------------
August 27, August 28, August 27, August 28,
1995 1994 1995 1994
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net sales:
Product $3,905 $4,684 $ 7,824 $ 9,552
Service 4,700 5,135 9,326 10,274
------ ------ ------- -------
Total net sales 8,605 9,819 17,150 19,826
------ ------ ------- -------
Cost of sales:
Product 2,181 3,098 4,561 6,193
Service 3,072 3,312 6,159 6,500
------ ------ ------- -------
Total cost of sales 5,253 6,410 10,720 12,693
------ ------ ------- -------
Gross Margin 3,352 3,409 6,430 7,133
Selling, general and administrative expense 2,810 3,468 5,561 6,720
Research and development expense 538 570 1,070 1,206
------ ------ ------- -------
Total operating expenses 3,348 4,038 6,631 7,926
------ ------ ------- -------
Income (loss) from operations 4 (629) (201) (793)
Interest income (21) (52) (50) (77)
Interest expense 17 5 21 7
Other (income) expense, net (9) 42 (225) 67
Foreign exchange (gain) loss (25) (45) (40) (63)
------ ------ ------- -------
Total other (income) expenses (38) (50) (294) (66)
------ ------ ------- -------
Income (loss) before taxes 42 (579) 93 (727)
(Benefit) provision for income taxes -- 3 -- 4
------ ------ ------- -------
Net income (loss) $ 42 $ (582) $ 93 $ (731)
====== ====== ======= =======
Net income (loss) per share $ 0.01 $(0.09) $ 0.01 $ (0.11)
====== ====== ======= =======
Number of shares used in the
computation of per share amounts 6,591 6,562 6,576 6,559
====== ====== ======= =======
</TABLE>
See accompanying notes.
-4-
<PAGE> 5
ALPHA MICROSYSTEMS
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Six Months Ended
----------------------
August 27, August 28,
1995 1994
---------- ----------
<S> <C> <C>
Cash flow from operating activities:
Net income (loss) $ 93 $ (731)
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Gain on sale of fixed assets (211) --
Depreciation and amortization 1,033 1,337
Provision for losses on accounts receivable (59) 39
Inventory provision 152 86
Other changes in operating assets and liabilities:
Accounts receivable (170) (471)
Inventories 361 4
Prepaid expenses and current assets 76 (154)
Accounts payable and other
accrued liabilities (61) 134
Accrued salaries and wages (441) (423)
Deferred revenue (257) (144)
Other, net (4) (7)
Net cash provided by (used in) ------- -------
operating activities 512 (330)
------- -------
Cash flow from investing activities:
Proceeds from sale of fixed assets 240 --
Acquisition of businesses -- (84)
Purchases of equipment (1,301) (947)
Capitalization of software costs (541) (284)
Other, net (16) 40
------- -------
Net cash used in investing activities (1,618) (1,275)
------- -------
Cash flows from financing activities:
Issuance of stock 10 66
Principal debt repayments (253) (450)
------- -------
Net cash used in financing activities (243) (384)
------- -------
Effect of exchange rate changes on cash (21) 63
------- -------
Decrease in cash and cash equivalents (1,370) (1,926)
Cash and cash equivalents at beginning of period 3,289 6,251
------- -------
Cash and cash equivalents at end of period $ 1,919 $ 4,325
======= =======
</TABLE>
See accompanying notes.
-5-
<PAGE> 6
ALPHA MICROSYSTEMS
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. INTERIM ACCOUNTING POLICY
In the opinion of management of Alpha Microsystems (the "Company" or
"Alpha Micro"), the accompanying unaudited condensed consolidated financial
statements contain all adjustments necessary to fairly present the consolidated
financial position of the Company at August 27, 1995, the consolidated results
of its operations for the three and six month periods ended August 27, 1995 and
August 28, 1994 and its cash flows for the six month periods ended August 27,
1995 and August 28, 1994. These condensed consolidated financial statements do
not include all disclosures normally presented annually under generally accepted
accounting principles and, therefore, they should be read in conjunction with
the Company's annual report on Form 10-K for the year ended February 26, 1995.
The results of operations for the six month period ended August 27,
1995, are not necessarily indicative of the results to be expected for the full
fiscal year.
REVENUE RECOGNITION
The Company recognizes revenue on its hardware and software sales on
delivery, and recognizes revenue on its service sales and post contract customer
support on a straight line basis over the contract period. When significant
obligations remain after a software product has been delivered, revenue is not
recognized until obligations have been completed or are no longer significant.
The costs of any insignificant obligations are accrued when the related revenue
is recognized. Revenue is recognized only when collection of the resulting
receivable is probable.
PER SHARE INFORMATION
Per share information is based upon the weighted average common and
common equivalent shares outstanding during the period ended August 27, 1995,
and the weighted average common shares outstanding during the period ended
August 28, 1994.
TRANSLATION OF FOREIGN CURRENCIES
The Company's foreign entities use the local currency as the functional
currency. The Company translates all foreign entity assets and liabilities at
quarter-end exchange rates, all income and expense accounts at average rates,
and records adjustments resulting from translation in a separate component of
shareholders' equity.
-6-
<PAGE> 7
2. INVENTORIES
Inventories are stated at the lower of cost (first-in, first-out
method) or market. Inventories net of reserves for excess and obsolete
inventories of $1,828,000 and $1,723,000 at August 27, 1995 and February 26,
1995, respectively, are comprised of the following:
<TABLE>
<CAPTION>
(In thousands)
------------------------
August 27, February 26,
1995 1995
--------- ------------
<S> <C> <C>
Raw materials $ 226 $ 581
Work in process 20 180
Finished goods 1,189 1,187
------ ------
$1,435 $1,948
====== ======
</TABLE>
3. DEBT
On July 10, 1995, the Company signed an agreement for a revolving line
of credit up to a maximum limit of $2,000,000, based upon 70% of the eligible
accounts receivable and under which letters of credit and the foreign exchange
portion shall not exceed in the aggregate at any one time $500,000. Borrowing
under the line of credit will bear interest of prime plus one and one half
percent (1.5%) and a commitment fee for the first year of $15,000. In addition,
the Company agreed to issue 50,000 warrants to the lender, after the 40,000
warrants the lender previously received had been canceled. The price of the new
warrants is at the market value of the Company's common stock as of the date of
the loan.
The line of credit is secured by substantially all of the Company's
assets. Its availability is subject to financial covenants requiring that the
Company maintain a quick ratio of not less than 1.3 to 1, a tangible net worth
of not less than $6,500,000, and a ratio of total liabilities to tangible net
worth of no more than 1.0 to 1. The agreement also includes covenants which
require that the Company must not have two or more consecutive quarterly losses
or an aggregate year-to-date loss of over $300,000, and the Company must make a
net profit on a consolidated basis for fiscal 1996. Currently, the Company has
no outstanding bank borrowings.
4. NOTE RECEIVABLE
As part of the consideration for selling the Belgian subsidiary to a
member of local management, the Company received a note for 15,000,000 Belgian
francs which is payable over the next two years.
5. SUBSEQUENT EVENT
On September 15, 1995, the Company acquired the ongoing service
contracts and certain related assets of Instant Data Systems Incorporated
("IDS") for a purchase price of $300,000. The purchase price will be paid over
eighteen months, and the ultimate price and cash paid will depend upon the
contract revenues purchased.
6. TAXES
The Company has significant federal net operating loss carryforwards
totaling approximately $15.0 million at February 26, 1995, which begin expiring
in 2006. As a result,
-7-
<PAGE> 8
the Company recorded no tax provision for the six months ended August 27, 1995.
If there is a greater than 50% change in the Company's ownership during any
three-year period, the utilization of the net operating loss and general
business credit carryforward can be limited. During the last three-year period
ended February 26, 1995, the Company had experienced an approximate 41% change
in ownership.
