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SECURITIES AND EXCHANGE COMMISSION
Washington, DC. 20549
FORM 10-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [Fee Required]
For the fiscal year ended FEBRUARY 25, 1996
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [No Fee Required]
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 SO. FAIRVIEW STREET, SANTA ANA, CA 92704
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (714) 957-8500
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
None None
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK
(Title of Class)
UNITS TO PURCHASE COMMON STOCK AND REDEEMABLE
COMMON STOCK PURCHASE WARRANT
(Title of Class)
REDEEMABLE COMMON STOCK PURCHASE WARRANT
(Title of Class)
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
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. []
The aggregate market value of the voting stock held by non-affiliates of the
registrant based on the closing sale price of its common stock on April 26, 1996
on the Nasdaq National Market, a date within 60 days prior to the date of
filing, was $26,587,919.
As of April 26, 1996, there were 6,595,453 shares of the registrant's common
stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE: NONE
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PART I
INTRODUCTORY NOTE
This Annual Report on Form 10-K contains certain forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act") and the
Company intends that such forward-looking statements be subject to the safe
harbors created thereby. These forward-looking statements include (i) the
ability of the Company to continue to meet its financial obligations and the
continued availability of financing, (ii) the market acceptance of the
Company's hardware and software products and services, including the recently
announced AlphaCONNECT, (iii) the continued development of the Company's
technical, manufacturing, sales, marketing and management capabilities,
(iv) anticipated competition, and (v) future success of the continued
implementation of the Company's transition plan, including its ability to
effectively and efficiently manage its resources.
The forward-looking statements included herein are based on current expectations
that involve a number of risks and uncertainties. The Company's future success
will be highly dependent upon its ability to develop, produce, and market
products and services that incorporate new technology, are priced competitively,
and achieve significant market acceptance. There can be no assurance that the
Company's products and services will be commercially successful or technically
advanced due to the rapid improvements in computer technology and resulting
product obsolescence. There is also no assurance that the Company will be able
to deliver commercial quantities of new products in a timely manner. The success
of new product and service introductions is dependent on a number of factors,
including market acceptance, the Company's ability to manage risks associated
with product and services transitions, the effective management of inventory
levels in line with anticipated product demand, the timely manufacturing of
products in appropriate quantities to meet anticipated demand, and the Company's
ability to manage its expenses in proportion to its revenues. There can be no
assurance that such new product and service introductions will occur without
adversely affecting the Company's revenues, cash flow, results of operations
and financial condition.
Assumptions relating to the foregoing involve judgments with respect to, among
other things, future economic, competitive and market conditions, all of which
are difficult or impossible to predict accurately and many of which are beyond
the control of the Company. In addition, the business and operations of the
Company are subject to substantial risks which increase the uncertainty inherent
in the forward-looking statements. In light of the significant uncertainties
inherent in the forward-looking information included herein, the inclusion of
such information should not be regarded as a representation by the Company or
any other person that the objectives or plans of the Company will be achieved.
ITEM 1. BUSINESS
Alpha Microsystems (the "Company" or "Alpha Micro") is a California corporation
with its principal offices located at 2722 S. Fairview Street, Santa Ana, CA
92704 (telephone number 714/957-8500). The Company provides information
technology products and services targeted at specific market niches both
directly and through value-added resellers ("VARS") and distributors. The
Company also provides consulting, networking, software support and maintenance
services, with approximately 46 locations in North America and the United
Kingdom.
This Annual Report on Form 10-K refers to various trademarks of the Company and
certain trademarks of other companies.
GENERAL DEVELOPMENT OF THE BUSINESS
The Company was incorporated under California law on March 17, 1977. During the
last five years, the Company has completed several acquisitions including
acquisitions of product lines and subsidiaries. To expand its service business,
the Company has made various acquisitions. In fiscal 1996, the Company acquired
the assets and ongoing contract revenue of Instant Data Services and Alpha
Technology. While the Company's acquisitions have enabled it to generate
additional services revenues, there has been significant attrition in acquired
customer bases.
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As part of the Company's strategy to enter vertical markets, it acquired, in
fiscal 1994, substantially all of the assets and service contracts of CV
Systems, which provided veterinary practice administration software. In fiscal
1996, the Company sold CV Systems to Veterinary Centers of America ("VCA"), a
major user of the product. The sale resulted from market pressures from
veterinary industry consolidation and the Company's belief that it could apply
its resources toward areas with greater growth potential.
In 1991, the Company acquired an interest in Sabre, which markets a product sold
under the tradename SWORDS to cash-and-carry wholesalers. Subsequently, the
Company acquired the remaining interest in Sabre Belfast in fiscal 1995 and
acquired the remaining interest in Sabre Dublin in fiscal 1996. SWORDS was
released for sale in Ireland in fiscal 1993, and in the United Kingdom in fiscal
1994.
The Company introduced two Windows-based products, PANDA, its food service
administration software, in fiscal 1995 and Alpha 2000, its dental practice
software, in fiscal 1996. The Company has refocused its marketing strategy for
PANDA and is evaluating additional development of Alpha 2000 in an effort to
economically enhance its market acceptance. Subsequent to year-end, the Company
introduced AlphaCONNECT, an Internet/Intranet software product for data mining,
harvesting, formatting, manipulation and delivery, and for the creation of
dynamically self-updating Web pages.
The Company currently conducts its European operations directly through Alpha
Microsystems Great Britain Limited ("AMGB"). In fiscal 1996, the Company
finalized the sale of Alpha Microsystems Belgium, S.A. to a member of its
Belgian management. The Company maintains several international distributor and
dealer relationships, including its former Belgium subsidiary.
DESCRIPTION OF BUSINESS
Alpha Microsystems, founded in 1977, is a supplier of information technology
products and services targeted at specific market niches. The Company has
historically had two principal lines of business: (1) the sale of computer and
networking hardware and software products, and (2) the service of its own and
third party hardware and software products as well as installation, training,
and consulting services. In recognition of the intensely competitive nature of
the computer hardware industry and the migration towards open system
environments and away from proprietary systems such as those primarily sold by
the Company, the Company has in the last several years as part of a transition
plan focused its efforts on vertical niche markets such as dental practice
management, and the expansion of its service business. In fiscal 1996, service
revenues accounted for 55.8% of total revenues and product sales accounted for
44.2% of total revenues, as compared to fiscal 1992, when service revenues
accounted for 33.3% of total revenues and product sales accounted for 66.7% of
total revenues.
The following table sets forth the percentage contribution to total Company
revenues of each of these principal lines of business for the periods indicated:
Percentage of Revenues
Fiscal Year End
<TABLE>
<CAPTION>
February 25, February 26, February 27,
1996 1995 1994
<S> <C> <C> <C>
Product Revenues 44.2% 48.5% 52.3%
Service Revenues 55.8% 51.5% 47.7%
</TABLE>
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IMPLEMENTATION OF TRANSITION PLAN
During the mid-1990s through fiscal 1996 the Company implemented a transition
plan to de-emphasize its hardware business, and focus on its software and
services businesses. At the same time, the Company has redeployed certain
assets, closed certain facilities, downsized its employment, initiated asset
management programs, and adjusted its intangibles to more accurately reflect
current market values.
CONSOLIDATION OF EUROPEAN OPERATIONS
The Company closed its Italian operation in fiscal 1994, and transferred
customer service responsibilities for Italian customers to its United Kingdom
subsidiary. The Company also closed its French subsidiary and disposed of its
Belgian subsidiary by selling it to one of the Belgian employees. As a result of
these actions, the only remaining material European operations are Alpha
Microsystems Great Britain Ltd., with offices in the United Kingdom, and Sabre
Business Systems Ltd., with offices in the United Kingdom and Ireland. This
strategic consolidation has streamlined the Company's European distribution
channels and reduced expenses associated with declining product lines.
EXPENSE REDUCTION--ASSET MANAGEMENT
The Company has taken steps to reduce operating expenses and to institute new
asset management techniques. Effective in the second quarter of fiscal 1996, the
Company moved its corporate, software development, engineering, and servicing
operations, as well as its downsized and largely outsourced hardware
manufacturing operation, into a smaller facility in Santa Ana, California, and
terminated its previous lease. The new facility is approximately 60% of the size
of the previous headquarters, and lease rates are substantially lower. The
Company has instituted asset management techniques to maximize available working
capital while funding software development; the techniques have included close
management of physical inventories and a focus on improving collections. As a
result of these efforts the Company's inventories have been reduced from
$6,124,000 at the end of fiscal 1992 to $943,000 at the end of fiscal 1996. The
Company has also reduced its personnel worldwide from 392 at the end of fiscal
1995 to 321 at the end of fiscal 1996.
EXPENSE REDUCTION--DE-EMPHASIS OF HARDWARE BUSINESS
The Company has de-emphasized its hardware business, and has significantly
reduced the expenses associated with this line of business. Steps taken have
included a substantial shrinkage in the Company's hardware workforce and sales
force, the outsourcing of subassemblies and certain product lines, the
reduction of floor space allocated to hardware integration, and a substantial
reduction in hardware engineering expense. The Company has also re-organized its
hardware business as a division within Alpha Microsystems Services Organization
("AMSO"), resulting in a reduction of personnel expenses associated with
hardware products.
INTANGIBLE WRITE-DOWN
The Company has written down the value of certain intangibles on its balance
sheet to more accurately reflect the current market value of such intangibles.
The latest write-down was taken at the end of fiscal 1996 and aggregated
$1,995,000; this write-down was associated with certain vertical software
products and goodwill.
EMPHASIS ON SOFTWARE AND SERVICE
The Company has redirected some of its available resources and assets toward the
development and sale of software and information technology services. The
Company's investment in the development and introduction of new products
contributed to its losses and negative cash flow during each of the fiscal
years 1995 and 1996.
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INTRODUCTION OF NEW PRODUCTS
The Company has introduced numerous new products during fiscal 1996 and the
first part of fiscal 1997. These include Alpha 2000 software for dental practice
management, PANDA enhancements for the Company's customers in institutional
foodservice administration, and the new AlphaCONNECT software, which represents
what the Company anticipates is the first product in a family of
Internet/Intranet software products.
SERVICES OPERATION
The Company and its subsidiaries maintain service operations which employ
approximately 149 service personnel worldwide (approximately 129 in North
America and 20 in Europe) to provide service and technical support to the
Company's users and certain dealers. The Alpha Microsystems Services Operation
("AMSO") provides multi-vendor hardware and software maintenance and repair
services throughout the United States and Canada via a network of 44 field
offices linked to a national dispatch and advisory center. The technical support
and service operations of the Company's European subsidiary serve the Company's
European dealers and users. Through the Alpha Micro Technical Assistance Center,
the Company responds to questions from dealers and end-users around the world by
electronic and telephone communications channels. The Company intends to expand
the service segment of its business through new service contracts, expansion of
time and material servicing, and alliances with third-party firms, although no
assurances can be given that the Company will be successful in expanding its
services operation above current levels.
AMSO's contribution to the Company's operations has increased over the past
years. On a worldwide basis, gross profit margins for service operations for
fiscal 1996, 1995, and 1994 were 30.4%, 29.8% and 38.2% respectively. The
expansion of AMSO has occurred in part through acquisitions. AMSO continues to
develop opportunities to service selected products manufactured by third parties
in an effort to more fully exploit the Company's service capabilities. AMSO's
services also include the design and installation of computer networks. Other
professional services offered by AMSO include consulting services related to
site preparation work, electrical power and cabling analysis, air conditioning,
humidity and static electricity problems, and lightning protection for computer
systems.
During fiscal year 1996, AMSO began development of a direct sales and marketing
group with a view toward expanding AMSO through this direct sales and marketing
group. AMSO's sales efforts are concentrated on securing contracts for service
of open systems such as IBM RS6000s and Microsoft and Novell networks. AMSO
will also continue to investigate acquisitions, but only on an opportunistic
basis.
PRODUCTS
HARDWARE
COMPUTER SYSTEMS. The Company supports its customers and VAR
distribution channel with its family of business-oriented computer systems. The
Company's computers are based primarily on the Motorola 680XX family of
microprocessors. In addition, the Company provides an array of video display
terminals, backup subsystems, memory boards, disk drives, and other components
and accessories.
The Company's primary product line, the AM Series, is based upon the Motorola
680XX family of microprocessors and primarily includes the Eagle family of
small business computer systems. The Eagle family was first introduced in 1994
with the latest member being the Super Eagle, which commenced delivery in late
fiscal 1996. The AM Series also includes the AM-4000 as well as the recently
announced AM-6000 that is anticipated to be available toward the end of fiscal
1997. The AM-6000 is based upon the latest and most powerful member of the
Motorola 680XX family, the Motorola 68060. However, the Company can make no
assurances at this time as to the future availability of the AM-6000.
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The AM Series supports users ranging from four with the Falcon add-in
application processor for personal computing to more than 200 with the AM-4000.
The Eagle 100 Business Solution, supporting up to 16 users, currently accounts
for a substantial portion of AM Series sales.
OPERATING SYSTEMS. The primary operating system licensed with
the Company's products is AMOS, the Company's proprietary operating system. The
Company also incorporates Novell NetWare, SCO UNIX, AT&T UNIX, MS-DOS, and
Microsoft Windows, among others, into certain of its products. In addition to
operating systems software, the Company markets and distributes a variety of
software products for its hardware systems including language compilers,
development and conversion tools, networking products, application programs,
and utility programs. These currently include AlphaBASIC, AlphaLAN (a
networking product for both serial and Ethernet-based networking), AlphaWRITE
(a word processor), AlphaCALC (an electronic spreadsheet), MULTI (a
multi-tasking windowing product) and others. In addition, the Company has
introduced the widely used AcuCOBOL language compiler for its AMOS based
systems. Using AlphaTCP/IP and AlphaDDE, the AMOS-based systems capability has
been expanded to the realm of client/server technology and other applications.
AMOS. The AM Series line is supported by the Company's
proprietary operating system, AMOS, which is installed on most of the Company's
computers worldwide. AMOS is tailored to provide a combination of high
performance and ease of use, while offering the flexibility of a multi-user
system. Because the AM Series incorporates AMOS, users can generally expand or
upgrade hardware with little or no modifications to existing applications
software, as well as draw on an existing library of applications software.
INTERNET/INTRANET SOFTWARE
AlphaCONNECT. On April 3, 1996, the Company announced the
introduction of AlphaCONNECT, which the Company anticipates is a first product
in a family of software products for use in Internet/Intranet applications.
AlphaCONNECT is a software product that mines, harvests, and manipulates data
from assigned locations on corporate Intranets and local area networks (LANs),
as well as from Internet sites using HTTP (Hyper Text Transfer Protocol) and FTP
(File Transfer Protocol) standards. AlphaCONNECT then formats and delivers the
acquired data from legacy sources to popular Windows-, Windows 95- and Windows
NT-compatible horizontal applications including Microsoft Excel, Microsoft
Access, Microsoft Word, Quattro Pro, WordPerfect, Borland Paradox, and Web
browsers such as Netscape.
Based on user-specified criteria and under the control of a built-in timer,
AlphaCONNECT automatically controls the entire harvesting and updating cycle.
The software can be set up to establish connections with legacy applications or
Web sites, collect the desired data, launch the appropriate Windows application
or Web page updating routines, filter the incoming source data, map the output
to the specified destination and shut down the application when all processes
are completed. When delivering data to Windows applications, AlphaCONNECT can
create new documents or spreadsheets, or update existing ones containing
user-defined formulas, formats, and attributes.
AlphaCONNECT also facilitates the development and maintenance of dynamically
self-updating Web pages.