7. GOODWILL AND INTANGIBLES
Management routinely evaluates events or conditions that might diminish
the fair market value of intangible assets. Intangible assets include acquired
service contracts, capitalized computer software costs and goodwill. The book
value of goodwill and acquired service contracts is associated with the
acquisition of companies or assets. Software cost is the accumulation of
capitalized development costs or the assigned value of software associated with
an acquisition.
8. CONTINGENCIES
PRIOR LEASE OBLIGATIONS
The Company is in the process of negotiating the requirements and costs
associated with exiting its previous location and has not yet paid the exit fee
of $250,000. Management believes the Company has accrued an appropriate amount
for this contingency, and that the outcome of its discussions with its previous
landlord will not materially affect the Company.
LITIGATION
Two former employees of Alpha Microsystems Belgium S.A. ("AMB") have
asserted that AMB is in breach of its obligations under Belgium employment law
to pay salaries for up to two years in certain circumstances and have asserted
that the Company has direct liability for these obligations. The employees have
offered to settle their claim for $1.2 million, which the Company has rejected.
Management of the Company believes that the claim is without merit and plans to
vigorously defend itself against these claims.
-8-
<PAGE> 9
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
SUMMARY
The following table was derived from the Condensed Consolidated
Statements of Operations as a percentage of net sales for the three and six
month periods ended August 27, 1995, and August 28, 1994:
<TABLE>
<CAPTION>
RELATIONSHIP TO NET SALES
------------------------------------------------
Three Months Ended Six Months Ended
------------------------------------------------
August 27, August 28, August 27, August 28,
1995 1994 1995 1994
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of sales 61.0 65.3 62.5 64.0
----- ----- ----- -----
Gross margin 39.0 34.7 37.5 36.0
Selling general and administrative expense 32.7 35.3 32.4 34.0
Research and development expense 6.3 5.8 6.2 6.1
Interest income (0.2) (0.5) (0.3) (0.4)
Interest expense 0.2 0.1 0.1 --
Other (income) expense, net (0.1) 0.4 (1.3) 0.3
Foreign exchange (gain) loss (0.3) (0.5) (0.2) (0.3)
----- ----- ----- -----
Income (loss) from operations before taxes 0.4 (5.9) 0.6 (3.7)
Provision (benefit) for income taxes -- -- -- --
----- ----- ----- -----
Net income (loss) 0.4% (5.9)% 0.6% (3.7)%
===== ===== ===== =====
</TABLE>
GENERAL
The Company, which for its first decade was principally a designer and
vendor of computer hardware and related systems software, continues to
transition its business to focus on areas offering growth potential. The
Company's strategy is to strengthen its distribution channels, concentrate on
vertical markets, and expand its already broad base of support services,
including field maintenance and networking. In support of its strategy, the
Company has continued its efforts to consolidate European operations, reduce
expenses and establish new asset management techniques, and shift toward system
assembly and integration. Management will continue to monitor market and
business conditions and will be flexible in considering future shifts in
strategy as appropriate.
During the first six months of fiscal 1996, the Company earned a net
income of $93,000, or $0.01 per share, which was primarily associated with the
sale of its PICK distributed database product ("PICK"). PICK was sold on March
24, 1995 for $300,000 and generated a gain on sale of $211,000. As anticipated,
revenues declined as a result of the sale of the PICK and VSO product lines and
lower demand for the Company's traditional products. In response, management
has reduced expenses accordingly.
The Company's strategic marketing efforts continued to progress during
the first six months of the current fiscal year. The Company obtained four new
orders for PANDA from Southern California school districts, and has been test
marketing the system in additional
-9-
<PAGE> 10
regions, such as Texas, Virginia, Florida, New York, New Jersey, Maryland and
Pennsylvania. The Company's early test version of its AlphaHealthCare dental
practice management software (Alpha 2000) has been introduced at several trade
shows and individually to key dental industry opinion leaders and has been well
received. Alpha 2000 is actively being marketed and the Company is taking
orders for delivery in the last half of the current fiscal year.
Based upon the favorable market response, the Company intends to
significantly expand its sales and marketing resources for both vertical
products. While it is unlikely that revenues for these products will increase
sufficiently to offset the additional investment in the short term, the Company
believes that its capabilities to gain a larger market share over the long term
will be significantly enhanced. The operating expenses associated with
additional marketing and sales efforts towards introducing these products will
likely have a negative impact on the Company's short-term performance.
RESULTS OF OPERATIONS
Six Months Ended August 27, 1995 and August 28, 1994
Net sales decreased $2,676,000, or 13.5%, to $17,150,000 for the six
month period ended August 27, 1995, from $19,826,000 for the six month period
ended August 28, 1994. Total product revenues declined $1,728,000, or 18.1%
from approximately $9,552,000 for the comparable period.
Sales of the Company's traditional products declined $1,804,000,
offset by an increase of $76,000 in sales of the Company's vertical products.
Lower demand for the Company's traditional products, the sale of the PICK and
VSO product lines, and lower revenues from Belgian customers accounted for most
of the decline in product revenues. PICK and VSO revenues accounted for
approximately $289,000 in the six months ended August 27, 1995, compared to
approximately $858,000 in the comparable period of fiscal 1995. The Belgian
subsidiary, Alpha Microsystems Belgium, S.A. ("AMB"), which was sold to a
member of its Belgian management team at the end of fiscal 1995, had accounted
for $1,123,000 in revenues in the first half of fiscal 1995. In the first half
of fiscal 1996, sales to the Belgian company accounted for $615,000 in
revenues. The negative impact of reduced AMB revenues was offset by the
elimination of overhead and other expenses associated with the subsidiary.
Total service revenue for the six months ended August 27, 1995,
declined $948,000, or 9.2%, to $9,326,000 from $10,274,000 for the same period
in the prior year. The decrease was attributable both to a reduction in service
revenue from prior acquisitions (Alpha Computer Services, Inc. and MGI Group
International, Inc.) and in traditional AMOS-based service contracts. The
Company has been successful in expanding its base of support services,
including field maintenance and networking, and intends to invest additional
resources in this area.
Total gross margin for the Company for the six months ended August 27,
1995, increased to 37.5% compared to 36.0% during the same period last year.
Product gross margin for the first half of fiscal 1996 increased to 41.7%
compared to 35.2% during the same period in the prior year. The increase in
the current period was due to a higher percentage of revenues from traditional
hardware products with higher gross margin as compared to the same period in
the prior year in which a higher percentage of lower margin PICK, VSO and
non-proprietary products were sold.
-10-
<PAGE> 11
Service business gross margin declined to 34.0% during the half year
ended August 27, 1995 from 36.7% during the same period in the prior year. The
decline was primarily due to reductions in cost of goods sold, primarily labor
costs, not fully offsetting the revenue decline. However, the service
organization reduced selling, general and administrative expenses which
assisted in partially offsetting the overall impact of the service revenue
decline. To improve revenues, the service organization is focusing on obtaining
new contracts for its networking support services, supporting vertical markets
with services, and increasing third-party services. Revenues from these new
areas of focus generally produce lower margins than the Company's traditional
service business.
Selling, general and administrative expenses decreased $1,159,000 to
$5,561,000 for the six months ended August 27, 1995, from $6,720,000 for the
comparable period in the prior fiscal year. This reduction is primarily due to
the Company's decision to divest itself of certain non-core activities such as
the divestiture of AMB, VSO, and Imaging operations, which reduced expenditures
by $481,000, $289,000, and $108,000, respectively. Selling, general and
administrative expenses were also reduced by streamlining certain other areas
of the business. The Company utilized some of these savings by investing in
additional resources to enhance its position in its vertical markets.
Approximately $1,768,000 in selling, general and administrative expenses in the
first half of the current fiscal year was due to this investment in vertical
markets compared to $1,355,000 for the same period in the prior fiscal year.
On March 24, 1995, the Company sold its rights to reproduce and
license Pick64+ distributed database software to Sequoia Systems, Inc., for
$100,000 cash and a $200,000 note receivable. The transaction generated a gain
on sale of $211,000.
Research and development expenses incurred for the six months ended
August 27, 1995 decreased by $136,000 to $1,070,000 from $1,206,000 during the
same period in the prior fiscal year. This reduction was primarily due to
refocusing the Company's resources on new software development. Approximately
$541,000 of new software development expenses have been capitalized in the
first half of the current fiscal year, as compared to $284,000 in the
comparable period of the prior fiscal year.
LIQUIDITY AND CAPITAL RESOURCES
During the six months ended August 27, 1995, the Company's working
capital decreased by $756,000 to $2,432,000 from $3,188,000 at February 26,
1995. Net cash and cash equivalents decreased during the six month period
ended August 27, 1995 by $1,370,000 to $1,919,000, primarily as a result of the
costs incurred in connection with the Company's move to its new facilities.
Net cash provided by operating activities during the first half of the current
fiscal year was $512,000 compared to a $330,000 net cash utilization for
operations during the same period in the prior fiscal year.
Inventories decreased from $1,948,000 at February 26, 1995 to
$1,435,000 at August 27, 1995. In addition to management's strict controls to
maintain a lower inventory level, the Company had higher shipments during the
last month of the second quarter, which resulted in lower inventory levels.
Net accounts receivable increased from $4,844,000 at February 26, 1995 to
$5,234,000 at August 27, 1995. This increase was primarily due to the
receivable associated with the sale of the PICK product line, higher sales
activity during the last month of the quarter, and a larger portion of revenue
coming from the European operations which tend to extend longer payment terms.
On July 10, 1995, the Company signed an agreement for a revolving line
of credit up to a maximum limit of $2,000,000, based upon 70% of the eligible
accounts receivable and under which letters of credit and the foreign exchange
portion shall not exceed in the aggregate at any one time $500,000. Borrowing
under the line of credit will bear interest of prime plus one and one half
percent (1.5%) and the commitment fee for the first year is
-11-
<PAGE> 12
$15,000. In addition, the Company agreed to issue 50,000 warrants to the lender,
after the 40,000 warrants the lender previously received had been canceled. The
price of the new warrants is at the market value of the Company's common stock
as of the date of the loan.
The line of credit is secured by substantially all of the Company's
assets. Its availability is subject to financial covenants requiring that the
Company maintain a quick ratio of not less than 1.3 to 1, a tangible net worth
of not less than $6,500,000, and a ratio of total liabilities to tangible net
worth of no more than 1.0 to 1. The agreement also includes covenants which
require that the Company must not have two or more consecutive quarterly losses
or an aggregate year-to-date loss of over $300,000, and the Company must make a
net profit on a consolidated basis for fiscal 1996. Currently, the Company has
no outstanding bank borrowings.
As part of the Company's continuing efforts to reduce expenses, it has
entered into a new 66-month lease and has moved into a 66,200 square foot
facility located within one mile of its prior 104,000 square foot facility. The
new lease, which began on July 1, 1995 and expires on December 31, 2000, will
provide significant savings. The average annual rent for the new facility is
$285,000, compared to $680,000 in fiscal 1995 for the prior facility. The
Company has an option to extend the new lease term for an additional three
years.
Under its new lease, the Company agreed to pay the up-front costs of
certain leasehold improvements. The leasehold improvements for which the
Company assumed responsibility include office construction, plumbing, wiring,
and general tenant improvements. The total cost of these improvements was
approximately $806,000, which will be depreciated over the life of the lease.
The cost of these improvements, fully recorded during the first six months of
the current fiscal year, is the primary reason that net property and equipment
increased to $4,342,000 at August 27, 1995, from $3,604,000 at February 26,
1995.
The Company believes that the current cash position augmented by
operating activities, supplemented as necessary with funds expected to be
available under the Company's line of credit, will provide it with sufficient
resources to finance its working capital requirements for the remainder of the
fiscal year. The Company's future capital requirements depend on a variety of
factors, including, but not limited to, the rate of decline in the traditional
business, the success and timing and amount of investment required to penetrate
the vertical markets, and service revenue growth or decline.
-12-
<PAGE> 13
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security-Holders
The Annual Meeting of Shareholders of Alpha Microsystems was held on
July 14, 1995. At the Annual Meeting, all of management's nominees listed in
the Proxy Statement were elected and there was no solicitation in opposition to
such nominees. The appointment of Ernst & Young as independent auditors of the
Company and its subsidiaries for the year ending February 25, 1996 was ratified
by the shareholders. Voting was as follows:
<TABLE>
<CAPTION>
Directors For Against Abstain
--------- --- ------- -------
<S> <C> <C> <C>
Clarke E. Reynolds 5,812,679 15,000 N/A
Douglas J. Tullio 5,814,799 12,900 N/A
Rockell N. Hankin 5,811,179 16,500 N/A
Harry L. Hathaway 5,810,179 17,500 N/A
Richard E. Mahmarian 5,819,129 8,500 N/A
</TABLE>
The proposal to ratify the appointment of Ernst & Young as independent
auditors of the Company and its subsidiaries for the year ending February 25,
1996 received 5,908,095 votes for approval and 53,550 votes against approval,
with 14,860 abstentions.
6. Exhibits and Reports on Form 8-K.
(a) See Exhibit Index.
(b) No Form 8-K was filed during the quarter ended August 27, 1995.
-13-
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ALPHA MICROSYSTEMS
(Registrant)
Date: October 10, 1995 By:/s/ Douglas J. Tullio
----------------------
President and
Chief Executive Officer
Date: October 10, 1995 By:/s/ Michael J. Lowell
----------------------
Vice President and
Chief Financial Officer
-14-
<PAGE> 15
EXHIBIT INDEX
<TABLE>
<CAPTION>
Number Description of Documents
- ------ ------------------------
<S> <C>
10.146 Agreement to Grant Nonqualified Stock Option by and between
Registrant and Clarke E. Reynolds dated July 14, 1995.
10.147 Agreement to Grant Nonqualified Stock Option by and between
Registrant and Rockell N. Hankin dated July 14, 1995.
10.148 Agreement to Grant Nonqualified Stock Option by and between
Registrant and Harry L. Hathaway dated July 14, 1995.
10.149 Agreement to Grant Nonqualified Stock Option by and between
Registrant and Richard E. Mahmarian dated July 14, 1995.
27 Financial Data Schedule.
</TABLE>
-15-
<PAGE> 1
Exhibit 10.146
ALPHA MICROSYSTEMS
AGREEMENT TO GRANT NONQUALIFIED STOCK OPTION
(AUTOMATIC ADDITIONAL OPTION GRANT PURSUANT TO DIRECTORS' STOCK OPTION PLAN)
THIS NONQUALIFIED STOCK OPTION AGREEMENT ("Agreement") is
entered into effective as of July 14, 1995 (the "Automatic Grant Date") by and
between ALPHA MICROSYSTEMS, a California corporation (the "Company"), and
Clarke E. Reynolds ("Director"). Unless otherwise defined herein, capitalized
words used in this Agreement shall have the same meaning as such terms are
defined in the Company's Directors' 1993 Stock Option Plan (the "Plan").
R E C I T A L S :
A. The Company has adopted and the shareholders of the
Company have approved the Plan.