AlphaCONNECT beta tests were conducted at discrete customer locations, and have
also been conducted by visitors to the Company's World Wide Web page, who have
been able to download beta versions of AlphaCONNECT since April 3, 1996. These
beta tests have resulted in various enhancements to AlphaCONNECT, principally
associated with ease of use, connectivity and compatibility with various Web
browsers. The Company anticipates that it will release AlphaCONNECT for sale in
late May 1996, but no assurances can be given that it will be released for sale
at that time (or at all), or that sales of AlphaCONNECT will materialize or will
be significant.
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The Company is researching and developing additional Internet/Intranet products
for announcement in upcoming months. Some of these products are anticipated to
broaden the plug-and-play compatibility of the software for additional popular
horizontal applications, and to increase its ease of use. Other of these
products are anticipated to be plug-ins directed at specific legacy systems. No
assurance can be given that any additional products will be successfully
developed or sold.
VERTICAL MARKET SOFTWARE
ALPHA 2000. Alpha 2000, announced in mid-1995 and released
for deliveries in November 1995, is a Windows-based suite of software
applications for use in dental practices. Modules include practice management,
certain diagnostic interfaces, office utilities, and certain marketing
applications. Alpha 2000 is a successor to FOCUS, a dental practice management
system developed and installed by the Company's Alpha HealthCare subsidiary
during the 1980s. Currently, the Company believes there are approximately 800
installations of FOCUS systems, addressing the needs of approximately 2,800
health care professionals. Alpha 2000 was introduced with the goal of expanding
the marketplace addressable by Alpha HealthCare by providing industry-standard
and broadly compatible Microsoft Windows-based systems. During fiscal 1996,
sale of Alpha 2000 generated only approximately $35,000 in revenues, primarily
because the product was introduced late in the fiscal year and because the
product required further development to more fully meet the needs of the
marketplace. Principally because of its short market history, no assurances can
be given that Alpha 2000 sales will develop or increase, or that Alpha 2000
will generate substantial revenues or gross profits.
PANDA. PANDA is a software package designed for use in
institutional, primarily educational, foodservice administration applications.
The Company has approximately 15 district installations of PANDA that serve
approximately 95 primary and 38 secondary schools in the state of California.
For fiscal 1996, PANDA generated approximately $426,000 in revenues, and its
expense, principally associated with software enhancement, on-site consulting
with customers, and maintenance, substantially exceeded the gross profits
generated. The Company is currently evaluating its plans for PANDA, and expects
to continue to sell PANDA in California, to provide support to current
installations, and to continue to enhance it on a diminished expense basis.
SWORDS. SWORDS, first introduced by Sabre Business Systems in
Ireland in 1985, was acquired by the Company in its acquisition of Sabre in
1991. SWORDS is a software application designed for use by wholesalers,
distributors, and "cash-and-carry" markets in the United Kingdom and Ireland.
SWORDS, which operates in AMOS and open systems environments such as AcuCOBOL,
includes point of sale operations for both over-the-counter and check-out lane
operations, and supports mobile, remote capture functions from delivery trucks
and vans. Through a number of special features including built-in pricing
flexibility and extensive on-line history files, SWORDS provides real-time
management of gross profit margins, whether during purchase order placement or
at the point of sale. SWORDS also provides users with an extensive range of key
inventory, purchasing, sales, and management reports. SWORDS currently has
approximately 101 installations, and generated revenue of approximately
$1,791,000 in fiscal 1996. The Company expects to continue to sell the product
in the United Kingdom and Ireland. No assurances can be made that SWORDS sales
will grow from current levels.
DISTRIBUTION AND MARKETING
The Company currently markets its hardware products primarily through a network
of approximately 221 dealers and distributors, approximately 179 of which are
located in North America, Latin America, Australia and the Asia Pacific area and
the remainder of which are located in Western Europe.
The terms of most of the agreements between the Company and its dealers provide
for a non-exclusive one-year term with one-year renewals, terminable upon 60
days notice. Most dealers pay an annual fee to the Company to receive marketing,
administrative, and technical support.
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The Company's distribution to its dealers and distributors is supported by
approximately 15 sales and marketing personnel located at the Company's
headquarters as well as in various metropolitan locations throughout the United
States and England. In addition, the Company engages in direct marketing with
respect to its vertical niche operations and in its service operations.
During fiscal 1996, 1995, and 1994, approximately 30%, 30%, and 31% of the
Company's net sales were made to foreign dealers and users. The Company
distributes its products in Great Britain and Western Europe through its
subsidiary in Great Britain which, in turn, sells directly and through
independent distributors and dealers. From its headquarters in the United
States, the Company sells its products directly to distributors and independent
dealers in Mexico, Latin America, Australia, the Asia Pacific area, and other
international markets.
Historically, the Company's dealer organization has been a strength of the
Company's hardware sales program. For a variety of reasons, including the
current pressures in the computer industry to move toward open systems hardware,
increasing numbers of dealers have migrated away from the Company's traditional
hardware products or have added other competing products to their product
offerings. In addition, the computer industry market conditions continue to
threaten the viability of many computer product distributors and dealers, and
the Company's distributors and dealers are not immune to these conditions.
Sales of the Company's hardware are dependent upon several large customers,
however none of these customers represent more than 10% of the consolidated
revenues. The loss of one or more of these customers could have a material
adverse effect on the Company's results of operations.
INTEGRATION AND SUPPLIES
The Company's manufacturing process consists primarily of assembling,
integrating, and testing a wide variety of purchased electronic and
electromechanical components and subassemblies. Most components and
subassemblies are available from a number of alternative sources and certain
suppliers have provided the Company with favorable consignment arrangements.
However, a number of components and subassemblies used by the Company are
available from a single or limited number of outside suppliers. Some of these
components may periodically be in short supply and the Company has, on occasion,
experienced temporary delays or increased costs in obtaining these components.
The Company currently has more than one available source of supply for most of
its required components and subassemblies. As to those for which it does not
have more than one qualified source of supply, it believes it could redesign its
products so as to replace such single source component with alternate
components, if necessary. The Company maintains a supply of such single source
components which it believes is sufficient to enable it to continue operations
until any replacement supplier could be qualified and any necessary redesign
could be completed--with the exception of a line of Motorola microprocessors, on
which the Company's designs are dependent. The inability of the Company to
obtain the components and subassemblies necessary to enable it to fill its
then-existing orders for any reason, including, but not limited to, shortages,
product delays or work stoppages experienced by the Company's suppliers, could
have a material adverse effect on the Company's business, results of operations
and financial condition.
The Company's backlog is not significant because lead time is typically less
than one week from receipt of order to shipment. The Company buys materials
pursuant to short-term forecasts and builds inventory to a semi-finished goods
state. The finished products are then integrated based upon individual customer
orders.
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FOREIGN OPERATIONS
The Company's foreign sales to dealers and users comprise a substantial part of
the Company's total net sales (30%, 30%, and 31% in fiscal 1996, 1995, and 1994,
respectively). In fiscal 1996, approximately 59% of the Company's foreign sales
were product sales and 41% were service revenues. Currently, the Company
operates its European operations through AMGB and Sabre. See Note 11 to the
Company's Notes to Consolidated Financial Statements contained elsewhere in this
Annual Report on Form 10-K for financial information concerning the Company's
foreign operations.
The Company believes that its gross profit margins with respect to foreign sales
are not materially different from gross profit margins with respect to domestic
sales. A significant portion of international receivables and payables are in
currencies other than U.S. dollars, the value of which fluctuates in relation to
U.S. currency. Currency fluctuations can have a material adverse affect on the
Company's foreign revenue, profitability and cash flow in terms of U.S. dollars.
Foreign currency exchange gains included in the determination of income (loss)
from operations before taxes and extraordinary item were $76,000, $93,000, and
$(216,000) for the 1996, 1995, and 1994 fiscal years, respectively. To minimize
the extent to which the Company may be affected by changes in the value of
foreign currencies in relations to the U.S. dollar, from time to time the
Company hedges some of its foreign currency transactions by short-term forward
foreign exchange contracts. The Company's operations outside the United States
are subject to the usual risks and limitations attendant upon investments in
foreign countries, such as fluctuations in currency values, exchange control
regulations, wage and price controls, employment regulations, effects of foreign
investment laws, governmental instability (including expropriation or
confiscation of assets), and other potentially detrimental domestic and foreign
governmental policies affecting U.S. companies doing business abroad.
As part of its commitment to providing quality products, AMGB has obtained
certification for quality control standards for England, British Standard 5750.
WARRANTY
The Company provides a one-year parts and labor warranty on its AM-4000 system
and a one-year parts warranty on all of its other products, other than software.
Software licensed by the Company is not warranted by the Company and is licensed
"as is." Applications software provided by third parties is covered by the
warranties of the third party suppliers. The Company has not had significant
warranty problems and believes its warranty reserves are adequate based on the
Company's historical experience.
RESEARCH AND DEVELOPMENT
The Company intends to continue investing in research and development, even
though such costs may continue to be reduced as a result of the Company's move
towards OEM supplied products and systems assembly and integration. Annually,
management determines the amount of such investment after considering the
Company's profitability levels and technological standing within the industry.
Research and development expenses totaled $2,093,000, $2,239,000, and
$2,847,000 or 14.5%, 11.9%, and 13.8% of the Company's product revenue,
respectively, in fiscal years 1996, 1995, and 1994. In accordance with
Statement of Financial Accounting Standards No. 86, the Company capitalizes
certain engineering costs related to software development after technological
feasibility has been established and amortizes these costs as the respective
products are sold. See Note 1 to the Notes to Consolidated Financial Statements
included elsewhere in this Annual Report on Form 10-K.
The Company continues to utilize independent software developers where
appropriate and has entered into agreements with such developers to design,
enhance, and/or support products to be marketed by the Company. Some agreements
provide for an initial amount to be paid as a development fee and a royalty
structure based on future revenues received from the developed product. This
structure allows the Company to reduce current costs related to development and
support of such products, while deferring
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royalty costs against future revenues. The remainder of the agreements are
usually structured such that these independent software developers are
compensated on an hourly rate basis.
COMPETITION
The computer industry is characterized by rapid technological changes and
product obsolescence and the Company, in particular, faces severe competitive
pressures as many competitors have aggressively targeted the broad range of
market segments in which the Company's products and services compete. The
Company's competition includes a large number of hardware manufacturers, service
providers and software developers and re-sellers, many of which have longer
operating histories, greater name recognition, larger installed customer bases
and databases and significantly greater financial, technical and marketing
resources than the Company. Such competitors may be able to undertake more
extensive marketing campaigns and make more attractive offers to potential
employees, distribution partners, advertisers and content providers. As a
result of their greater resources, they may also be better able than the
Company to modify and enhance their products to meet changing market demands.
In addition, due to the declining popularity of proprietary systems in favor of
open systems such as Microsoft Windows, there are an ever declining number of
distributors, dealers and developers of software and related products for use
with the Company's proprietary systems, which continues to have an adverse
effect upon the Company's competitive position. There can be no assurance that
competition from existing competitors will not substantially increase, that
established or new companies will not enter the market in direct competition
with the Company or that the Company will be able to compete successfully with
such existing or new competitors.
In addition, with respect to the Company's new software product, AlphaCONNECT,
the market for Internet services and products is intensely competitive. Since
there are no substantial barriers to entry for Internet services and products,
the Company expects competition in these markets to persist, intensify and
increase in the future. The Company believes that the principal competitive
factors in these markets are name recognition, performance, ease of use and
functionality. In the future, the Company may encounter competition from on-line
service providers, Web site operators, providers of Web browser software (such
as Netscape or Microsoft) and other Internet services and products that
incorporate data retrieval, collection and conversion features into their
offerings, as well as competition from computer operating systems companies
such as Microsoft, which in the past has bundled software with its operating
systems at little or no additional cost to users. Consequently, if commercially
viable, AlphaCONNECT software will likely at some point, be subject to price
erosion due to free client software distributed by on-line service providers,
Internet access providers, operating system providers and others.
The Company's future success will depend in significant part on its ability to
adapt to rapidly changing technologies, keep its products competitively priced,
maintain and enhance its market position, adapt its services and products to
evolving industry standards, and continually improve the performance, features
and reliability of its services and products in response to both evolving
demands of the marketplace and competitive service and product offerings. There
can be no assurance that the Company will have the resources to respond to this
rapidly evolving market.
GOVERNMENTAL REGULATION
The Company's operations are subject to a number of federal, state, and local
laws relating to environmental, health, safety and labor matters applicable to
business generally. The Company believes its business is operated in substantial
compliance with all material applicable government regulations. However, there
can be no assurances that future regulations will not require the Company to
modify its products, business or operations to meet environmental, health,
safety, or labor requirements, or that the Company will be able, for financial
or other reasons, to comply with such future requirements. Failure to comply
with future governmental regulations could subject the Company to fines or
injunctions, which could result in a material adverse effect on the Company's
business, results of operations, and financial condition. Although the Company
is not aware of any claim involving violation of environmental, health, safety
or labor laws or regulations, there can be no assurance that such claim may not
arise in the future,
10
<PAGE> 11
which may have a material adverse effect on the Company's business, results of
operations, and financial conditions.
The currently marketed versions of the Company's multi-user systems (including
the recently announced Super Eagle) have been successfully tested by an
independent testing agency for compliance with Federal Communications Commission
requirements for electromagnetic interference in commercial environments.
LICENSES, PATENTS AND TRADEMARKS
The Company markets a variety of software programs that it has either developed
internally, acquired ownership rights to, or is marketing through license
agreements with third party vendors. Internally developed software, as well as
software in which all ownership rights, title, and interest have been acquired
from any third party vendor, is distributed to dealers and users through a
licensing system primarily in object code format. Source code to these software
programs is not licensed for distribution and the Company claims such
intellectual property protection as may be available for such source code. The
Company's proprietary AMOS operating system is marketed and maintained in this
manner. Software acquired from third party vendors pursuant to master licenses
is distributed to the Company's dealers and users for their use pursuant to a
structure of sub-licenses consistent with such master licenses.
The Company licenses the AlphaLAN network software product from U.A. Systems,
Inc. pursuant to a nonexclusive, worldwide (except India) license which was
renewed for a 3-year term ending December 31, 1998 with successive one year
renewals. Either party may terminate such agreement upon giving notice to the
other party at least 60 days prior to the end of any one year renewal period.
The Company licenses the AcuCOBOL AMOS based compiler from AcuCobol,
Incorporated pursuant to a 10 year, exclusive worldwide license commencing
October 29, 1992 and terminable by AcuCobol, Incorporated upon default by the
Company, including the Company's failure to meet certain minimum royalty
requirements. Although no assurances can be given, the Company believes it will
be able to renew its material licenses on terms which will be acceptable.
In addition to claiming standard copyright protection, the Company has
submitted a provisional patent application to the United States Patent and
Trademark Office with respect to certain aspects of its AlphaCONNECT
technology. There can be no assurance that any patent will be issued with
respect to any aspect of AlphaCONNECT. The provisional application will become
abandoned one year after filing unless the Company files a regular patent
application referencing the provisional application. The Company may decide not
to file a regular patent application or may decide to abandon prosecution prior
to issuance of a patent. In addition, there can be no assurance that the
provisional patent application will provide priority for a later filed regular
patent application. If any patent issues, there can be no assurance that any
claims allowed will be sufficiently broad to protect the Company's technology,
to deter competitors or to prevent third parties from developing equivalent
technology that does not infringe such claims, or that the patent will not
otherwise be circumvented. In addition, there can be no assurance that any
patents that may be issued will not be challenged, invalidated, or held
unenforceable, or that any rights granted thereunder would provide proprietary
protection to the Company and its investment in AlphaCONNECT. Failure of any
patents to provide protection of the Company's technology may make it easier
for the Company's competitors to offer technology equivalent to or superior to
the Company's technology.