B. Pursuant to the terms of the Plan, Directors of the
Company who satisfy certain conditions receive an automatic grant of Options to
purchase Common Stock of the Company.
C. The Company and Director execute this Agreement to
reflect the terms of an automatic grant.
NOW THEREFORE, FOR GOOD AND VALUABLE CONSIDERATION, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Automatic Grant. Pursuant to the terms of the Plan,
Director is granted as of the Automatic Grant Date an option to purchase Two
Thousand Five Hundred (2,500) Shares of the Company's Common Stock, at One
Dollar Twenty Five Cents ($1.25) per share, which is equal to one hundred
percent (100%) of the Fair Market Value of a share of the Company's Common
Stock on the Automatic Grant Date.
2. Exercise Period of Option. Subject to Section 4
below, the Options reflected herein shall become exercisable in cumulative
increments at the following times and in the following amounts:
<PAGE> 2
(a) With respect to 50% of the underlying shares
of Common Stock, as of the day immediately prior to the first annual
meeting of shareholders after the Automatic Grant Date;
(b) With respect to an additional 25% of the
underlying shares of Common Stock, as of the day immediately prior to
the second annual meeting of shareholders after the Automatic Grant
Date; and
(c) With respect to an additional 25% of the
underlying shares of Common Stock, on the day immediately prior to the
third annual meeting of shareholders after the Automatic Grant Date.
The options granted hereunder shall lapse and expire five (5)
years from the date of this Agreement.
Notwithstanding the foregoing but still subject to Section 4
below, this option shall automatically become fully exercisable upon a "change
in control" of the Company," as such term is defined in Section 2(d) of the
Company's Directors' Stock Option Plan.
3. Exercise. This option may be exercised on the terms
and conditions contained herein by giving ten (10) days' prior written notice
of exercise to the Company, specifying the number of shares to be purchased and
the price to be paid therefor and delivering a check in the amount of the
purchase price payable to the Company. The purchase price may also be paid, in
whole or in part, by delivery to the Company of outstanding shares of the
Company's Common Stock valued at Fair Market Value, as defined in the Company's
Directors' Stock Option Plan.
Director agrees, as a condition to the exercise of this
Option, to make appropriate arrangements with the Company for the satisfaction
of any Federal, state or local income tax withholding requirements and Federal
social security employment tax requirements applicable to the exercise of this
Option or the sale of Shares acquired under this Option.
4. Cessation of Directorship. No Option may be
exercised after Director ceases to be a director except to the extent that the
Option was exercisable at the time of such cessation. No Option may be
exercised after its term expires or is otherwise canceled.
(a) Death. If Director dies while he is a
director of the Company, or having ceased to be a director, but during
the period during which he could have exercised the Option under this
Agreement, and has not fully exercised this Option, then this Option
may be exercised in full, at any time within twelve (12) months after
the Director's death by the executor or administrator of his estate or
-2-
<PAGE> 3
by any person or persons who have acquired this option directly from
the Director by bequest or inheritance, but only to the extent that,
at the date of death, the Director's right to exercise this option had
accrued and had not been forfeited pursuant to the terms of this
Agreement and had not been previously exercised.
(b) Disability. If Director ceases active
service by reason of Disability, Director shall have the right to
exercise this Option at any time within twelve (12) months after such
cessation of directorship, but only to the extent that, at the date of
such cessation of directorship, Director's right to exercise this
Option had accrued pursuant to the terms of this Agreement and had not
previously been exercised.
(c) Other Reasons. If Director ceases to be a
Director for any reason other than those mentioned above in
subsections (a) or (b), Director shall have the right, subject to the
restrictions referred to in this Section 4 to exercise the Option at
any time within thirty (30) days following such cessation, discharge
or termination but, only to the extent that, at the date of cessation,
discharge or termination, the Optionee's right to exercise such Option
had accrued pursuant to the terms hereunder and had not previously
been exercised.
(d) Change in Control. If any Change in Control
of the Company should occur, then the exercise dates of the Options
granted pursuant to this Agreement shall automatically accelerate and
all Options granted under this Agreement shall become exercisable in
full. However, in no event shall any Option be exercisable after the
date of termination of this exercise period of such Option specified
in Sections 2(a), 2(b) or 2(c) above.
5. Transferability. During the lifetime of Director,
this Option shall be exercisable only by Director and shall not be assignable
or transferable. In the event of Director's death, this Option shall not be
transferable by Director other than by will or the laws of descent and
distribution. Any other attempted alienation, assignment, pledge,
hypothecation, attachment, execution or similar process, whether voluntary or
involuntary, with respect to all or any part of this Option or right hereunder,
shall be null and void and, at the Company's option, shall cause all of
Director's rights hereunder to terminate.
6. Securities Act and Other Regulatory Requirements.
This option is not exercisable, in whole or in part, and the Company is not
obligated to sell any share of the Company's Common Stock subject to this
Option, if such exercise or sale, in the opinion of counsel for the Company,
would violate the Securities Act of 1933 (or any other federal or state
statutes having similar requirements) as it may be in effect at that time.
-3-
<PAGE> 4
The Board of Directors of the Company may require as a
condition of issuance of any shares under this option that Director furnish a
written representation that he or she is acquiring the shares for investment
and not with a view to distribution to the public.
The Board of Directors of the Company may decide, in its sole
discretion, that the listing or qualification of the shares of stock subject to
the option under any securities exchange requirements or under any applicable
law is necessary or desirable. If such a decision is made, this Option shall
not be exercisable in whole or in part unless and until such listing,
qualification, consent or approval shall have been effected or obtained free of
any conditions not acceptable to the Board of Directors of the Company.
7. Rights as a Shareholder. Director shall have no
rights as a shareholder with respect to any Shares covered by his Option
hereunder until the date of the issuance of a stock certificate for such
Shares. No adjustment shall be made for dividends (ordinary or extraordinary,
whether in cash, securities or other property), distributions or other rights
for which the record date is prior to the date such stock certificate is
issued, except as provided in Section 9 hereof.
8. Six-Month Holding Period. Neither this Option nor
any Share issuable upon exercise of this Option, may be sold or otherwise
disposed of prior to the date that is six (6) months and one (1) day following
the Automatic Grant Date.
9. Recapitalizations. Subject to any required action by
shareholders, the number of Shares covered by this Option and the Exercise
Price thereof shall be proportionately adjusted for any increase or decrease in
the number of issued Shares resulting from a subdivision or consolidation of
Shares or the payment of a stock dividend (but only of Common Stock) or any
other increase or decrease in the number of issued Shares effected without
receipt of consideration by the Company.
Subject to any required action by shareholders, if the Company
is the surviving corporation in any merger or consolidation, this Option shall
pertain and apply to the securities to which a holder of the number of Shares
subject to this Option would have been entitled. If the Company is not the
surviving corporation in any merger or consolidation, then this Option shall be
fully vested and exercisable until five (5) days prior to such merger or
consolidation (but shall terminate thereafter) unless provisions are made in
connection with such transaction for the continuance of the Plan or the
assumption or the substitution for this Option of a new option covering the
stock of a successor employer corporation, or a parent or subsidiary thereof,
with appropriate adjustments as to the number and kind of shares and prices. A
dissolution or liquidation of the Company shall cause this Option to terminate.
Except as expressly provided in this Section 9, the Director
shall have no rights by reason of any subdivision or consolidation of shares of
stock of any class, the
-4-
<PAGE> 5
payment of any stock dividend or any other increase or decrease in the number
of shares of stock of any class or by reason of any dissolution, liquidation,
merger or consolidation or spin-off of assets or stock of another corporation,
and any issue by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the number or
Exercise Price of Shares subject to this Option.