The Company has federally registered its trademarks "AlphaBASIC," "AlphaPASCAL,"
"AlphaSERV," "AlphaRJE," "AlphaACCOUNTING," " AlphaCALC," "AlphaWRITE,"
"AlphaFORTRAN 77," "AlphaCOBOL," "AMOS," "CaseLode," "AlphaLAN," "NODESTAR,"
"Videotrax," " AMSO," "Alpha2000," "Image.Doc," and the slogan "Right. From The
Start." Several of these marks have also been registered in certain foreign
countries. The Company claims the trademark "OmniBasic" in certain foreign
countries. The Company has also registered the trademark "Alpha Micro" in
selected states and various foreign countries. In addition, the Company has
pending application for the mark "inSight/am." AlphaCONNECT is a trademark of
the Company.
To protect its intellectual property, the Company also relies in part on
agreements with strategic employees and consultants which typically include
provisions concerning confidentiality and ownership of work product. Despite
these precautions, there can be no assurance that such agreements will provide
the Company with meaningful remedies in the event of an improper use or
disclosure of proprietary information. In addition, there can be no assurance
that third parties will not assert infringement claims against the Company in
the future or that the Company will be able to resolve such claims or disputes
on terms acceptable to the Company.
11
<PAGE> 12
While patent, copyright and trade secret rights provide certain protection to
the Company, the Company believes that its success is less dependent on those
ownership rights than on its innovative skills, technical competence, and
marketing abilities.
EMPLOYEES
On February 25, 1996, the Company and its subsidiaries employed approximately
321 persons. The Company's ability to attract and retain qualified personnel is
a significant factor in its future success. The Company has never experienced a
work stoppage and at present no employees are represented by a labor
organization. The Company considers its employee relations to be good.
ITEM 2. PROPERTIES
As part of its continuing efforts to reduce expenses, the Company negotiated a
new 66-month lease for a 66,200 square foot facility located within one mile of
its previous 104,000 square foot facility. The new lease, which began on July 1,
1995, provides significant savings. The average annual rent for the new facility
is $285,000, compared to $680,000 for the former facility in fiscal 1995. In
addition, the Company negotiated a cash rent reduction in exchange for paying
the up-front cost of certain leasehold improvements. These leasehold
improvements included office construction, plumbing, wiring, and general tenant
improvements. The costs of these improvements was $923,000, which will be
depreciated over the life of the lease.
ITEM 3. LEGAL PROCEEDINGS
Carlos Garralda and Andre Warnier, employees of the Company's former subsidiary,
Alpha Microsystems Belgium, S.A. ("AMB"), filed an action in November 1995
against AMB and the Company in Orange County Superior Court alleging that AMB is
in breach of its obligations under Belgium employment law to pay salaries for a
notice period of up to two years following termination of employment. The
Plaintiffs allege, among other things, that the Company has alter ego liability
for these obligations. The plaintiffs are claiming compensatory damages in
excess of $780,000 and unspecified punitive damages. The Court has temporarily
stayed this lawsuit until July 18, 1996 in order to await the outcome of
virtually identical litigation instituted by the plaintiffs against AMB in
Belgium. Although no assurances as to the outcome of the litigation can be
given, management believes that its defenses to the litigation are meritorious.
In December 1995, Phoenix Marketing, Inc. dba Electronic Business Systems, Inc.,
in response to the Company's collection efforts for a past due account, filed an
amended cross-complaint alleging damages of $3,200,000 for defective
merchandise, loss of business reputation and loss of future business. Although
no assurances as to the outcome of the litigation can be given, management
believes that the plaintiff's claims are without merit. Trial is presently set
for November 1996.
The Company is currently involved in certain other claims and litigation. The
Company does not consider any of these other claims or litigation to be
material. Management has made provisions in the Company's financial statements
for the settlement of lawsuits for which unfavorable outcomes are both probable
and estimable. In the opinion of management, results of known existing claims
and litigation will not have a material adverse effect on the Company's
consolidated financial position, results of operations or cash flows.
12
<PAGE> 13
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Inapplicable.
13
<PAGE> 14
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's common stock is included on the National Association of Securities
Dealers Automated Quotation ("Nasdaq") National Market under the symbol ALMI.
On November 26, 1993, the Company completed its shareholder rights offering,
which entitled shareholders to subscribe on a one-to-one basis for up to
3,095,892 units, (plus 366,999 units sold to cover over-allotments), each unit
consisting of one share of common stock and one redeemable warrant to purchase
one share of common stock. A total of 900,891 rights were exercised by
shareholders at a subscription price of $1.625. On December 8, 1993, the
subsequent public offering was completed for the sale of the remaining 2,195,001
units, as well as the over-allotment exercised by the Underwriters. The net
proceeds to the Company totaled approximately $3,894,000 of which $1,200,000 was
used to repay borrowings under the Company's line of credit.
The units were traded on the Nasdaq Small Cap System under the symbol "ALMIU."
On December 31, 1993, the warrants became detachable from the common stock and
are now traded on the Nasdaq National Market under the symbol "ALMIW." The units
discontinued trading on January 4, 1994.
The following table sets forth the range of high and low sales prices for the
Company's common stock (ALMI) for the fiscal quarters indicated, as quoted on
the Nasdaq National Market:
<TABLE>
<CAPTION>
HIGH LOW
---- ---
Fiscal year ended February 25, 1996
- -----------------------------------
<S> <C> <C>
First Quarter $1 3/32 $25/32
Second Quarter 1 7/16 29/32
Third Quarter 1 7/16 15/16
Fourth Quarter 1 1/4 9/16
Fiscal year ended February 26, 1995
- -----------------------------------
First Quarter $2 3/4 $1 3/4
Second Quarter 2 1/4 1 1/2
Third Quarter 1 7/8 1 3/16
Fourth Quarter 1 3/8 3/4
</TABLE>
On April 26, 1996, the high was $4 3/8, the low was $3 31/32, and the
approximate number of record holders of the Company's common stock was 514.
The Company has not paid dividends on its common stock, and it anticipates that
for the foreseeable future it will not pay dividends. Should the Company desire
to pay dividends, any such dividends would be subject to the prior written
consent of the Company's lender and to any preferential rights to receive
dividend payments contained in any securities subsequently issued by the
Company.
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<PAGE> 15
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
------------------------------------------------------------------------------
FEB. 25, FEB. 26, FEB. 27, FEB. 28, FEB. 23,
1996 1995 1994 1993 1992
----------- ----------- ---------- ----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
STATEMENT OF OPERATIONS DATA:
<S> <C> <C> <C> <C> <C>
Product sales $ 14,466 $ 18,823 $ 20,582 $ 28,261 $ 32,881
Service revenues 18,297 19,962 18,747 16,781 16,439
----------- ----------- ---------- ----------- ----------
Net sales 32,763 38,785 39,329 45,042 49,320
Cost of sales 22,967 27,385 23,876 28,440 28,927
----------- ----------- ---------- ----------- ----------
Gross margin 9,796 11,400 15,453 16,602 20,393
Income (loss) before taxes
and extraordinary item (3,555)(3) (6,247)(2) 223 (3,819)(1) 529
Income (loss) before
extraordinary item (3,575)(3) (6,247)(2) 336 (3,732)(1) 153
Net income (loss) (3,575)(3) (6,247)(2) 336 (3,732)(1) 304
Income (loss) per share:
Income (loss) before
extraordinary item $ (0.54) $ (0.95) $ 0.08 $ (1.25) $ 0.05
Extraordinary item -- -- -- -- 0.05
----------- ----------- ---------- ----------- ----------
Net income (loss) $ (0.54) $ (0.95) $ 0.08 $ (1.25) $ 0.10
=========== =========== ========== =========== ==========
Number of shares used in the
computation of per share
amounts 6,564,882 6,580,470 4,025,090 2,993,878 2,960,582
BALANCE SHEET DATA:
Current assets $ 7,199 $ 10,914 $ 15,252 $ 15,193 $ 18,080
Current liabilities 6,377 7,726 6,936 8,985 9,158
----------- ----------- ---------- ----------- ----------
Working capital 822 3,188 8,316 6,208 8,922
Inventories 943 1,948 2,593 4,102 6,124
Total assets 13,061 17,902 23,100 20,775 25,278
Long-term obligations 201 140 154 50 350
Shareholders' equity 6,483 10,036 16,010 11,740 15,770
</TABLE>
(1) Includes a charge of $2,676,000 for the restructuring of the Company's
operations including the closure of its operations in France and Italy.
(2) Includes charges of $972,000 for the sale of Alpha Microsystems Belgium,
S.A. and for the following write-downs: $783,000 for customer lists,
$649,000 for software associated with the Company's hardware business,
$507,000 associated with slow moving service spares, $279,000 for
severence, $694,000 for slow moving inventory associated with the Company's
hardware business, and $304,000 in anticipation of the sale of the imaging
and VSO product lines.
(3) Includes charges of $1,995,000 for the write down of intangible assets
primarily associated with the Company's Alpha HealthCare subsidiary and
PANDA division.
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<PAGE> 16
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION
SUMMARY
The following table sets forth operational data as a percentage of net sales for
the periods indicated:
<TABLE>
<CAPTION>
RELATIONSHIP TO NET SALES
---------------------------------------
Fiscal Year Ended
---------------------------------------
Feb. 25, Feb. 26, Feb. 27,
1996 1995 1994
------- -------- --------
<S> <C> <C> <C>
Net sales:
Product sales 44.2% 48.5% 52.3%
Service revenues 55.8 51.5 47.7
----- ----- -----
Total net sales 100.0% 100.0% 100.0%
Cost of sales 70.1 70.6 60.7
----- ----- -----
Gross margin 29.9% 29.4% 39.3%
Selling, general and administrative expense 36.2 40.1 31.0
Research and development expense 6.4 5.8 7.2
Interest (income) expense, net (0.2) (0.4) (0.1)
Other (income) expense (1.6) -- 0.6
----- ----- -----
Income (loss) before taxes (10.9) (16.1) 0.6
Net income (loss) (10.9)% (16.1)% 0.8%
</TABLE>
GENERAL
The Company, which for its first decade was principally a designer and vendor of
computer hardware and related systems software, has transitioned its business to
focus on areas that the Company believes offer higher growth potential. During
this transition, the Company has found it necessary to make periodic
adjustments in response to changing market conditions and limited financial
resources. Consequently, during the last few years, the Company has incurred
substantial losses and taken significant write-offs against non-performing
assets. The Company has also been faced with significant product launch delays,
resource constraints, and management changes. The Company anticipates that it
will have to continue to be flexible in considering future shifts in strategy as
changes occur in the highly competitive and dynamic marketplace in which the
Company competes.
As part of its transition strategy, the Company has also continued to focus on
reducing expenses in line with decreasing revenues in its traditional hardware
business. The Company is currently investing additional resources in its service
business as part of its efforts to broaden its service product offerings and
enhance its service organization's sales and marketing presence. In fiscal 1996,
the Company developed its new AlphaCONNECT software product which is used for
data mining, harvesting, formatting, manipulation, and delivery, and for the
creation of self-updating Web pages, and which the Company anticipates will be
available for sale during fiscal 1997. There can be no assurance as to the
degree of customer acceptance or market potential for the AlphaCONNECT product.
Also, the Company applied resources towards its vertical software products,
PANDA and Alpha 2000, during fiscal 1996. In addition to focusing on new areas
of its business, the Company continues in its efforts to efficiently manage its
assets and to consolidate its European operations.
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<PAGE> 17
During fiscal 1996, sales of both the PANDA and Alpha 2000 product lines did not
develop as anticipated. Both product lines contributed significantly to the
Company's fiscal 1996 operating loss with only minimal revenues being generated
by each of these products. As part of the Company's continuing analysis of the
net realizable value of intangible assets of these product lines, the Company
wrote off $1,389,000 in capitalized software, $373,000 for PANDA and $1,016,000
for Alpha 2000, during the fourth quarter of fiscal 1996 resulting in net
capitalized software of $349,000 for PANDA and $132,000 for Alpha 2000 as of
year-end. In addition, the Company evaluated the potential impairment of the
remaining goodwill and other intangible assets associated with the Alpha
HealthCare acquisition and wrote off $481,000 of goodwill and intangibles. The
Company has refocused its marketing strategy for PANDA and is evaluating
additional development of Alpha 2000 in an effort to economically enhance its
market acceptance.
The Company used $293,000 of cash in operations during fiscal 1996 and the cash
balance decreased to $505,000 at February 25, 1996, compared to $3,289,000 at
February 26, 1995. This decline was primarily due to investments in leasehold
improvements at the Company's new Santa Ana location of approximately $900,000,
and in vertical market products and service assets in fiscal 1996. These
investments included $470,000 for PANDA, $506,000 for Alpha 2000, and $421,000
for certain service assets.
The Company operates on a 52/53-week fiscal year ending on the last Sunday in
the month of February. Fiscal years 1996, 1995, and 1994 ended on February 25,
1996, February 26, 1995, and February 27, 1994, respectively.
The discussion herein is qualified by reference to the Introductory Note set
forth in the beginning of this Annual Report on Form 10-K.
Fiscal 1996 compared to Fiscal 1995
Revenues in fiscal 1996 of $32,763,000 decreased $6,022,000, or 15.5 percent,
compared to $38,785,000 for fiscal 1995 revenues. The largest portion of this
decrease was in product revenues which decreased $4,357,000, or 23.1 percent, to
$14,466,000 from $18,823,000 in fiscal 1995. This decrease was attributable in
part to actions taken by management during the year, such as the sale of the
Company's Pick 64, VSO (veterinary software) and imaging software, along with
the loss of sales for related hardware. In addition, product revenue decreased
due to the Company selling its Belgian subsidiary to local management during the
first quarter of fiscal 1996. These actions accounted for $2,394,000, or 54.9
percent, of the decrease in product revenues during the year. In addition, the
Company's traditional hardware business continued to decline by approximately
$1,773,000, or 19.3 percent, to $7,400,000. During fiscal 1996, European
hardware revenues decreased $1,128,000, or 18.7 percent, to $4,891,000 from
$6,019,000 in fiscal 1995.
Service revenues in fiscal 1996 decreased by $1,665,000, or 8.3 percent, to
$18,297,000 from $19,962,000 in fiscal 1995. The decrease was primarily
associated with the Company's United States operations and was mainly
attributable to a reduction in service revenue from prior acquisitions (Alpha
Computer Service, Inc. and MGI Group, International, Inc.). In addition,
revenues from the traditional proprietary service contracts declined. However,
the Company was able to stabilize its service business during fiscal 1996,
generating approximately $3,400,000 in domestic revenues during each of the four
quarters of the year with no material drop off in business during the last half
of the year. This was primarily accomplished by additional investment in service
sales and marketing personnel, increased marketing and advertising, and
expanding and enhancing its base of support services such as field maintenance,
networking, and open and mixed system operating environment support, including
AIX and IBM RS6000 support.