The grant of this Option shall not affect in any way the right
or power of the Company to make adjustments, reclassifications, reorganizations
or changes of its capital or business structure, to merge or consolidate or to
dissolve, liquidate, sell or transfer all or any part of its business or
assets.
10. Successors. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors,
heirs, beneficiaries, executors and administrators.
11. Paragraph Headings. Paragraph headings are for
convenience only and are not part of the context.
12. Terms of Plan. This Agreement shall be subject to
all of the provisions of the Directors' Stock Option Plan of the Company, as
amended from time to time, and such provisions are incorporated herein by this
reference. In the event of any conflict between the terms and provisions of
this Agreement and the terms or provisions of the Plan, the provisions of the
Plan shall prevail.
13. Non-Qualified Stock Option. This option is not
intended to satisfy the requirements of Section 422 of the Internal Revenue
Code of 1986, as amended.
ALPHA MICROSYSTEMS
By: /s/ DOUGLAS J. TULLIO
---------------------------
Name: Douglas J. Tullio
Title: President and Chief
Executive Officer
DIRECTOR:
/s/ CLARKE E. REYNOLDS
---------------------------
Clarke E. Reynolds
-5-
<PAGE> 1
Exhibit 10.147
ALPHA MICROSYSTEMS
AGREEMENT TO GRANT NONQUALIFIED STOCK OPTION
(AUTOMATIC ADDITIONAL OPTION GRANT PURSUANT TO DIRECTORS' STOCK OPTION PLAN)
THIS NONQUALIFIED STOCK OPTION AGREEMENT ("Agreement") is
entered into effective as of July 14, 1995 (the "Automatic Grant Date") by and
between ALPHA MICROSYSTEMS, a California corporation (the "Company"), and
Rockell N. Hankin ("Director"). Unless otherwise defined herein, capitalized
words used in this Agreement shall have the same meaning as such terms are
defined in the Company's Directors' 1993 Stock Option Plan (the "Plan").
R E C I T A L S :
A. The Company has adopted and the shareholders of the
Company have approved the Plan.
B. Pursuant to the terms of the Plan, Directors of the
Company who satisfy certain conditions receive an automatic grant of Options to
purchase Common Stock of the Company.
C. The Company and Director execute this Agreement to
reflect the terms of an automatic grant.
NOW THEREFORE, FOR GOOD AND VALUABLE CONSIDERATION, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Automatic Grant. Pursuant to the terms of the Plan,
Director is granted as of the Automatic Grant Date an option to purchase Two
Thousand Five Hundred (2,500) Shares of the Company's Common Stock, at One
Dollar Twenty Five Cents ($1.25) per share, which is equal to one hundred
percent (100%) of the Fair Market Value of a share of the Company's Common
Stock on the Automatic Grant Date.
2. Exercise Period of Option. Subject to Section 4
below, the Options reflected herein shall become exercisable in cumulative
increments at the following times and in the following amounts:
<PAGE> 2
(a) With respect to 50% of the underlying shares
of Common Stock, as of the day immediately prior to the first annual
meeting of shareholders after the Automatic Grant Date;
(b) With respect to an additional 25% of the
underlying shares of Common Stock, as of the day immediately prior to
the second annual meeting of shareholders after the Automatic Grant
Date; and
(c) With respect to an additional 25% of the
underlying shares of Common Stock, on the day immediately prior to the
third annual meeting of shareholders after the Automatic Grant Date.
The options granted hereunder shall lapse and expire five (5)
years from the date of this Agreement.
Notwithstanding the foregoing but still subject to Section 4
below, this option shall automatically become fully exercisable upon a "change
in control" of the Company," as such term is defined in Section 2(d) of the
Company's Directors' Stock Option Plan.
3. Exercise. This option may be exercised on the terms
and conditions contained herein by giving ten (10) days' prior written notice
of exercise to the Company, specifying the number of shares to be purchased and
the price to be paid therefor and delivering a check in the amount of the
purchase price payable to the Company. The purchase price may also be paid, in
whole or in part, by delivery to the Company of outstanding shares of the
Company's Common Stock valued at Fair Market Value, as defined in the Company's
Directors' Stock Option Plan.
Director agrees, as a condition to the exercise of this
Option, to make appropriate arrangements with the Company for the satisfaction
of any Federal, state or local income tax withholding requirements and Federal
social security employment tax requirements applicable to the exercise of this
Option or the sale of Shares acquired under this Option.
4. Cessation of Directorship. No Option may be
exercised after Director ceases to be a director except to the extent that the
Option was exercisable at the time of such cessation. No Option may be
exercised after its term expires or is otherwise canceled.
(a) Death. If Director dies while he is a
director of the Company, or having ceased to be a director, but during
the period during which he could have exercised the Option under this
Agreement, and has not fully exercised this Option, then this Option
may be exercised in full, at any time within twelve (12) months after
the Director's death by the executor or administrator of his estate or
-2-
<PAGE> 3
by any person or persons who have acquired this option directly from
the Director by bequest or inheritance, but only to the extent that,
at the date of death, the Director's right to exercise this option had
accrued and had not been forfeited pursuant to the terms of this
Agreement and had not been previously exercised.
(b) Disability. If Director ceases active
service by reason of Disability, Director shall have the right to
exercise this Option at any time within twelve (12) months after such
cessation of directorship, but only to the extent that, at the date of
such cessation of directorship, Director's right to exercise this
Option had accrued pursuant to the terms of this Agreement and had not
previously been exercised.
(c) Other Reasons. If Director ceases to be a
Director for any reason other than those mentioned above in
subsections (a) or (b), Director shall have the right, subject to the
restrictions referred to in this Section 4 to exercise the Option at
any time within thirty (30) days following such cessation, discharge
or termination but, only to the extent that, at the date of cessation,
discharge or termination, the Optionee's right to exercise such Option
had accrued pursuant to the terms hereunder and had not previously
been exercised.
(d) Change in Control. If any Change in Control
of the Company should occur, then the exercise dates of the Options
granted pursuant to this Agreement shall automatically accelerate and
all Options granted under this Agreement shall become exercisable in
full. However, in no event shall any Option be exercisable after the
date of termination of this exercise period of such Option specified
in Sections 2(a), 2(b) or 2(c) above.
5. Transferability. During the lifetime of Director,
this Option shall be exercisable only by Director and shall not be assignable
or transferable. In the event of Director's death, this Option shall not be
transferable by Director other than by will or the laws of descent and
distribution. Any other attempted alienation, assignment, pledge,
hypothecation, attachment, execution or similar process, whether voluntary or
involuntary, with respect to all or any part of this Option or right hereunder,
shall be null and void and, at the Company's option, shall cause all of
Director's rights hereunder to terminate.
6. Securities Act and Other Regulatory Requirements.
This option is not exercisable, in whole or in part, and the Company is not
obligated to sell any share of the Company's Common Stock subject to this
Option, if such exercise or sale, in the opinion of counsel for the Company,
would violate the Securities Act of 1933 (or any other federal or state
statutes having similar requirements) as it may be in effect at that time.
-3-
<PAGE> 4
The Board of Directors of the Company may require as a
condition of issuance of any shares under this option that Director furnish a
written representation that he or she is acquiring the shares for investment
and not with a view to distribution to the public.
The Board of Directors of the Company may decide, in its sole
discretion, that the listing or qualification of the shares of stock subject to
the option under any securities exchange requirements or under any applicable
law is necessary or desirable. If such a decision is made, this Option shall
not be exercisable in whole or in part unless and until such listing,
qualification, consent or approval shall have been effected or obtained free of
any conditions not acceptable to the Board of Directors of the Company.
7. Rights as a Shareholder. Director shall have no
rights as a shareholder with respect to any Shares covered by his Option
hereunder until the date of the issuance of a stock certificate for such
Shares. No adjustment shall be made for dividends (ordinary or extraordinary,
whether in cash, securities or other property), distributions or other rights
for which the record date is prior to the date such stock certificate is
issued, except as provided in Section 9 hereof.
8. Six-Month Holding Period. Neither this Option nor
any Share issuable upon exercise of this Option, may be sold or otherwise
disposed of prior to the date that is six (6) months and one (1) day following
the Automatic Grant Date.
9. Recapitalizations. Subject to any required action by
shareholders, the number of Shares covered by this Option and the Exercise
Price thereof shall be proportionately adjusted for any increase or decrease in
the number of issued Shares resulting from a subdivision or consolidation of
Shares or the payment of a stock dividend (but only of Common Stock) or any
other increase or decrease in the number of issued Shares effected without
receipt of consideration by the Company.
Subject to any required action by shareholders, if the Company
is the surviving corporation in any merger or consolidation, this Option shall
pertain and apply to the securities to which a holder of the number of Shares
subject to this Option would have been entitled. If the Company is not the
surviving corporation in any merger or consolidation, then this Option shall be
fully vested and exercisable until five (5) days prior to such merger or
consolidation (but shall terminate thereafter) unless provisions are made in
connection with such transaction for the continuance of the Plan or the
assumption or the substitution for this Option of a new option covering the
stock of a successor employer corporation, or a parent or subsidiary thereof,
with appropriate adjustments as to the number and kind of shares and prices. A
dissolution or liquidation of the Company shall cause this Option to terminate.
Except as expressly provided in this Section 9, the Director
shall have no rights by reason of any subdivision or consolidation of shares of
stock of any class, the
-4-
<PAGE> 5
payment of any stock dividend or any other increase or decrease in the number
of shares of stock of any class or by reason of any dissolution, liquidation,
merger or consolidation or spin-off of assets or stock of another corporation,
and any issue by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the number or
Exercise Price of Shares subject to this Option.
The grant of this Option shall not affect in any way the right
or power of the Company to make adjustments, reclassifications, reorganizations
or changes of its capital or business structure, to merge or consolidate or to
dissolve, liquidate, sell or transfer all or any part of its business or
assets.
10. Successors. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors,
heirs, beneficiaries, executors and administrators.
11. Paragraph Headings. Paragraph headings are for
convenience only and are not part of the context.
12. Terms of Plan. This Agreement shall be subject to
all of the provisions of the Directors' Stock Option Plan of the Company, as
amended from time to time, and such provisions are incorporated herein by this
reference. In the event of any conflict between the terms and provisions of
this Agreement and the terms or provisions of the Plan, the provisions of the
Plan shall prevail.
13. Non-Qualified Stock Option. This option is not
intended to satisfy the requirements of Section 422 of the Internal Revenue
Code of 1986, as amended.
ALPHA MICROSYSTEMS
By: /s/ DOUGLAS J. TULLIO
----------------------------
Name: Douglas J. Tullio
Title: President and Chief
Executive Officer
DIRECTOR:
/s/ ROCKELL N. HANKIN
------------------------------
Rockell N. Hankin
-5-
<PAGE> 1
Exhibit 10.148
ALPHA MICROSYSTEMS
AGREEMENT TO GRANT NONQUALIFIED STOCK OPTION
(AUTOMATIC ADDITIONAL OPTION GRANT PURSUANT TO DIRECTORS' STOCK OPTION PLAN)
THIS NONQUALIFIED STOCK OPTION AGREEMENT ("Agreement") is
entered into effective as of July 14, 1995 (the "Automatic Grant Date") by and
between ALPHA MICROSYSTEMS, a California corporation (the "Company"), and Harry
L. Hathaway ("Director"). Unless otherwise defined herein, capitalized words
used in this Agreement shall have the same meaning as such terms are defined in
the Company's Directors' 1993 Stock Option Plan (the "Plan").
R E C I T A L S :
A. The Company has adopted and the shareholders of the
Company have approved the Plan.
B. Pursuant to the terms of the Plan, Directors of the
Company who satisfy certain conditions receive an automatic grant of Options to
purchase Common Stock of the Company.
C. The Company and Director execute this Agreement to
reflect the terms of an automatic grant.
NOW THEREFORE, FOR GOOD AND VALUABLE CONSIDERATION, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Automatic Grant. Pursuant to the terms of the Plan,
Director is granted as of the Automatic Grant Date an option to purchase Two
Thousand Five Hundred (2,500) Shares of the Company's Common Stock, at One
Dollar Twenty Five Cents ($1.25) per share, which is equal to one hundred
percent (100%) of the Fair Market Value of a share of the Company's Common
Stock on the Automatic Grant Date.
2. Exercise Period of Option. Subject to Section 4
below, the Options reflected herein shall become exercisable in cumulative
increments at the following times and in the following amounts:
<PAGE> 2
(a) With respect to 50% of the underlying shares
of Common Stock, as of the day immediately prior to the first annual
meeting of shareholders after the Automatic Grant Date;
(b) With respect to an additional 25% of the
underlying shares of Common Stock, as of the day immediately prior to
the second annual meeting of shareholders after the Automatic Grant
Date; and
(c) With respect to an additional 25% of the
underlying shares of Common Stock, on the day immediately prior to the
third annual meeting of shareholders after the Automatic Grant Date.
The options granted hereunder shall lapse and expire five (5)
years from the date of this Agreement.
Notwithstanding the foregoing but still subject to Section 4
below, this option shall automatically become fully exercisable upon a "change
in control" of the Company," as such term is defined in Section 2(d) of the
Company's Directors' Stock Option Plan.
3. Exercise. This option may be exercised on the terms
and conditions contained herein by giving ten (10) days' prior written notice
of exercise to the Company, specifying the number of shares to be purchased and
the price to be paid therefor and delivering a check in the amount of the
purchase price payable to the Company. The purchase price may also be paid, in
whole or in part, by delivery to the Company of outstanding shares of the
Company's Common Stock valued at Fair Market Value, as defined in the Company's
Directors' Stock Option Plan.
Director agrees, as a condition to the exercise of this
Option, to make appropriate arrangements with the Company for the satisfaction
of any Federal, state or local income tax withholding requirements and Federal
social security employment tax requirements applicable to the exercise of this
Option or the sale of Shares acquired under this Option.
4. Cessation of Directorship. No Option may be
exercised after Director ceases to be a director except to the extent that the
Option was exercisable at the time of such cessation. No Option may be
exercised after its term expires or is otherwise canceled.
(a) Death. If Director dies while he is a
director of the Company, or having ceased to be a director, but during
the period during which he could have exercised the Option under this
Agreement, and has not fully exercised this Option, then this Option
may be exercised in full, at any time within twelve (12) months after
the Director's death by the executor or administrator of his estate or
-2-
<PAGE> 3
by any person or persons who have acquired this option directly from
the Director by bequest or inheritance, but only to the extent that,
at the date of death, the Director's right to exercise this option had
accrued and had not been forfeited pursuant to the terms of this
Agreement and had not been previously exercised.
(b) Disability. If Director ceases active
service by reason of Disability, Director shall have the right to
exercise this Option at any time within twelve (12) months after such
cessation of directorship, but only to the extent that, at the date of
such cessation of directorship, Director's right to exercise this
Option had accrued pursuant to the terms of this Agreement and had not
previously been exercised.
(c) Other Reasons. If Director ceases to be a
Director for any reason other than those mentioned above in
subsections (a) or (b), Director shall have the right, subject to the
restrictions referred to in this Section 4 to exercise the Option at
any time within thirty (30) days following such cessation, discharge
or termination but, only to the extent that, at the date of cessation,
discharge or termination, the Optionee's right to exercise such Option
had accrued pursuant to the terms hereunder and had not previously
been exercised.