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<PAGE> 18
The gross margin decrease of $1,604,000 to $9,796,000 in fiscal 1996 compared to
$11,400,000 for fiscal 1995 was primarily associated with lower revenues. The
gross margin percentage increase of 0.5 percentage points to 29.9 percent in
fiscal 1996 compared to 29.4 percent in fiscal 1995 was primarily associated
with the Company's write-offs to cost of goods sold of approximately $2,777,000
in the fourth quarter of fiscal 1995, compared to write-offs in the fourth
quarter of fiscal 1996 of $1,389,000, in capitalized software associated with
the PANDA and Alpha 2000 product lines. The Company has refocused its marketing
strategy for PANDA and is evaluating additional development of Alpha 2000 in an
effort to economically enhance its market acceptance.
Product gross margins in fiscal 1996 decreased by $1,213,000 to $4,238,000 from
$5,451,000 in fiscal 1995 due to the decrease in product sales in fiscal 1996
when compared to fiscal 1995. The gross margin was negatively impacted in fiscal
1995 by the write-offs taken in the fourth quarter, which was primarily
responsible for the comparative increase in fiscal 1996. Product gross margin as
a percentage of product sales for fiscal 1996 increased by 0.3 percentage points
to 29.3 percent compared to 29.0 percent in fiscal 1995 primarily due to lower
amount of write-offs taken in fiscal 1996 when compared to fiscal 1995.
Service gross margins in fiscal 1996 decreased by $391,000 to $5,558,000 from
$5,949,000 in fiscal 1995. The decrease in gross margin during fiscal 1996 was
associated with lower volume and a larger portion of the service revenues being
derived from lower margin open system contract revenues. The service gross
margin percentage for fiscal 1996 increased by 0.6 percentage points to 30.4
percent compared to 29.8 percent in fiscal 1995. The comparable higher gross
margin percentage in fiscal 1996 was primarily associated with write-offs taken
in fiscal 1995.
Selling, general and administrative expense in fiscal 1996 decreased by
$3,698,000, or 23.8 percent, to $11,855,000 from $15,553,000 in fiscal 1995.
This was primarily due to the Company's continuing cost reduction program,
which, in fiscal 1996, included consolidating its European operations,
relocating its Santa Ana operations to a lower cost facility, and reducing
headcount to 321 at February 25, 1996, from 392 at February 26, 1995. In
addition, the Company took a bad debt charge associated with selling its Belgian
operations and incurred severance expenses during fiscal 1995 of $237,000
Research and development expense in fiscal 1996 was $146,000 lower than fiscal
1995. The Company continued to develop PANDA and Alpha 2000 as well as its
AMOS-based family of products. The Company plans to enhance its AMOS product
line by introducing a new version of its operating system and upgrading the
hardware product line through the introduction of the Motorola 68060
microprocessor during the coming year.
The Company reported other income in fiscal 1996 of $597,000, which was
primarily associated with the sale of the Pick 64 product line during the first
quarter and interest income earned during the year.
The Company reported a net loss of $3,575,000, or $0.54 per share, compared to a
net loss of $6,247,000, or $0.95 per share, for fiscal 1995. The loss is
attributable to the factors described above.
Fiscal 1995 compared to Fiscal 1994
Revenues of $38,785,000 decreased $544,000, or 1.4 percent, compared to fiscal
1994 revenues of $39,329,000. This decline was attributable to a $1,759,000
decrease in product revenues, offset by an increase in service revenues of
$1,215,000.
Product revenues of $18,823,000 decreased $1,759,000, or 8.5 percent, compared
to $20,582,000 in fiscal 1994. The decrease was due primarily to the continued
decline in revenues from AMOS hardware and related software products, offset by
an increase of $1,056,000 in revenues from vertical markets. The Company's
vertical market initiative included both products and services for FOCUS dental
practice, food service, and cash-and-carry distribution administration systems.
Total vertical market revenues in fiscal 1995 and fiscal 1994 were $4,810,000
and $3,078,000, respectively. Of these totals,
18
<PAGE> 19
product revenues represented $2,958,000 and $1,902,000, respectively. Vertical
market revenues were higher in fiscal 1995, primarily due to full year
recognition of the Alpha HealthCare acquisition. In fiscal 1995, domestic
product revenues declined $462,000 to $12,804,000, and international product
revenues declined $1,297,000 to $6,019,000, from fiscal 1994.
Services revenues of $19,962,000 increased $1,215,000, or 6.5 percent, compared
to $18,747,000 in fiscal 1994. The increase was attributable primarily to the
acquisition of Alpha Computer Services, Inc., MTS, Inc., and Kathy Parker
Training Centers (UK) Limited, which in total represented revenues of
$2,192,000. Services revenues from vertical markets were $1,852,000 in fiscal
1995 and $1,176,000 in fiscal 1994. In fiscal 1995, domestic services revenues
increased $743,000 to $16,548,000 and international services revenues increased
$472,000 to $3,415,000.
Total gross margin decreased to 29.4 percent compared to 39.3 percent for fiscal
1994. Product gross margin decreased to 29.0 percent from 40.3 percent for the
same period. This decrease was primarily due to the write-offs incurred during
the fourth quarter of 1995, changes in product mix, and price reductions in
traditional products. Charges for write-offs in the fourth quarter included
$702,000 for various vertical market products, $694,000 for obsolete inventory,
and $42,000 for severance costs associated with work force reductions.
Services gross margin in fiscal 1995 decreased to 29.8 percent compared to 38.2
percent in fiscal 1994. This decrease was primarily associated with increased
cost of goods sold resulting from the following charges taken during the third
and fourth quarters of fiscal 1995: $507,000 to write down service parts;
$783,000 for customer lists from earlier acquisitions which did not meet
expectations; and $49,000 for severance costs.
Selling, general and administrative (SG&A) expense in fiscal 1995 increased to
$15,553,000 from $12,183,000 in fiscal year 1994. Several factors contributed to
this increase: $972,000 in bad debt expense associated with selling the Belgium
operations; $829,000 due to full year recognition of Alpha HealthCare; and
higher SG&A expense due to new and full year recognition of other acquisitions.
In addition, bad debt expense increased by $796,000, resulting from a reduction
of the reserve required and recorded in fiscal 1994.
Research and development expense in fiscal 1995 was $2,239,000, or 11.9 percent
of product revenues, compared to $2,847,000, or 13.8 percent of product
revenues, in fiscal 1994. The Company continued development of vertical market
products and the AM hardware series, in particular the Eagle family of small
business computer systems and the Falcon add-in application processor for
personal computers.
The Company reported other income of $145,000 in fiscal 1995 compared to other
expense of $200,000 in fiscal 1994. This was primarily due to a foreign currency
gain of $93,000 in fiscal 1995 compared to a loss of $216,000 in fiscal 1994.
The Company reported a net loss of $6,247,000, or $0.95 per share, compared to
net income of $336,000, or $0.08 per share, for fiscal 1994. The loss was
attributable to the factors described above, and a tax benefit recorded in
fiscal 1994 associated with the elimination of a deferred tax liability (see
Note 8 to the Consolidated Financial Statements).
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<PAGE> 20
LIQUIDITY AND CAPITAL RESOURCES
During fiscal 1996, the Company's working capital decreased by $2,366,000 to
$822,000 from $3,188,000 at the end of fiscal 1995. This decrease was primarily
associated with a decline in cash due to investments in leasehold improvements
at the Company's new Santa Ana facility of approximately $900,000, vertical
market software (food service administration and dental practice management) of
$976,000, and service assets of $421,000.
Cash flow used in operations during fiscal 1996 was $293,000 compared to cash
flow from operations of $743,000 in fiscal 1995. The reduction in cash flow from
operations was primarily attributable to the net operating loss of the Company,
payment of liabilities accrued at the end of fiscal 1995, and increased
receivables in the United Kingdom associated with several large orders taken at
the end of fiscal 1996.
The Company ended fiscal 1996 with a cash balance of $505,000. The Company
currently has two credit facilities, subject to certain covenants, one with a
U.S. bank which allows for up to $2,000,000 in credit subject to the limitation
discussed below, and the other with a U.K. bank which allows for 250,000 pounds
sterling in credit. No amounts were outstanding at February 25, 1996 under the
UK facility.
The U.S. credit facility borrowings are restricted to 50% of qualified
receivables, which as of February 25, 1996, allowed for maximum borrowings of
$1,290,000, of which $500,000 was borrowed at year end. The U.S. facility
requires the Company to maintain a tangible net worth greater than $4,700,000, a
quick ratio greater than 1.0 to 1 and a debt to tangible net worth ratio of
less than 1.25 to 1, and does not permit the Company to incur losses for two
quarters resulting in an aggregate loss higher than $250,000. As of February 25,
1996, the Company was in compliance with each of these covenants.
Management believes cash flow from operations, cash balances on hand, and
potential borrowings under the Company's available credit lines will be
sufficient to meet its liquidity needs for the coming fiscal year. The Company's
future capital requirements depend on a variety of factors, including but not
limited to spare parts, accounts receivable and inventory levels, the success
and timing of the Company's introduction of AlphaCONNECT, market penetration of
vertical software products, services growth, and the rate of decline of
proprietary hardware and related software revenues. If cash flows from current
operations prove to be insufficient to support all product lines, management
intends to take action to downsize and/or eliminate, if necessary, certain
product lines.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Financial Statements and Supplementary Data of the Company
are listed and included under Item 14 of this report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
20
<PAGE> 21
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth information concerning the
executive officers and directors of the Company as of May 2, 1996.
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Clarke E. Reynolds 75 Chairman of the Board of Directors
Douglas J. Tullio 53 President, Chief Executive Officer and Director
Michael J. Lowell 37 Vice President and Chief Financial Officer
John F. Glade 53 Vice President, Engineering and Manufacturing, Secretary and Director
Philip D. Smith 46 Vice President, and President of Alpha HealthCare
Rockell N. Hankin 49 Director
Richard E. Mahmarian 59 Director
</TABLE>
Clarke E. Reynolds has served as Chairman of the Board of Directors of the
Company since May, 1991 and has been a director of the Company since 1989. Mr.
Reynolds served as Chief Executive Officer of the Company from January 1991 to
August 1991, as President from November 1990 to May 1991, as Vice Chairman of
the Board from October 1990 to May 1991, and as Chief Operating Officer of the
Company from November 1990 to May 1991. Mr. Reynolds provided independent
consulting services to the Company from 1984 through 1990, was an employee of
the Company from November 1990 through May 1993, and presently provides
independent consulting services to the Company. Mr. Reynolds was previously
employed by NCR Corporation for over 47 years, during which time Mr. Reynolds
held a variety of sales and marketing and general management positions including
Vice President Pacific Region, Managing Director and Chairman of the Board NCR
United Kingdom, Vice President NCR Europe and Vice President Executive Office.
Mr. Reynolds serves as a Director of Sparta, Inc., which provides a wide range
of scientific, engineering and technical assistance services, primarily for the
U.S. military services and the Department of Defense.
Douglas J. Tullio has served as President, Chief Executive Officer and a
Director of the Company since 1991. Mr. Tullio also served as Chief Operating
Officer from May 1991 to March 1994. Mr. Tullio joined the Company in January
1990 and served as Executive Vice President of the Company and President of the
Company's subsidiaries, Rexon Business Machines and AMS Computers. (In April
1990, these subsidiaries were merged into the Company.) From 1984 to 1989, he
worked for General Automation, Inc., in the positions of President and member of
the Board of Directors, Executive Vice President, Vice President, General
Manager and Vice President of Sales and Marketing.
Michael J. Lowell has served as Vice President and Chief Financial Officer of
the Company since March 1995. Prior to joining the Company, he was Vice
President and Chief Financial Officer for Wahlco Environmental Systems, Inc.
(NYSE:WAL). Mr. Lowell held various positions at Wahlco and at its parent,
Pacific Diversified Capital Company (PDC), which he joined in 1987. He served as
Vice President, Finance and Chief Financial Officer for PDC, and as Chief
Financial Officer for two of PDC's subsidiaries, Integrated Information Systems
and Phase One Development. Prior to his appointment as Chief Financial Officer
at Wahlco, he served as Vice President, Finance and Treasurer.
21
<PAGE> 22
Before joining PDC and Wahlco, Mr. Lowell served as a Division Controller at
Ducommun Electronics Group, Inc.
John F. Glade was appointed a Director in May 1996 and has served as Secretary
of the Company since January 1987 and Vice President, Engineering and
Manufacturing since May 1988. Mr. Glade joined the Company as Director of
Engineering in September 1978, served as Vice President, Engineering from
February 1979 until June 1985 and served as Vice President, Advanced Products
Development from June 1985 until May 1988. He also served as Secretary of the
Company from February 1983 to August 1985 and a Director of the Company from
1979 through 1994.
Philip D. Smith has served as President of Alpha HealthCare, one of the
Company's subsidiaries, since December 1995, as Vice President of the Company
since March 1995 and as Vice President, Domestic Sales and Marketing from 1993
to 1995. He joined the Company in 1989 after the Company acquired Fujitsu
Microelectronics. From 1983 to 1989, he held various sales and marketing
positions at Fujitsu, culminating in National Sales Director at Fujitsu
Microelectronics in 1988. Prior to joining Fujitsu, Mr. Smith served at Xerox
Corporation and Data General in sales and management positions.
Rockell N. Hankin, who has served as a Director of the Company since 1987, is a
senior partner of Hankin & Co., which was established in June 1986 and provides
consulting services. Mr. Hankin is also a Director of Semtech Corporation (ASE),
which manufactures electronic components, a Director of House of Fabrics (in
reorganization) (NYSE), a national retail chain which markets sewing supplies
and crafts, a Director of Quidel (NMS), which manufactures and distributes rapid
diagnostic tests for medical applications and a Director of Sparta, Inc., which
provides a wide range of scientific, engineering and technical assistance
services, primarily for the U.S. military services and the Department of
Defense.
Richard E. Mahmarian, who has served as a Director of the Company since 1995, is
Vice Chairman of the Board and Executive Vice President of RJS, Inc., a
manufacturer of bar code printers, verification scanners, software, and
consumable products. Mr. Mahmarian has been a principal of RJS, Inc. since 1987,
when it was purchased in a leveraged buyout. Prior to joining RJS, Inc., he held
various management positions for Manx Engineering Corporation, Bell & Howell
Company, Northrop Corporation and NCR Corporation.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended ("Section
16(a)"), requires the Company's directors and executive officers, and persons
who own more than ten percent of the Company's common stock, to file with the
Securities and Exchange Commission and the National Association of Securities
Dealers, Inc. initial reports of ownership and reports of changes in ownership
of Common Stock. Officers, directors and greater than ten-percent shareholders
are required by SEC regulations to furnish the Company with copies of all
Section 16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended February 25, 1996 all such
reports required pursuant to Section 16(a) by the Company's officers, directors
and greater than ten-percent beneficial owners were timely filed, other than
reports required to reflect stock awards granted by the Stock Option Committee
under the Company's Stock Award Plan to Mr. Tullio and Mr. Glade in the amount
of 15,000 and 7,500 shares respectively, which were inadvertantly not filed.
22
<PAGE> 23
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth for each of the Company's
executive officers earning in excess of $100,000 during the fiscal year ended
February 25, 1996, compensation allocated or paid on or before May 1, 1996, for
services in all capacities with the Company and its subsidiaries during the
fiscal year ended February 25, 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation
----------------------
Annual Compensation Awards
------------------- ------
Other Securities
Annual Underlying All Other
Name and Compen- Restricted Stock Options/ Compen-
Principal Position Year Salary($) Bonus($) sation ($) Award(s) ($)(1) SARs (#)(2) sation(3)
- ------------------ ---- --------- --------- ---------- --------------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Douglas J. Tullio President and CEO 1996 217,713 28,894 * -- 15,000 --
1995 206,400 28,359(4) * 5,859 -- 514
1994 199,125 80,000 * -- 251,939 2,332
Philip D. Smith 1996 131,993(5) -- * -- 40,000 --
Vice President, Sales and Marketing 1995 114,821 -- * -- -- 321
1994 126,037 -- * -- -- --
John F. Glade 1996 131,211 7,500 * -- 7,500 --
Vice President, Engineering and 1995 133,262 17,430(4) * 2,930 -- 365
Manufacturing, and Secretary 1994 119,187 40,000 * -- 10,000 1,391
Michael J. Lowell 1996 114,014 16,686 * -- 40,000 --
Vice President, Chief Financial Officer 1995 -- -- * -- -- --
1994 -- -- * -- -- --
</TABLE>
- --------------------------
* Aggregate amount does not exceed 10% of the total of annual salary and
bonus reported for the named executive officer.