(d) Change in Control. If any Change in Control
of the Company should occur, then the exercise dates of the Options
granted pursuant to this Agreement shall automatically accelerate and
all Options granted under this Agreement shall become exercisable in
full. However, in no event shall any Option be exercisable after the
date of termination of this exercise period of such Option specified
in Sections 2(a), 2(b) or 2(c) above.
5. Transferability. During the lifetime of Director,
this Option shall be exercisable only by Director and shall not be assignable
or transferable. In the event of Director's death, this Option shall not be
transferable by Director other than by will or the laws of descent and
distribution. Any other attempted alienation, assignment, pledge,
hypothecation, attachment, execution or similar process, whether voluntary or
involuntary, with respect to all or any part of this Option or right hereunder,
shall be null and void and, at the Company's option, shall cause all of
Director's rights hereunder to terminate.
6. Securities Act and Other Regulatory Requirements.
This option is not exercisable, in whole or in part, and the Company is not
obligated to sell any share of the Company's Common Stock subject to this
Option, if such exercise or sale, in the opinion of counsel for the Company,
would violate the Securities Act of 1933 (or any other federal or state
statutes having similar requirements) as it may be in effect at that time.
-3-
<PAGE> 4
The Board of Directors of the Company may require as a
condition of issuance of any shares under this option that Director furnish a
written representation that he or she is acquiring the shares for investment
and not with a view to distribution to the public.
The Board of Directors of the Company may decide, in its sole
discretion, that the listing or qualification of the shares of stock subject to
the option under any securities exchange requirements or under any applicable
law is necessary or desirable. If such a decision is made, this Option shall
not be exercisable in whole or in part unless and until such listing,
qualification, consent or approval shall have been effected or obtained free of
any conditions not acceptable to the Board of Directors of the Company.
7. Rights as a Shareholder. Director shall have no
rights as a shareholder with respect to any Shares covered by his Option
hereunder until the date of the issuance of a stock certificate for such
Shares. No adjustment shall be made for dividends (ordinary or extraordinary,
whether in cash, securities or other property), distributions or other rights
for which the record date is prior to the date such stock certificate is
issued, except as provided in Section 9 hereof.
8. Six-Month Holding Period. Neither this Option nor
any Share issuable upon exercise of this Option, may be sold or otherwise
disposed of prior to the date that is six (6) months and one (1) day following
the Automatic Grant Date.
9. Recapitalizations. Subject to any required action by
shareholders, the number of Shares covered by this Option and the Exercise
Price thereof shall be proportionately adjusted for any increase or decrease in
the number of issued Shares resulting from a subdivision or consolidation of
Shares or the payment of a stock dividend (but only of Common Stock) or any
other increase or decrease in the number of issued Shares effected without
receipt of consideration by the Company.
Subject to any required action by shareholders, if the Company
is the surviving corporation in any merger or consolidation, this Option shall
pertain and apply to the securities to which a holder of the number of Shares
subject to this Option would have been entitled. If the Company is not the
surviving corporation in any merger or consolidation, then this Option shall be
fully vested and exercisable until five (5) days prior to such merger or
consolidation (but shall terminate thereafter) unless provisions are made in
connection with such transaction for the continuance of the Plan or the
assumption or the substitution for this Option of a new option covering the
stock of a successor employer corporation, or a parent or subsidiary thereof,
with appropriate adjustments as to the number and kind of shares and prices. A
dissolution or liquidation of the Company shall cause this Option to terminate.
Except as expressly provided in this Section 9, the Director
shall have no rights by reason of any subdivision or consolidation of shares of
stock of any class, the
-4-
<PAGE> 5
payment of any stock dividend or any other increase or decrease in the number
of shares of stock of any class or by reason of any dissolution, liquidation,
merger or consolidation or spin-off of assets or stock of another corporation,
and any issue by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the number or
Exercise Price of Shares subject to this Option.
The grant of this Option shall not affect in any way the right
or power of the Company to make adjustments, reclassifications, reorganizations
or changes of its capital or business structure, to merge or consolidate or to
dissolve, liquidate, sell or transfer all or any part of its business or
assets.
10. Successors. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors,
heirs, beneficiaries, executors and administrators.
11. Paragraph Headings. Paragraph headings are for
convenience only and are not part of the context.
12. Terms of Plan. This Agreement shall be subject to
all of the provisions of the Directors' Stock Option Plan of the Company, as
amended from time to time, and such provisions are incorporated herein by this
reference. In the event of any conflict between the terms and provisions of
this Agreement and the terms or provisions of the Plan, the provisions of the
Plan shall prevail.
13. Non-Qualified Stock Option. This option is not
intended to satisfy the requirements of Section 422 of the Internal Revenue
Code of 1986, as amended.
ALPHA MICROSYSTEMS
By: /s/ DOUGLAS J. TULLIO
----------------------------
Name: Douglas J. Tullio
Title: President and Chief
Executive Officer
DIRECTOR:
/s/ HARRY L. HATHAWAY
--------------------------------
Harry L. Hathaway
-5-
<PAGE> 1
Exhibit 10.149
ALPHA MICROSYSTEMS
AGREEMENT TO GRANT NONQUALIFIED STOCK OPTION
(AUTOMATIC INITIAL OPTION GRANT PURSUANT TO DIRECTORS' STOCK OPTION PLAN)
(DIRECTOR WHOSE TENURE IS LESS THAN 3 YEARS)
THIS NONQUALIFIED STOCK OPTION AGREEMENT ("Agreement") is
entered into effective as of July 14, 1995 (the "Automatic Grant Date") and
between ALPHA MICROSYSTEMS, a California corporation (the "Company"), and
Richard E. Mahmarian ("Director"). Unless otherwise defined herein,
capitalized words used in this Agreement shall have the same meaning as such
terms are defined in the Company's Directors' 1993 Stock Option Plan (the
"Plan").
R E C I T A L S :
A. The Company has adopted and the shareholders of the
Company have approved the Plan.
B. Pursuant to the terms of the Plan, directors of the
Company who satisfy certain conditions receive an automatic grant of Options to
purchase Common Stock of the Company.
C. The Company and Director execute this Agreement to
reflect the terms of an automatic grant.
NOW THEREFORE, FOR GOOD AND VALUABLE CONSIDERATION, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Automatic Grant. Pursuant to the terms of the Plan,
Director is granted as of the Automatic Grant Date an option to purchase Ten
Thousand (10,000) Shares of the Company's Common Stock, at One Dollar
Twenty-Five Cents ($1.25) per share, which is equal to one hundred percent
(100%) of the Fair Market Value of a share of the Company's Common Stock on the
Automatic Grant Date.
2. Exercise Period of Option. Subject to Section 4
below, the Options reflected herein shall become exercisable in cumulative
increments at the following times and in the following amounts:
<PAGE> 2
(a) With respect to 50% of the underlying shares
of Common Stock, as of the day immediately prior to the first annual
meeting of shareholders after the Automatic Grant Date;
(b) With respect to an additional 25% of the
underlying shares of Common Stock, as of the day immediately prior to
the second annual meeting of shareholders after the Automatic Grant
Date; and
(c) With respect to an additional 25% of the
underlying shares of Common Stock, on the day immediately prior to the
third annual meeting of shareholders after the Automatic Grant Date.
The options granted hereunder shall lapse and expire
five (5) years from the date of this Agreement.
Notwithstanding the foregoing but still subject to
Section 4 below, this option shall automatically become fully exercisable upon
a "change in control" of the Company," as such term is defined in Section 2(d)
of the Company's Directors' Stock Option Plan.