(1) The number of aggregate restricted unvested stock holdings outstanding
as of February 25, 1996 was 11,250 and the aggregate value of such
restricted stock was $8,438. Stock awards to Mr. Tullio and Mr. Glade
as additional compensation for fiscal 1995 vest 50% on May 5, 1996,
with the remaining 50% vesting on May 5, 1997. Although the Company
has not paid and does not anticipate paying dividends, any dividends
paid would accrue to the benefit of the grantees.
(2) All options were granted under the 1993 Alpha Microsystems Employee
Stock Option Plan, excepting options granted to Mr. Glade in fiscal
1994 representing 10,000 shares, which were granted under the
Company's Nonqualified Stock Option Plan.
(3) Consists solely of Company contributions to the Employee Profit
Sharing and Savings Plan.
(4) Includes awards of stock in the following amounts: for fiscal 1995:
Tullio: $5,859, and Glade: $2,930.
(5) Includes commissions of $3,039 paid to Mr. Smith.
23
<PAGE> 24
Stock Options Grants
The following table provides information on stock options granted under the 1993
Alpha Microsystems Employee Stock Option Plan to the executive officers named in
the Summary Compensation Table.
OPTION/SAR GRANTS IN LAST FISCAL YEAR (1)
-----------------------------------------
<TABLE>
<CAPTION>
Individual Grants Potential Realizable Value
at Assumed Annual Rates
of Stock Price
Appreciation for Option Term
----------------------------------------------------------------------------------------------------
Percent of
Number of Total
Securities Options/
Underlying SARs
Options/ Granted to Exercise Market
SARs Employees or Price on
Granted in Fiscal Base Price Date of Expiration
Name (#) Year ($/Sh) Grant Date 5% ($) 10% ($)
- ----------------- ---------- ---------- ---------- -------- ---------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
Douglas J. Tullio 15,000 12% $ .78125 $ .78125 5/5/00 $3,200 $7,100
Philip D. Smith 40,000 33% $ 1.625 $ 1.00 4/3/00 -- --
John F. Glade 7,500 6% $ .78125 $ .78125 5/5/00 $1,600 $3,550
Michael J. Lowell 40,000 33% $ 1.625 $ 1.00 4/3/00 -- --
- ----------------
</TABLE>
(1) All options were granted under the 1993 Alpha Microsystems Employee
Stock Option Plan. Options granted to Mr. Tullio and Mr. Glade become
exercisable as follows: 50% on date of grant, 25% on the first
anniversary date of the grant, and 25% on the second anniversary date
of the grant. Options granted to Mr. Smith and Mr. Lowell become
exercisable as follows: 25% on the first anniversary date, 25% on the
second anniversary date, 25% on the third anniversary date, and 25% on
the fourth anniversary date. In the event that the employment of
optionee shall be terminated, otherwise than by reason of death or
permanent disability or misconduct, the option and all rights
terminate on the 30th day after termination of employment.
24
<PAGE> 25
Fiscal Year-End Values of Outstanding Stock Options
The following table provides information with respect to the named executive
officers concerning unexercised stock options held as of the end of the
Company's 1996 fiscal year.
FISCAL YEAR-END OPTION/VALUES
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised In-The-
Options at FY-End (#) Money Options at FY-End ($)
--------------------------- -----------------------------
Number of
Shares Value
Acquired on Realized
Name Exercise (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- ----------------------- ------------ -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Douglas J. Tullio -- -- 246,455 70,484 -- --
Philip D. Smith -- -- -- 40,000 -- --
John F. Glade -- -- 8,750 8,750 -- --
Michael J. Lowell -- -- -- 40,000 -- --
</TABLE>
Compensation of Directors
Directors who are employees of the Company do not receive additional
compensation for acting as a member of the Board of Directors or any committee
thereof. Outside directors receive a monthly retainer of $2,000, and a fee of
$1,000 for each Board meeting and committee meeting (excluding telephonic
meetings) attended in excess of 12 each year, with all Board and committee
meetings held in a single day to be deemed as one meeting. In addition,
directors are reimbursed for their reasonable travel expenses incurred for
attendance at such meetings. In December 1995, the outside directors
elected to defer these director fees, and, subject to shareholder approval and
compliance with Section 16b-3 promulgated under the Exchange Act, certain
directors agreed to accept directors' fees in stock in lieu of cash.
In June 1993, the Company entered into a Consulting Agreement with Mr. Reynolds
whereby Mr. Reynolds agrees to provide consulting services to the Company. Under
the agreement, the Company pays to Mr. Reynolds a retainer of $2,000 per month.
The agreement may be terminated by either party upon 30 days' written notice.
Employment Agreements and Guaranteed Severance Payments
The Company has entered into employment agreements with Messrs. Tullio and
Glade. The agreements establish each employee's base salary and entitle each
employee to receive benefits, vacation and sick leave in accordance with the
Company's policies. The agreements are not for any specified term as either
party may terminate the employment relationship at any time in accordance with
the terms of the agreements. The agreements also contain provisions concerning
the non-disclosure by the employee of Company proprietary information and the
ownership of inventions conceived or made by the employee during the period of
employment with the Company. Pursuant to such employment agreements, under
certain circumstances, if an officer is terminated, voluntarily or
involuntarily, as a result of a "change in control" of the Company during the
term of his employment, the officer shall be entitled to monthly severance
payments for a period ranging under the individual agreements from 90 days to as
much as eighteen (18) months (the "Severance Period") following the effective
date of such termination. The term "change in control" means any of the
following: (a) merger or consolidation of the Company; (b) sale of all or
substantially all of the assets of the Company; (c) sale of more than 50% of the
outstanding common stock of the Company by any person or persons; or (d) change
of identity of at least a majority of the Board of
25
<PAGE> 26
Directors within a twelve-month period. The severance payments are based upon
the average total compensation paid to such officer during the previous fiscal
year (excluding any non-cash compensation). The severance payments shall be
reduced by any compensation, fees or remuneration received by such officer
during the Severance Period. The Company is also obligated to continue to
provide medical and dental benefits to the officer during the Severance Period.
Additionally, any rights the officer may have in connection with Company's stock
options and stock awards and the Company's profit sharing plan shall continue
uninterrupted during the Severance Period, to the extent permitted by applicable
tax law, other laws and the Company plans. The severance payments to the
executive officers are required, under certain circumstances, to be placed in a
trust to ensure payment.
In addition to the foregoing, Mr. Tullio is entitled to receive severance
payments and a continuation of employee benefits following termination if
termination is for any reason other than for causes arising out of breach of
Company policy or illegal acts. Such severance payments and benefits are for up
to six (6) months for Mr. Tullio.
The Company has also entered into an agreement with Michael J. Lowell, its Vice
President and Chief Financial Officer, pursuant to which Mr. Lowell is entitled
to receive six months termination pay at his base rate of pay in effect at the
time of termination if his employment is terminated by the Company for any
reason other than misconduct, fraud, or other unlawful acts.
Indemnification Agreements
The Company has entered into indemnification agreements with its directors and
certain key officers which provide such individuals with contractual
indemnification rights similar in scope to the applicable sections of the
Company's Bylaws. Such indemnification agreements apply retroactively as well as
prospectively to any actions taken by the indemnified parties while serving as
officers or directors of the Company. Such indemnification agreements also
provide that the Company shall indemnify such persons to the fullest extent
permitted by law, notwithstanding that such indemnification is not specifically
authorized by the indemnification agreement, the Company's Articles of
Incorporation, the Company's Bylaws or by statute.
Compensation Committee Interlocks and Insider Participation
The Company's Compensation Committee for fiscal 1996 was composed of Messrs.
Hankin, Hathaway (a former director), Mahmarian, and Reynolds. Mr. Reynolds is
Chairman of the Board and has served the Company in the past in numerous
executive positions, including Chief Executive Officer.
26
<PAGE> 27
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table contains certain information as of May 1, 1996 as to each
director, each individual included in the Summary Compensation Table, all
officers and directors as a group, and each person who, to the knowledge of the
Company, was the beneficial owner of 5% or more of the outstanding shares of
Common Stock. Persons named in the following table have sole voting and
investment powers with respect to all shares shown as beneficially owned by
them, subject to community property laws where applicable, and other information
contained in the footnotes to the table. Information with respect to beneficial
ownership is based on the Company's Common Stock records and data supplied to
the Company by its shareholders.
<TABLE>
<CAPTION>
Name or Identity Number of Shares Beneficially Percent of
of Group Owned (1) Class
--------------------- ----------------------------- -----------
<S> <C> <C>
Brinson Partners, Inc. 937,000(2) 13.5
John F. Glade 203,950(3) 3.1
Rockell N. Hankin 16,000(4) *
Richard E. Mahmarian - (4) *
Clarke E. Reynolds 39,500(4) *
Douglas J. Tullio 314,205 4.6
Philip D. Smith 18,000 *
Michael J. Lowell 10,000 *
All directors and officers
as a group (7 persons) 601,655 8.7
</TABLE>
- --------------------------
* Does not exceed 1% of the outstanding shares of Common Stock of the
Company.
(1) Includes shares issuable upon exercise of options and warrants which
are presently exercisable or will become exercisable on or before July
1, 1996. Options and warrants representing the right to acquire a
total of 346,955 shares are presently exercisable or will become
exercisable on or before July 1, 1996, by all officers and directors,
as a group. Also includes shares escrowed under the Company's Stock
Incentive Award Plan.
(2) Based upon information provided to the Company by such shareholder in
a Schedule 13D dated February 9, 1996, on behalf of itself and Brinson
Trust Company, Brinson Holdings, Inc., SBC Holding (USA), and Swiss
Bank Corporation. The shares beneficially owned include 598,000
actually owned and 339,000 which could be acquired through exercise of
warrants. The business address of Brinson Partners, Inc., Brinson
Holdings, Inc. and Brinson Trust Company is 209 South LaSalle,
Chicago, Illinois 60604-1295. The business address of SBC Holding
(USA), Inc. is 222 Broadway, new York, New York 10038. The business
address of Swiss Bank Corporation is Aeschenplatz 6 CH-4002, Basel,
Switzerland.
(3) Includes 27,500 shares owned directly by Mr. Glade individually and
160,200 shares held in a revocable trust of which Mr. Glade and his
wife, Alana L. Glade, are sole trustees. Mr. and Mrs. Glade, acting
jointly, have the power to vote and dispose of such shares.
(4) Does not include shares issuable in lieu of directors fees, subject to
shareholder approval.
27
<PAGE> 28
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
28
<PAGE> 29
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) (1) The following financial statements are referenced in Part II Item
8 and submitted herewith:
<TABLE>
<CAPTION>
Page Number
-----------
<S> <C>
Report of Independent Auditors F-1
Consolidated Balance Sheets at February 25, 1996 F-2
and February 26, 1995
Consolidated Statements of Operations for the years F-3
ended February 25, 1996, February 26, 1995, and
February 27, 1994
Consolidated Statements of F-4
Shareholders' Equity for the years
ended February 25, 1996, February 26,
1995, and February 27, 1994
Consolidated Statements of Cash Flows F-5
for the years ended February 25,
1996, February 26, 1995, and February
27, 1994
Notes to Consolidated Financial Statements F-6
(2) The following financial statement schedule for the fiscal years
1994, 1995, and 1996 is submitted herewith:
Schedule II - Valuation and Qualifying Accounts
All other schedules are omitted because they are not applicable
or the required information is presented in the financial
statements or notes thereto.
(3) The list of exhibits contained in the Index to Exhibits is
submitted herewith.
(b) No reports on Form 8-K were filed during the fourth quarter of fiscal
1996.
</TABLE>
29
<PAGE> 30
(c) 1. The Index of Exhibits is as follows:
2. Exhibits:
2.1 Agreement of Purchase and Sale by and between Registrant and Alpha
Computer Services, Inc., dated February 24, 1994 (incorporated herein
by reference to Exhibit 2.9 to the Quarterly Report on Form 10-Q for
the quarter ended May 29, 1994)
2.2 Agreement to transfer shares by and between Registrant and Alpha
Microsystems Great Britain, Mr. Patrick Bolle, and Alpha Microsystems
Belgium dated February 28, 1995 (incorporated herein by reference to
Exhibit 2.10 to the Annual Report on Form 10-K of Registrant for the
Year Ended February 26, 1995 (the "1995 10-K")
3.1 Amended Articles of Incorporation of Registrant dated as of September
28, 1984 (incorporated herein by reference to Exhibit 4.0 to the
Quarterly Report on Form 10-Q of Registrant for the Quarter Ended
August 26, 1984)
3.2 Amended and Restated Bylaws, as amended, of Registrant (incorporated
herein by reference Exhibit 3.2 to the Annual Report on Form 10-K of
Registrant for the Year Ended February 28, 1988)
3.3 Amendment to Article III, Section 2 of the Amended and Restated Bylaws
of Registrant dated August 18, 1989 (incorporated herein by reference
to Exhibit 3.3 to the Quarterly Report on Form 10-Q of Registrant for
the Quarter Ended August 27, 1989)
3.4 Amendment to Article II of the Amended and Restated Bylaws of
Registrant dated August 21, 1991 (incorporated herein by reference to
Exhibit 3.7 to the Quarterly Report on Form 10-Q of Registrant for the
Quarter Ended August 25, 1991)
3.5 Amendment and Restatement to Article IV of the Articles of
Incorporation of Registrant dated June 24, 1992 (incorporated herein
by reference to Exhibit 10.71 to the Quarterly Report on Form 10-Q of
Registrant for the Quarter Ended May 31, 1992)
4.1 Warrant to purchase 50,000 shares of Common Stock dated July 10, 1995,
issued to Silicon Valley Bank (incorporated herein by reference to
Exhibit 10.140 to the Quarterly Report on Form 10-Q of Registrant for
the Quarter Ended May 28, 1995 (the "May 1995 10-Q")
4.2 Registration Rights Agreement by and between Registrant and Silicon
Valley Bank dated July 10, 1995 (incorporated herein by reference to
Exhibit 10.141 to the May 1995 10-Q)
4.3 Antidilution Agreement by and between Registrant and Silicon Valley
Bank dated July 10, 1995 (incorporated herein by reference to Exhibit
10.142 to the May 1995 10-Q)
4.4 Warrant to purchase 10,000 shares of Common Stock dated as of December
1, 1993, issued to John Westergaard
30
<PAGE> 31
4.5 Warrant to purchase 170,000 shares of Common Stock dated as of
December 17, 1993 issued to Dominick & Dominick, Inc.
4.6 Warrant to purchase 60,000 shares of Common Stock dated as of December
17, 1993 issued to John F. Doss
4.7 Warrant to purchase 60,000 shares of Common Stock dated as of December
17, 1993 issued to John R. Doss
4.8 Warrant to purchase 10,000 shares of Common Stock dated as of December
17, 1993 issued to Jonathan T. McKeage
4.9 Underwriters' Warrant to purchase 85,137 units dated April 30, 1996
issued to Barclay Investments, Inc.
4.10 Underwriters' Warrant to purchase 4,000 units dated April 30, 1996
issued to Robert G. Palmeiro
4.11 Underwriters' Warrant to purchase 14,379 units dated April 30, 1996
issued to G. L. Cabot Henderson
4.12 Underwriters' Warrant to purchase 10,000 units dated April 30, 1996
issued to Edward R. Henderson
4.13 Underwriters' Warrant to purchase 56,758 units dated April 30, 1996
issued to James F. Twaddell
4.14 Form of First Amendment to Underwriters' Warrant entered into between
the Registrant and each of Barclay Investments, Inc., Princeton
Securities Corporation, Robert G. Palmeiro, G. L. Cabot Henderson,
Edward R. Henderson and James F. Twaddell
4.15 Form of warrant certificate of Registrant (incorporated herein by
reference to Exhibit 4.3 to Amendment No. 4 to Registration
Statement on Form S-2, Registration No. 33-66424, of Registrant
("Amendment No. 4 to Form S-2") filed with the Securities and
Exchange Commission on November 1, 1993)
4.16 Form of Warrant Agreement with Mellon Securities Trust Company
(incorporated herein by reference to Exhibit 4.1 to Amendment No. 1
to Registration Statement on Form S-2, Registration No. 33-66424, of
Registrant ("Amendment No. 1 to Form S-2") filed with the Securities
and Exchange Commission on September 30, 1993)
4.17 Form of Underwriters' Warrant (incorporated herein by reference to
Exhibit 4.2 to Amendment No. 4 to Form S-2)
*10.1 Registrant's Second Amended and Restated Incentive Stock Option Plan
(incorporated herein by reference to Exhibit 4.1 to the Post-Effective
Amendment No. 1 to the Registration Statement on Form S-8 of
Registrant (Registration No. 2-76012) (the "Amended S-8") filed on May
12, 1983)
*10.2 Form of Incentive Stock Option Agreement (incorporated herein by
reference to Exhibit 10.1 to Amendment No. 1 of the Form S-2
Registration Statement filed with the Securities and Exchange
Commission on September 30, 1993)
*10.3 Form of Amended and Restated Incentive Stock Option Agreement
(incorporated herein by reference to Exhibit 10.51 to the Amendment
No. 2 of the Form S-2 Registration Statement filed with the Securities
Exchange Commission on October 15, 1993)
*10.4 Third Amended and Restated Incentive Stock Option Plan of Registrant
(incorporated herein by reference to Exhibit 10.9 to the Annual Report
on Form 10-K of Registrant for the Year Ended February 26, 1984)
*10.5 Stock Incentive Award Plan of Registrant (incorporated herein by
reference to Exhibit 10.21 to the Annual Report on Form 10-K of
Registrant for the Year Ended February 26, 1984)
*10.6 Non-Qualified Stock Option Plan of Registrant (incorporated herein by
reference to Exhibit 10.22 to the Annual Report on Form 10-K of
Registrant for the Year Ended February 26, 1984)
*10.7 Form of Incentive Option Agreement for use in connection with Third
Amended and Restated Incentive Stock Option Plan (incorporated herein
by reference to Exhibit 4.7 to the Post-Effective Amendment No. 1 to
the Registration Statement on Form 8 of the Registrant (Registration
Statement No. 2-9252) filed on August 23, 1984)
*10.8 Form of Non-Qualified Stock Option Agreement for use in connection
with Non-Qualified Stock Option Plan (incorporated herein by reference
to Exhibit 4.8 to the Post-Effective Amendment No. 1 to the
Registration Statement on Form 8 of the Registrant (Registration
Statement No. 29252) filed on August 23, 1984)
*10.9 Form of Stock Incentive Award and Escrow Agreement for use in
connection with the Stock Incentive Award Plan (incorporated herein by
reference to Exhibit 4.9 to the Post-Effective Amendment No. 1 to the
Registration Statement on Form 8 of the Registrant (Registration
Statement No. 2-9252) filed on August 23, 1984)
*10.10 Revised Form of Non-Qualified Stock Option Agreement for use in
connection with Non-Qualified Stock Option Plan (incorporated herein
by reference to Exhibit 10.30 to the Annual Report on Form 10-K of
Registrant for the Year Ended February 23, 1986)
31
<PAGE> 32
*10.11 Form of Contingent Non-Qualified Stock Option Agreement for use in
connection with Non-Qualified Stock Option Plan (incorporated herein
by reference to Exhibit 10.31 to the Annual Report on Form 10-K of
Registrant for the Year Ended February 23, 1986)
*10.12 Alpha Microsystems Profit Sharing Trust Agreement between Alpha
Microsystems and Bank of America N.T. & S.A. as Trustee dated May 24,
1985 (incorporated herein by reference to Exhibit 10.32 to the Annual
Report on Form 10-K of Registrant for the Year Ended February 23,
1986)
*10.13 Alpha Microsystems Profit Sharing Plan (as amended and restated) dated
May 15, 1986 (incorporated herein by reference to Exhibit 10.33 to the
Annual Report on Form 10-K of Registrant for the Year Ended February
23, 1986)
*10.14 Acceptance of Trust by Trustee dated September 30, 1986 pursuant to
Registrant's Profit Sharing Plan (incorporated herein by reference to
Exhibit 10.29 to the Annual Report on Form 10-K of Registrant for the
Year Ended February 22, 1987)
*10.15 First Amendment dated March 1, 1987 to the Registrant's Profit Sharing
Plan (incorporated herein by reference to Exhibit 10.30 to the Annual
Report on Form 10-K of Registrant for the Year Ended February 22,
1987)
*10.16 Revised Form of Non-Qualified Stock Option Agreement for use in
connection with Non-Qualified Stock Option Plan (incorporated herein
by reference to Exhibit 10.31 to the Annual Report on Form 10-K of
Registrant for the Year Ended February 22, 1987)
*10.17 Indemnification Agreement dated October 23, 1987 by and between Alpha
Microsystems and John F. Glade (incorporated herein by reference to
Exhibit 10.34 to the Quarterly Report on Form 10-Q of Registrant for
the Quarter Ended November 22, 1987)
*10.18 Indemnification Agreement dated October 23, 1987 by and between Alpha
Microsystems and Rockell N. Hankin (incorporated herein by reference
to Exhibit 10.36 to the Quarterly Report on Form 10-Q of Registrant
for the Quarter Ended November 22, 1987)
*10.19 Indemnification Agreement dated October 23, 1987 by and between Alpha
Microsystems and Harry L. Hathaway (incorporated herein by reference
to Exhibit 10.39 to the Quarterly Report on Form 10-Q of Registrant
for the Quarter Ended November 22, 1987)
*10.20 Second Amendment to Alpha Microsystems Profit Sharing Plan dated
January 22, 1988 (incorporated herein by reference to Exhibit 10.31 to
the Annual Report on Form 10-K of Registrant for the Year Ended
February 28, 1988)
*10.21 Alpha Microsystems Profit Sharing Plan Amendments Under IRS Notice
88-131 dated May 24, 1989 (incorporated herein by reference to Exhibit
32
<PAGE> 33
10.38 to the Quarterly Report on Form 10-Q of Registrant for the
Quarter Ended May 28, 1989)
*10.22 Alpha Microsystems Profit Sharing Plan Amendment dated December 15,
1989 (incorporated herein by reference to Exhibit 10.45 to the
Quarterly Report on Form 10-Q of Registrant for the Quarter Ended
November 26, 1989)
*10.23 Employment Agreement by and between the Registrant and Douglas J.
Tullio dated January 8, 1990 (incorporated herein by reference to
Exhibit 10.49 to the Quarterly Report on Form 10-Q of Registrant for
the Quarter Ended November 26, 1989)
*10.24 Indemnification Agreement by and between the Registrant and Douglas J.
Tullio dated January 8, 1990 (incorporated herein by reference to
Exhibit 10.50 to the Quarterly Report on Form 10-Q of Registrant for
the Quarter Ended November 26, 1989)
*10.25 Non-Qualified Stock Option Agreement by and between the Registrant and
Douglas J. Tullio dated January 8, 1990 (incorporated herein by
reference to Exhibit 10.51 to the Quarterly Report on Form 10-Q of
Registrant for the Quarter Ended November 26, 1989)
*10.26 Addendum to Employment Agreement by and between the Registrant and
Douglas J. Tullio dated May 21, 1990 (incorporated herein by reference
to Exhibit 10.54 to the Annual Report on Form 10-K of Registrant for
the Year Ended February 25, 1990)
*10.27 Revised Form of Non-Qualified Stock Option Agreement for use in
connection with Registrant's Non-Qualified Stock Option Plan
(incorporated herein by reference to Exhibit 10.59 to the Quarterly
Report on Form 10-Q of Registrant for the Quarter Ended August 26,
1990)
*10.28 Indemnification Agreement by and between Registrant and Clarke E.
Reynolds dated June 16, 1989 (incorporated herein by reference to
Exhibit 10.67 to the Annual Report on Form 10-K of Registrant for the
Year Ended February 23, 1992)
*10.29 Stock Incentive Award and Escrow Agreement by and between Registrant
and John F. Glade for 9,000 shares of the Company's common stock dated
August 11, 1992 (incorporated herein by reference to Exhibit 10.81 to
the Quarterly Report on Form 10-Q of Registrant for the Year Ended
August 30, 1992)
*10.30 Stock Incentive Award and Escrow Agreement by and between Registrant
and Clarke E. Reynolds for 9,000 shares of the Company's common stock
dated August 11, 1992 (incorporated herein by reference to Exhibit
10.80 to the Quarterly Report on Form 10-Q of Registrant for the
Quarter Ended August 30, 1992)
*10.31 Stock Incentive Award and Escrow Agreement by and between Registrant
and Douglas J. Tullio for 14,000 shares of the Company's common stock
dated August 11, 1992 (incorporated herein by reference
33
<PAGE> 34
to Exhibit 10.79 to the Quarterly Report on Form 10-Q of Registrant
for the Quarter Ended August 30, 1992)
*10.32 Non-Qualified Stock Option Agreement by and between Registrant and
Douglas J. Tullio for 40,000 shares of the Company's common stock
dated August 21, 1992 (incorporated herein by reference to Exhibit
10.76 to the Quarterly Report on Form 10-Q of Registrant for the Year
Ended August 30, 1992)
*10.33 Non-Qualified Stock Option Agreement by and between the Registrant and
Clarke E. Reynolds for 10,000 shares of the Company's Common Stock
dated April 20, 1993 (incorporated herein by reference to Exhibit
10.73 to Amendment No. 1 to Form S-2)
*10.34 Non-Qualified Stock Option Agreement by and between the Registrant and
Douglas J. Tullio for 60,000 shares of the Company's Common Stock
dated April 20, 1993 (incorporated herein by reference to Exhibit
10.74 to Amendment No. 1 to Form S-2)
*10.35 Non-Qualified Stock Option Agreement by and between the Registrant and
John Glade for 10,000 shares of the Company's Common Stock dated April
20, 1993 (incorporated herein by reference to Exhibit 10.75 to
Amendment No. 1 to Form S-2)
*10.36 Form of Stock Option Agreement by and between the Registrant and
Douglas J. Tullio dated August 31, 1993 (incorporated herein by
reference to Exhibit 10.85 to Amendment No. 1 to Form S-2)
*10.37 Consulting Agreement by and between the Registrant and Clarke E.