3. Exercise. This option may be exercised on the terms
and conditions contained herein by giving ten (10) days' prior written notice
of exercise to the Company, specifying the number of shares to be purchased and
the price to be paid therefor and by delivering a check in the amount of the
purchase price payable to the Company. The purchase price may also be paid, in
whole or in part, by delivery to the Company of outstanding shares of the
Company's Common Stock valued at Fair Market Value, as defined in the Company's
Directors' Stock Option Plan.
Director agrees, as a condition to the exercise of this
Option, to make appropriate arrangements with the Company for the satisfaction
of any Federal, state or local income tax withholding requirements and Federal
social security employment tax requirements applicable to the exercise of this
Option or the sale of Shares acquired under this Option.
4. Cessation of Directorship. No Option may be
exercised after Director ceases to be a director except to the extent that the
Option was exercisable at the time of such cessation. No Option may be
exercised after its term expires or is otherwise canceled.
(a) Death. If Director dies while he is a
director of the Company, or having cased to be a director, but during
the period during which he could have exercised the Option under this
Agreement, and has not fully exercised this Option, then this Option
may be exercised in full, at any time within twelve (12) months after
the Director's death by the executor or administrator of his estate or
-2-
<PAGE> 3
by any person or persons who have acquired this option directly from
the Director by bequest or inheritance, but only to the extent that,
at the date of death, the Director's right to exercise this option had
accrued and had not been forfeited pursuant to the terms of this
Agreement and had not been previously exercised.
(b) Disability. If Director ceases active
service by reason of Disability, Director shall have the right to
exercise this Option at any time within twelve (12) months after such
cessation of directorship, but only to the extent that, at the date of
such cessation of directorship, Director's right to exercise this
Option had accrued pursuant to the terms of this Agreement and had not
previously been exercised.
(c) Change in Control. If any Change in Control
of the Company should occur, then the exercise dates of the Options
granted pursuant to this Agreement shall automatically accelerate and
all Options granted under this Agreement shall become exercisable in
full.
5. Transferability. During the lifetime of Director,
this Option shall be exercisable only by Director and shall not be assignable
or transferable. In the event of Director's death, this Option shall not be
transferable by Director other than by will or the laws of descent and
distribution. Any other attempted alienation, assignment, pledge,
hypothecation, attachment, execution or similar process, whether voluntary or
involuntary, with respect to all or any part of this Option or right hereunder,
shall be null and void and, at the Company's option, shall cause all of
Director's rights hereunder to terminate.
6. Securities Act and Other Regulatory Requirements.
This option is not exercisable, in whole or in part, and the Company is not
obligated to sell any share of the Company's Common Stock subject to this
Option, if such exercise or sale, in the opinion of counsel for the Company,
would violate the Securities Act of 1933 (or any other federal or state
statutes having similar requirements) as it may be in effect at that time.
The Board of Directors of the Company may require as a
condition of issuance of any shares under this option that Director furnish a
written representation that he or she is acquiring the shares for investment
and not with a view to distribution to the public.
The Board of Directors of the Company may decide, in its sole
discretion, that the listing or qualification of the shares of stock subject to
the option under any securities exchange requirements or under any applicable
law is necessary or desirable. If such a decision is made, this Option shall
not be exercisable in whole or in part unless and until such listing,
qualification, consent or approval shall have been effected or obtained free of
any conditions not acceptable to the Board of Directors of the Company.
-3-
<PAGE> 4
7. Rights as a Shareholder. Director shall have no
rights as a shareholder with respect to any Shares covered by his Option
hereunder until the date of the issuance of a stock certificate for such
Shares. No adjustment shall be made for dividends (ordinary or extraordinary,
whether in cash, securities or other property), distributions or other rights
for which the record date is prior to the date such stock certificate is
issued, except as provided in Section 9 hereof.
8. Six-Month Holding Period. Neither this Option nor
any Share issuable upon exercise of this Option, may be sold or otherwise
disposed of prior to the date that is six (6) months and one day following the
Automatic Grant Date.
9. Recapitalizations. Subject to any required action by
shareholders, the number of Shares covered by this Option and the Exercise
Price thereof shall be proportionately adjusted for any increase or decrease in
the number of issued Shares resulting from a subdivision or consolidation of
Shares or the payment of a stock dividend (but only of Common Stock) or any
other increase or decrease in the number of issued Shares effected without
receipt of consideration by the Company.
Subject to any required action by shareholders, if the Company
is the surviving corporation in any merger or consolidation, this Option shall
pertain and apply to the securities to which a holder of the number of Shares
subject to this Option would have been entitled. If the Company is not the
surviving corporation in any merger or consolidation, then this Option shall be
fully vested and exercisable until five (5) days prior to such merger or
consolidation (but shall terminate thereafter) unless provisions are made in
connection with such transaction for the continuance of the Plan or the
assumption or the substitution for this Option of a new option covering the
stock of a successor employer corporation, or a parent or subsidiary thereof,
with appropriate adjustments as to the number and kind of shares and prices. A
dissolution or liquidation of the Company shall cause this Option to terminate.
Except as expressly provided in this Section 9, the Director
shall have no rights by reason of any subdivision or consolidation of shares of
stock of any class, the payment of any stock dividend or any other increase or
decrease in the number of shares of stock of any class or by reason of any
dissolution, liquidation, merger or consolidation or spin-off of assets or
stock of another corporation, and any issue by the Company of shares of stock
of any class, or securities convertible into shares of stock of any class,
shall not affect, and no adjustment by reason thereof shall be made with
respect to, the number or Exercise Price of Shares subject to this Option.
The grant of this Option shall not affect in any way the right
or power of the Company to make adjustments, reclassifications, reorganizations
or changes of its capital or business structure, to merge or consolidate or to
dissolve, liquidate, sell or transfer all or any part of its business or
assets.
-4-
<PAGE> 5
10. Successors. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors,
heirs, beneficiaries, executors and administrators.
11. Paragraph Headings. Paragraph headings are for
convenience only and are not part of the context.
12. Terms of Plan. This Agreement shall be subject to
all of the provisions of the Directors' Stock Option Plan of the Company as
amended from time to time, and such provisions are incorporated herein by this
reference. In the event of any conflict between the terms and provisions of
this Agreement and the terms or provisions of the Plan, the latter shall
prevail.
13. Non-qualified Stock Option. This option is not
intended to satisfy the requirements of Section 422 of the Internal Revenue
Code of 1986, as amended.
ALPHA MICROSYSTEMS
By: /s/ DOUGLAS J. TULLIO
----------------------------
Name: Douglas J. Tullio
Title: President and Chief
Executive Officer
DIRECTOR:
/s/ RICHARD E. MAHMARIAN
--------------------------------
Richard E. Mahmarian
-5-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> FEB-25-1996
<PERIOD-START> FEB-27-1995
<PERIOD-END> AUG-27-1995
<CASH> 1,919
<SECURITIES> 0
<RECEIVABLES> 5,495
<ALLOWANCES> 0
<INVENTORY> 1,435
<CURRENT-ASSETS> 9,345
<PP&E> 15,991
<DEPRECIATION> 11,647
<TOTAL-ASSETS> 17,095
<CURRENT-LIABILITIES> 6,913
<BONDS> 0
<COMMON> 21,231
0
0
<OTHER-SE> (11,131)
<TOTAL-LIABILITY-AND-EQUITY> 17,095
<SALES> 7,824
<TOTAL-REVENUES> 17,150
<CGS> 4,561
<TOTAL-COSTS> 10,720
<OTHER-EXPENSES> 6,631
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 21
<INCOME-PRETAX> 93
<INCOME-TAX> 0
<INCOME-CONTINUING> 93
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 93
<EPS-PRIMARY> 0.01
<EPS-DILUTED> 0.01
</TABLE>