Reynolds dated June 1, 1993 (incorporated herein by reference to
Exhibit 10.87 to Amendment No. 1 to Form S-2)
*10.38 Alpha Microsystems 1993 Employee Stock Option Plan (incorporated
herein by reference to Exhibit 10.109 to the Quarterly Report on Form
10-Q for the quarter ended May 29, 1994)
10.39 Alpha Microsystems 1993 Directors' Stock Option Plan (incorporated
herein by reference to Exhibit 10.110 to the Quarterly Report on Form
10-Q for the quarter ended May 29, 1994)
10.40 Non-Qualified Stock Option Agreement by and between Registrant and
Clarke E. Reynolds dated May 31, 1994 (incorporated herein by
reference to Exhibit 10.109 to the Quarterly Report on Form 10-Q for
the quarter ended November 27, 1994)
*10.41 Non-Qualified Stock Option Agreement by and between Registrant and
Rockell N. Hankin dated May 31, 1994 (incorporated herein by reference
34
<PAGE> 35
to Exhibit 10.111 to the Quarterly Report on Form 10-Q for the quarter
ended November 27, 1994)
*10.42 Non-Qualified Stock Option Agreement by and between Registrant and
Harry L. Hathaway dated May 31, 1994 (incorporated herein by reference
to Exhibit 10.112 to the Quarterly Report on Form 10-Q for the quarter
ended November 27, 1994)
10.43 Industrial Lease between Fairview Investors Ltd. and Registrant dated
October 28, 1994 (incorporated herein by reference to Exhibit 10.113
to the Quarterly Report on Form 10-Q for the quarter ended November
27, 1994)
*10.44 Separation Agreement and Agreement to provide consulting services by
and between Registrant and John D. Murray dated December 22, 1994
(incorporated herein by reference to Exhibit 10.114 to the Quarterly
Report on Form 10-Q for the quarter ended November 27, 1994)
10.45 Letter to John Murray from Sumitomo Bank dated January 5, 1995
amending the Loan Agreement (incorporated herein by reference to
Exhibit 10.115 to the Quarterly Report on Form 10-Q for the quarter
ended November 27, 1994)
*10.46 First Amended and Restated Non-Qualified Stock Option Plan of
Registrant dated August 18, 1989 (incorporated herein by reference to
Exhibit 19.14 to the Quarterly Report on Form 10-Q of Registrant for
the Quarter Ended August 27, 1989)
*10.47 First Amendment to Stock Incentive Award Plan of Registrant dated
August 15, 1990 (incorporated herein by reference to Exhibit 19.16 to
the Quarterly Report on Form 10-Q of Registrant for the Quarter Ended
August 26, 1990)
*10.48 First Amendment to Employment Agreement by and between Registrant and
John F. Glade dated May 3, 1991 (incorporated herein by reference to
Exhibit 19.8 to the Annual Report on Form 10-K of Registrant for the
Year Ended February 23, 1992)
*10.49 First Amendment to Employment Agreement by and between Registrant and
Douglas J. Tullio dated May 3, 1991 (incorporated herein by reference
to Exhibit 19.10 to the Annual Report on Form 10-K of Registrant for
the Year Ended February 23, 1992)
*10.50 Second Amendment and Restatement to the Non-Qualified Stock Option
Plan of Alpha Microsystems dated June 24, 1992 (incorporated herein by
reference to Exhibit 10.70 to the Quarterly Report on Form 10-Q for
the Quarter Ended May 31, 1992)
*10.51 Second Amendment and Restatement of the Alpha Microsystems Profit
Sharing Plan dated July 1, 1992 (incorporated herein by reference to
Exhibit 10.72 to the Quarterly Report on Form 10-Q for the Quarter
Ended May 31, 1992)
35
<PAGE> 36
10.52 Memorandum to Lease by and between Registrant and Fairview Investors,
Ltd. dated January 24, 1995 (incorporated herein by reference to
Exhibit 10.136 to the 1995 10-K)
*10.53 Separation Agreement and General Release by and between Registrant and
Gerald Knight dated March 10, 1995 (incorporated herein by reference
to Exhibit 10.137 to the 1995 10-K)
10.54 Letter to Mike Lowell from Silicon Valley Bank dated May 3, 1995 re:
new credit line (incorporated herein by reference to Exhibit 10.138 to
the 1995 10-K)
10.55 Loan and Security Agreement by and between Registrant and Silicon
Valley Bank dated July 10, 1995 (incorporated herein by reference to
Exhibit 10.139 to the May 1995 10-Q)
10.56 Collateral Assignment, Patent Mortgage and Security Agreement by and
between Registrant and Silicon Valley Bank dated July 10, 1995
(incorporated herein by reference to Exhibit 10.143 to the May 1995
10-Q)
10.57 Security Agreement by and between Alpha HealthCare, Inc., and Silicon
Valley Bank dated July 10, 1995 (incorporated herein by reference to
Exhibit 10.144 to the May 1995 10-Q)
10.58 Continuing Guaranty by and between Alpha HealthCare, Inc., and
Silicone Valley Bank dated July 10, 1995 (incorporated herein by
reference to Exhibit 10.145 to the May 1995 10-Q)
*10.59 Agreement to Grant Nonqualified Stock Option by and between Registrant
and Clarke E. Reynolds dated July 14, 1995 (incorporated herein by
reference to Exhibit 10.146 to the Quarterly Report on Form 10-Q for
the Quarter Ended August 27, 1995 (the "August 1995 10-Q")
*10.60 Agreement to Grant Nonqualified Stock Option by and between Registrant
and Rockell N. Hankin dated July 14, 1995 (incorporated herein by
reference to Exhibit 10.147 to the August 1995 10-Q)
*10.61 Agreement to Grant Nonqualified Stock Option by and between Registrant
and Harry L. Hathaway dated July 14, 1995 (incorporated herein by
reference to Exhibit 10.148 to the August 1995 10-Q)
*10.62 Agreement to Grant Nonqualified Stock Option by and between Registrant
and Richard E. Mahmarian dated July 14, 1995 (incorporated herein by
reference to Exhibit 10.149 to the August 1995 10-Q)
10.63 Amendment to Loan Agreement by and between Registrant and Silicon
Valley Bank dated November 30, 1995 (incorporated herein by reference
to Exhibit 10.150 to the Quarterly Report on Form 10-Q for the Quarter
Ended November 26, 1995 (the "November 1995 10-Q")
*10.64 Agreement to Grant Incentive Stock Option (Pursuant to 1993 Employee
Stock Option Plan) between Registrant and Philip D. Smith
36
<PAGE> 37
dated April 3, 1995 for 40,000 shares of common stock (incorporated
herein by reference to Exhibit 10.151 to the November 1995 10-Q)
*10.65 Agreement to Grant Incentive Stock Option (Pursuant to 1993 Employee
Stock Option Plan) between Registrant and Michael J. Lowell dated
April 3, 1995 for 40,000 shares of common stock (incorporated herein
by reference to Exhibit 10.152 to the November 1995 10-Q)
*10.66 Agreement to Grant Incentive Stock Option (Pursuant to 1993 Employee
Stock Option Plan) between Registrant and Randy Parks dated April 3,
1995 for 10,000 shares of common stock (incorporated herein by
reference to Exhibit 10.153 to the November 1995 10-Q)
*10.67 Agreement to Grant Incentive Stock Option (Pursuant to 1993 Employee
Stock Option Plan) between Registrant and Peggy Denson dated April 3,
1995 for 10,000 shares of common stock (incorporated herein by
reference to Exhibit 10.154 to the November 1995 10-Q)
*10.68 Agreement to Grant Incentive Stock Option (Pursuant to 1993 Employee
Stock Option Plan) between Registrant and Douglas J. Tullio dated May
5, 1995 for 15,000 shares of common stock (incorporated herein by
reference to Exhibit 10.155 to the November 1995 10-Q)
*10.69 Agreement to Grant Incentive Stock Option (Pursuant to 1993 Employee
Stock Option Plan) between Registrant and John F. Glade dated May 5,
1995 for 7,500 shares of common stock (incorporated herein by
reference to Exhibit 10.156 to the November 1995 10-Q)
10.70 Amendment to Loan Agreement by and between Registrant and Silicon
Valley Bank dated February 7, 1996
10.71 Amendment to Loan Agreement by and between Registrant and Silicon
Valley Bank dated March 7, 1996
10.72 Engagement Letter between Registrant and Sutro & Co. Incorporated
dated May 2, 1996
21 Subsidiaries
23 Consent of Independent Auditors
24 Power of Attorney (included on signature pages of this Annual Report)
27 Financial Data Schedule
(*Denotes Management Contract or Compensation Plan)
37
<PAGE> 38
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Shareholders
Alpha Microsystems
We have audited the accompanying consolidated balance sheets of Alpha
Microsystems as of February 25, 1996 and February 26, 1995, and the related
statements of operations, shareholders' equity, and cash flows for each of the
three years in the period ended February 25, 1996. Our audits also included the
financial statement schedule listed in the Index at Item 14(a). These financial
statements and schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Alpha
Microsystems at February 25, 1996 and February 26, 1995, and the results of its
operations and its cash flows for each of the three years in the period ended
February 25, 1996, in conformity with generally accepted accounting principles.
Also, in our opinion, the related financial statement schedule, when considered
in relation to the basic financial statements taken as a whole, presents fairly
in all material respects the information set forth therein.
Ernst & Young LLP
Orange County, California
April 29, 1996
38
<PAGE> 39
ALPHA MICROSYSTEMS
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
<TABLE>
<CAPTION>
February 25, February 26,
1996 1995
------------ -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 505 $ 3,289
Accounts receivable, net of allowance for
doubtful accounts of $927 and $1,004 at
February 1996 and 1995, respectively 5,241 4,844
Inventories 943 1,948
Subsidiary held for sale -- 269
Note receivable 159 --
Prepaid expenses and other current assets 351 564
-------- --------
Total current assets 7,199 10,914
Property and equipment, at cost 16,710 14,824
Less accumulated depreciation
and amortization 12,435 11,220
-------- --------
Net property and equipment 4,275 3,604
Service contracts, net 793 1,039
Software costs, net 535 1,302
Goodwill, net 170 864
Other assets, net 89 179
-------- --------
$ 13,061 $ 17,902
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Bank borrowings $ 500 $ --
Accounts payable 1,694 1,863
Deferred revenue 2,678 2,775
Other accrued liabilities 837 1,857
Accrued salaries and wages 476 836
Current portion of long-term debt 192 395
-------- --------
Total current liabilities 6,377 7,726
Long-term debt 201 140
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; 6,595,453 and
6,572,953 shares issued and outstanding
at February 25, 1996 and February 26,
1995, respectively 21,242 21,224
Accumulated deficit (14,694) (11,119)
Unamortized restricted stock plan expense (18) (19)
Foreign currency translation adjustment (47) (50)
-------- --------
Total shareholders' equity 6,483 10,036
-------- --------
$ 13,061 $ 17,902
======== ========
</TABLE>
See accompanying notes.
39
<PAGE> 40
ALPHA MICROSYSTEMS
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
<TABLE>
<CAPTION>
Year Ended
-------------------------------------------
February 25, February 26, February 27,
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
Net sales:
Product $ 14,466 $ 18,823 $ 20,582
Service 18,297 19,962 18,747
----------- ----------- -----------
Total net sales 32,763 38,785 39,329
----------- ----------- -----------
Cost of sales:
Product 10,228 13,372 12,288
Service 12,739 14,013 11,588
----------- ----------- -----------
Total cost of sales 22,967 27,385 23,876
----------- ----------- -----------
Gross Margin 9,796 11,400 15,453
Selling, general and
administrative expense 11,855 15,553 12,183
Research and development
expense 2,093 2,239 2,847
----------- ----------- -----------
Total operating expenses 13,948 17,792 15,030
----------- ----------- -----------
Income (loss) from operations (4,152) (6,392) 423
Interest income (93) (150) (125)
Interest expense 38 17 88
Other (income) expense, net (466) 81 21
Foreign exchange (gain) loss (76) (93) 216
----------- ----------- -----------
Total other (income) expenses (597) (145) 200
----------- ----------- -----------
Income (loss) before taxes (3,555) (6,247) 223
(Benefit) provision for income taxes 20 -- (113)
----------- ----------- -----------
Net income (loss) $ (3,575) $ (6,247) $ 336
=========== =========== ===========
Net income (loss) per share $ (0.54) $ (0.95) $ 0.08
=========== =========== ===========
Number of shares used in the
computation of per share amounts 6,564,882 6,580,470 4,025,090
=========== =========== ===========
</TABLE>
See accompanying notes.
40
<PAGE> 41
ALPHA MICROSYSTEMS
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Three Years Ended February 25, 1996
(In thousands, except share data)
<TABLE>
<CAPTION>
Unamortized Foreign
Common Stock Restricted Currency
------------------- Accumulated Stock Plan Translation
Shares Amount Deficit Expenses Adjustment Total
--------- ------- ----------- ---------- ----------- -------
<S> <C> <C> <C> <C> <C> <C>
Balance at February 28, 1993 3,085,579 $17,878 $ (5,208) $(85) $(240) $11,740
Net income -- -- 336 -- -- 336
Issuance of stock and redeemable
warrants net of offering costs
of $1,717 3,462,891 3,894 -- -- -- 3,894
Foreign currency translation -- -- -- -- (30) (30)
Exercise of stock options
($1.00 to $2.00 per share) 10,738 19 -- -- -- 19
Amortization -- -- -- 51 -- 51
--------- ------- -------- ---- ----- -------
Balance at February 27, 1994 6,559,208 21,186 (4,872) (34) (270) 16,010
Net loss -- -- (6,247) -- -- (6,247)
Foreign currency translation -- -- -- -- 220 220
Exercise of stock options
($1.00 to $2.00 per share) 13,745 38 -- -- -- 38
Amortization -- -- -- 15 -- 15
--------- ------- -------- ---- ----- -------
Balance at February 26, 1995 6,572,953 21,224 (11,119) (19) (50) 10,036
Net loss -- -- (3,575) -- -- (3,575)
Foreign currency translation -- -- -- -- 3 3
Restricted stock award 22,500 18 -- (18) -- --
Amortization -- -- -- 19 -- 19
--------- ------- -------- ---- ----- -------
Balance at February 25, 1996 6,595,453 $21,242 $(14,694) $(18) $ (47) $ 6,483
========= ======= ======== ==== ===== =======
</TABLE>
See accompanying notes.
41
<PAGE> 42
ALPHA MICROSYSTEMS
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
Year Ended
------------------------------------------------
February 25, February 26, February 27,
1996 1995 1994
------------ -------------- -----------
<S> <C> <C> <C>
Cash flow from operating activities:
Net income (loss) $(3,575) $(6,247) $ 336
Adjustments to reconcile net income (loss)
to cash provided by operating activities:
Loss from sale of subsidiary -- 972 --
Non-current asset write-down 1,995 1,431 --
Depreciation and amortization 2,325 3,388 2,271
Gain on sale of fixed assets (282) -- --
Provision for losses on accounts receivable (21) 467 (329)
Inventory provision 196 694 (96)
Restricted stock plan expense amortization 19 15 51
Forgiveness of vacation -- -- 40
Other changes in operating assets and liabilities:
Accounts receivable (376) (132) 547
Inventories 811 (109) 1,727
Prepaid expenses and current assets 412 (494) 183
Accounts payable and other accrued liabilities (1,256) 847 (1,325)
Accrued salaries and wages (359) 79 (191)
Deferred revenue (133) (142) (351)
Other, net (49) (26) 8
------- ------- -------
Net cash provided by (used in) operating activities (293) 743 2,871
------- ------- -------
Cash flow from investing activities:
Proceeds from sale of fixed assets 440 -- --
Acquisition of business (149) (84) (271)
Acquisition of service assets (94) (511) (631)
Purchases of spares and equipment (1,730) (984) (1,509)
Capitalization of software costs (976) (977) (410)
Sale of subsidiary -- (357) --
Purchase of intangibles -- -- (149)
Other, net -- (30) 9
------- ------- -------
Net cash used in investing activities (2,509) (2,943) (2,961)
------- ------- -------
Cash flows from financing activities:
Proceeds from line of credit 500 -- 400
Issuance of common stock -- 38 3,913
Debt repayments (463) (915) (1,688)
------- ------- -------
Net cash provided by (used in) financing activities 37 (877) 2,625
------- ------- -------
Effect of exchange rate changes on cash (19) 115 3
------- ------- -------
Increase (decrease) in cash and cash equivalents (2,784) (2,962) 2,538
Cash and cash equivalents at beginning of period 3,289 6,251 3,713
------- ------- -------
Cash and cash equivalents at end of period $ 505 $ 3,289 $ 6,251
======= ======= =======
Supplemental information:
Cash paid for:
Interest expense $ 38 $ 21 $ 91
Income tax payments (refunds), net $ (64) $ (139) $ (74)
</TABLE>
See accompanying notes.
42
<PAGE> 43
ALPHA MICROSYSTEMS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 25, 1996
1. SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
BASIS OF PRESENTATION
The accompanying consolidated financial statements include the accounts of Alpha
Microsystems and its subsidiaries (the "Company"). Significant intercompany
accounts and transactions have been eliminated in consolidation. Certain
reclassifications have been made to the prior years' consolidated financial
statements to conform to the fiscal 1996 presentation.
THE BUSINESS
Alpha Microsystems, founded in 1977, is a supplier of information technology
products and services targeted at specific market niches. The Company has
historically had two principal lines of business: (1) the integration and sale
of computer systems for sale through VARs along with software-based systems for
vertical market niche markets, such as dental practice management; and (2) the
provision of information technology services such as maintenance, software
support, training, consulting, and network installation and monitoring. The
Company has recently commenced a new line of business: the development and sale
of broad horizontal software products, such as the recently introduced
AlphaCONNECT Internet/Intranet software for data mining, harvesting, formatting,
manipulation, and delivery, and for the creation of dynamically self-updating
Web pages.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting periods.
Actual results could differ from those estimates.
FISCAL YEAR
The Company operates on a 52/53-week fiscal year ending on the last Sunday in
the month of February. Fiscal years 1996, 1995, and 1994 ended on February 25,
1996, February 26, 1995, and February 27, 1994, respectively.
OPERATIONS
During fiscal 1996, the Company continued to monitor market and business
conditions of its various products in light of limited financial resources and
consideration of its long-term business strategy. In the fourth quarter, the
Company altered its marketing and development plans for approaching the food
service administration and dental practice management marketplaces. As part of
this reassessment, the Company determined that net capitalized software and
other intangible assets associated with its products addressing these
marketplaces were impaired and wrote off $1,995,000 of such assets during the
fourth quarter of fiscal 1996.
43
<PAGE> 44
The net loss from operations in fiscal 1996 was $3,575,000, or $0.54 per share,
on revenues of $32,763,000. This compares to a net loss in fiscal 1995 of
$6,247,000, or $0.95 per share, on revenues of $38,785,000.
Cash flow used in operations during fiscal 1996 was $293,000 compared to cash
flow from operations in fiscal 1995 of $743,000. During fiscal 1996, the cash
balance decline of $2,784,000 was primarily associated with expenditures
pertaining to the relocation of the Company's Santa Ana facility, the
development of vertical market software products, and the acquisition of service
assets. The Company ended the year with a cash balance of $505,000.
Management believes cash flow from operations, cash balances on hand and
potential borrowings under the Company's credit lines will be sufficient to meet
the liquidity needs for the coming fiscal year. The Company has a $2,000,000
line of credit, subject to certain conditions, for its domestic operation(see
note 5). In addition, the Company's United Kingdom subsidiary has a 250,000
pounds sterling line of credit, subject to certain conditions. If cash flows
from current operations prove to be insufficient to support all product lines,
management intends to take action to downsize and/or eliminate, if
necessary, certain product lines.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments purchased with a maturity of
three months or less to be cash equivalents.
PROPERTY AND EQUIPMENT
The straight-line method of depreciation is used for the following classes of
assets for financial statement purposes and is based on the following estimated
useful lives:
<TABLE>
<CAPTION>
Years
-----
<S> <C>
Machinery and equipment 3 to 5
Leasehold improvements 1 to 6
Service parts 5
</TABLE>
Major classes of property and equipment were as follows:
<TABLE>
<CAPTION>
Feb. 25, Feb. 26,
(In thousands) 1996 1995
- -----------------------------------------------------------------------
<S> <C> <C>
Machinery and equipment $ 7,577 $ 6,904
Leasehold improvements 1,364 492
Service parts 7,769 7,428
------- -------
$16,710 $14,824
------- -------
</TABLE>
Depreciation expense was $1,729,000, $1,933,000, and $1,078,000 for fiscal years
1996, 1995 and 1994, respectively.
INTANGIBLE ASSETS
Intangible assets include acquired service contracts, capitalized computer
software costs and goodwill. The book value of goodwill and service contracts
are associated with the acquisition of companies or assets. Software cost is the
accumulation of capitalized software development costs or the assigned value of
software associated with an acquisition.
44
<PAGE> 45
The straight-line amortization period for intangible assets is dependent on
their expected economic life. The amortization period for the major classes of
intangible assets is as follows:
<TABLE>
<CAPTION>
Years
-----
<S> <C>
Service contracts 5
Capitalized software 3 to 5
Goodwill 5 to 10
</TABLE>
In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," which requires
impairment losses to be recorded on long-lived assets used in operations when
indicators of impairment are present and the undiscounted cash flows estimated
to be generated by those assets over the asset's life are less than the carrying
value. The Company has adopted SFAS 121 and as a result wrote off $481,000 in
goodwill and service contracts related to Alpha HealthCare, during the fourth
quarter of fiscal 1996.
In accordance with SFAS No. 86, "Accounting for the Costs of Computer Software
to Be Sold, Leased, or Otherwise Marketed," the Company capitalizes certain
engineering costs related to software development after technological
feasibility has been established and amortizes these costs as the respective
products are sold. However, in no event is the amortization less than that which
would be achieved by amortizing such costs on a five-year straight-line basis
from the date of product release. Capitalized software costs, net of accumulated
amortization of $3,256,000 and $1,319,000, were $535,000 and $1,302,000 at
February 25, 1996 and February 26, 1995, respectively. Total amortization
expense charged to cost of product sales for the fiscal years 1996, 1995 and
1994 was approximately $186,000, $689,000 and $372,000, respectively.
In addition, management routinely evaluates events or conditions that might
diminish the carrying value of intangible assets pursuant to SFAS No. 86. During
the fourth quarter of fiscal 1996, management reforecast revenues and cash flow
for each capitalized software asset's anticipated service life and as a result
of this analysis, the Company wrote down accumulated capitalized software
development costs of $373,000 for its PANDA product line and $1,016,000 for its
Alpha HealthCare product line to their respective revised net realizable value.
WARRANTIES
The Company accrues estimated costs of product warranties as revenues from sales
are recognized, or if some event necessitates a change in the level of reserves
for potential warranties. Products are typically warranted for twelve months.
DEFERRED REVENUE
Deferred revenue is revenue billed in advance for service contracts and is
recognized ratably over the contract period or as the services are performed.
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.
45
<PAGE> 46
RESEARCH AND DEVELOPMENT EXPENSES
Research and development costs are expensed as incurred. Substantially all
research and development expenses are related to developing new products and
designing significant improvements to existing products.
INCOME TAXES
Deferred tax assets and liabilities reflect the impact of temporary differences
between amounts of assets and liabilities for financial reporting purposes, such
amounts measured by tax laws and the expected future tax consequences of net
operating loss carryforwards.
PER SHARE DATA
Earnings (loss) per share is calculated using the weighted average number of
common and common equivalent shares outstanding during the period. The weighted
average shares outstanding for fiscal 1996 and 1995 are calculated solely on the
basis of weighted average number of common shares outstanding. The number of
weighted average shares outstanding for fiscal 1994 was calculated based upon
the weighted average number of common shares outstanding and dilutive stock
options and warrants, reduced by the number of common shares assumed to have
been repurchased with the proceeds from the exercise of such instruments.
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
year-end exchange rates, all income and expense accounts at average rates, and
records adjustments resulting from translation in a separate component of
shareholders' equity.
2. INVENTORIES
Inventories are valued at the lower of cost or market. Cost is determined on the
first-in, first-out method. Inventories, net of reserves for excess and obsolete
inventories of $1,726,000 and $1,723,000 at February 25, 1996 and February 26,
1995, respectively, comprise the following:
<TABLE>
<CAPTION>
Feb. 25, Feb. 26,
(In thousands) 1996 1995
------ ------
<S> <C> <C>
Raw materials $ 116 $ 581
Work in process -- 180
Finished goods 827 1,187
------ ------
$ 943 $1,948
====== ======
</TABLE>
3. ACQUISITIONS AND DISPOSALS
In December, 1995, the Company acquired the remaining shares of Sabre Business
Systems, Dublin, Ireland for approximately $149,000, bringing the Company's
ownership to 100%.
46
<PAGE> 47
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, plus a potential bonus payment of $50,000. The
purchase price will be paid over eighteen months, and the ultimate price and
cash paid may be adjusted downward based upon the contract revenue purchased. On
June 1, 1995, the Company acquired the assets of Alpha Technology for $161,000.
The purchase price will be paid over 18 months and the ultimate price may be
adjusted based upon the contract revenue purchased.
On April 3, 1995, the Company sold its subsidiary, Alpha Microsystems Belgium,
S.A., to a member of its Belgium local management resulting in a loss of
$972,000 which was provided for as of February 26, 1995. The sale agreement
allows the Company to maintain its distribution channel in Belgium and to avoid
any potential future losses from this subsidiary; net losses from this
subsidiary in 1995 and 1994 were $206,000 and $167,000, respectively.
In fiscal 1995 and 1994, the Company acquired certain assets of various service
companies, including service contracts, service parts and accounts receivable.
The cost of these acquisitions was $1,918,000 and $776,000, in fiscal 1995 and
1994, respectively, of which the non-cash portion was $1,407,000 and $208,000,
in fiscal 1995 and 1994, respectively. In fiscal 1995, the most significant
acquisition was that of the service contracts and related assets of Alpha
Computer Services, Inc. ("ACS"), completed in March 1994. ACS was purchased for
$1,520,000, of which $238,000 was paid in cash, $1,156,000 in notes payable over
a period of twenty-two months, and the Company assumed $126,000 in liabilities.
In May 1994, the Company acquired certain assets and ongoing service contracts
from MTS, Inc.("MTSI") for a purchase price of approximately $195,000.
In addition, in March 1994, the Company acquired the remaining shares of Sabre
Business Systems, Belfast, Ireland, for approximately $84,000, bringing the
Company's ownership to 100%. In May 1994, Alpha Microsystems Great Britain (UK)
Limited acquired certain assets and liabilities of Kathy Parker Training
Centers, U.K., for approximately $137,000.
All acquisitions have been accounted for as purchases and the acquired
operations have been included in the consolidated statements of operations from
the dates of acquisition.
4. EMPLOYEE BENEFIT PLAN
The Company has a defined contribution profit sharing plan covering
substantially all of its full-time employees. Contributions to the plan are at
the sole discretion of the Company's Board of Directors and cannot exceed the
maximum allowable deduction for federal income tax purposes. There were no
discretionary Company contributions for fiscal 1996, 1995 and 1994.
During the year ended February 24, 1991, the Company implemented a program
whereby the voluntary contributions of the employees are matched at a rate of
50% of employee contributions up to a total of 5.0% of the employee's salary.
During the first quarter of fiscal 1994, the employer match portion of the
employee contribution was reduced from 50% to 20% up to a total of 5.0% of an
employee's salary. During fiscal 1996 and 1995, the employer matched 60% of the
employee contribution for participants with an annual income of less than
$29,999. Matching contributions were $32,000, $42,000 and $99,000 for fiscal
1996, 1995 and 1994, respectively.
5. DEBT
The Company and its wholly-owned subsidiary, Alpha HealthCare, have a line of
credit, subject to certain conditions, for borrowing up to a maximum limit of
$2,000,000, with letters of credit in the aggregate not to exceed $500,000. The
line of credit, which expires on July 9, 1996, is secured by substantially all
of the Company's United States based assets and its availability is subject to
borrowings not exceeding fifty percent (50%) of qualified accounts receivable.
The maximum potential borrowings at February 25, 1996, were $1,290,000 of which
$500,000 was
47
<PAGE> 48
borrowed. The credit line agreement contains certain covenants including:
tangible net worth being $4,700,000 or higher, and the Company maintaining a
quick asset ratio of 1.00 to 1 and a debt to tangible net worth ratio of greater
than 1.25 to 1. In addition, the Company can not incur an after tax loss in two
fiscal quarters where the aggregate loss of the two quarters exceeds $250,000.
Borrowings under this line of credit bear interest of prime plus two and one
half percent (2.5%), which was 10.75% at February 25, 1996. In addition, the
Company issued the bank 50,000 warrants to purchase an equal number of shares
at a price of $1.21875 per share (see Note 7).
On January 24, 1996 the Company's United Kingdom subsidiary received a 250,000
pounds sterling Credit Facility from a bank, subject to certain conditions
including the United Kingdom subsidiary maintaining minimum levels of tangible
net worth and other financial covenants. The borrowings under this facility will
bear interest at 2.25% per annum over the bank's base rate.
6. FOREIGN CURRENCY GAINS (LOSSES)
Foreign currency exchange gains (losses) included in the determination of income
(loss) from operations before taxes and extraordinary item were $76,000, $93,000
and $(216,000) for fiscal 1996, 1995 and 1994, respectively. The Company had no
forward exchange contracts outstanding at February 25, 1996.
7. COMMON STOCK
On November 26, 1993, the Company completed its shareholder rights offering,
which entitled shareholders to subscribe on a one-for-one basis for up to
3,095,892 units (plus 366,999 units sold to the Underwriters to cover
over-allotments), each unit consisting of one share of common stock and one
redeemable warrant to purchase one share of common stock. A total of 900,891
rights were exercised by shareholders at a subscription price of $1.625. On
December 8, 1993, the subsequent public offering was completed for the sale of
the remaining 2,195,001 units as well as the over-allotment exercised by the
Underwriters. The net proceeds to the Company totaled approximately $3,894,000
of which $1,200,000 was used to repay borrowings under the Company's line of
credit.
On July 10, 1995, in exchange for a new line of credit and 40,000 warrants
previously issued, the Company issued 50,000 new warrants with an exercise price
of $1.21875 to its bank. In fiscal 1994, the Company agreed to sell to its
financial advisor a redeemable warrant to purchase 300,000 shares of common
stock exercisable at $2.50 per share and to issue a redeemable warrant to
purchase 10,000 shares of common stock exercisable at $2.50 per share to a
financial group in exchange for services.
Under the terms of the Company's Stock Incentive Award Plan, the Stock Option
Committee of the Board of Directors is authorized to award up to 150,000
restricted shares of common stock. These shares are issued subject to certain
transfer restrictions, including the passage of time, ranging from one to ten
years. The Committee may, at the time an award is made, prescribe additional
conditions for the lapse of restrictions. The Company has granted 131,050
restricted shares of common stock to certain employees, without cost. The shares
are subject to forfeiture under certain circumstances, and 25% of such shares
will vest each year, beginning on the date of grant. As of February 25, 1996,
119,800 of these restricted shares had vested. Unearned compensation was
recognized for the market value of the restricted shares on the date of grant
and is amortized ratably over the vesting period. The unamortized unearned
compensation value is recorded as a reduction of shareholders' equity in the
accompanying consolidated balance sheet.
8. INCOME TAXES
48
<PAGE> 49
The provision (benefit) for income taxes consists of the following:
(In thousands)
<TABLE>
<CAPTION>
1996 1995 1994
--------- --------- -----
<S> <C> <C> <C>
Federal:
Current $ -- $ -- $ --
Deferred -- -- (87)
Foreign:
Current 20 -- (26)
Deferred -- -- --
======= ======= =====
$ 20 $ -- $(113)
======= ======= =====
</TABLE>
A reconciliation of income tax expense (benefit) to the statutory U.S. federal
income tax rate follows:
<TABLE>
<CAPTION>
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
Statutory U.S. federal
income tax rate (benefit) (34.0)% (34.0)% 34.0%
Changes in taxes resulting from:
Foreign losses & excess rates 1.4 6.0 --
Net operating losses utilized -- -- (37.0)
Reduction of excess tax -- -- (50.7)
Domestic losses with no
tax benefit 28.0 28.0 --
Other items, net 5.3 -- 3.0
------ ------ ------
Effective tax rate 0.7% --% (50.7)%
====== ====== ======
</TABLE>
United States and foreign income (loss) before taxes based on income are as
follows:
(In thousands)
<TABLE>
<CAPTION>
1996 1995 1994
------- ------- -----
<S> <C> <C> <C>
Domestic $(3,714) $(4,912) $ 242
Foreign 159 (1,335) (19)
------- ------- -----
$(3,555) $(6,247) $ 223
======= ======= =====
</TABLE>
Deferred tax assets and liabilities reflect the impact of temporary differences
between amounts of assets and liabilities for financial reporting purposes, such
amounts measured by tax laws and the expected future tax consequences of net
operating loss carryforwards. Temporary differences and net operating loss
carryforwards which give rise to deferred tax assets and liabilities recognized
in the balance sheet are as follows:
49
<PAGE> 50
<TABLE>
<CAPTION>
(In thousands) 1996 1995
------- -------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards $ 6,520 $ 5,463
Accrued tax credits 899 885
Accruals not currently deductible for
tax purposes 353 645
Depreciation -- 77
Translation adjustment 67 70
Other 3 3
Valuation allowance (7,365) (7,106)
------- -------
Total deferred tax asset 447 37
------- -------
Deferred tax liabilities:
Depreciation (338) --
Capitalized software (139) (37)
------- -------
Total deferred tax liability 447 (37)
------- -------
Net deferred tax asset $ -- $ --
======= =======
</TABLE>
The Company has federal net operating loss carryforwards totaling approximately
$17,500,000 at February 25, 1996, which begin expiring in 2006. 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
the Company has experienced an approximate 41% change in ownership.
9. COMMITMENTS AND CONTINGENCIES
As part of the Company's continuing efforts to reduce expenses, it entered into
a 66-month lease for a 66,200 square foot facility located within one mile of
its former 104,000 square foot facility. The new lease began on July 1, 1995 and
expires on December 31, 2000. The average annual rent for the new facility is
$285,000 compared to $680,000 in fiscal 1995 for the old facility.
The leasehold improvements for which the Company is responsible include office
construction, plumbing, wiring and general tenant improvements. The cost of the
leasehold improvements for its new Santa Ana facility was $923,000, which is
being depreciated over the life of the lease.
50
<PAGE> 51
The Company leases its manufacturing and office facilities and certain equipment
under operating leases which expire on various dates through 2013. Rent expense
during fiscal years 1996, 1995, and 1994 was $1,966,000, $2,255,000, and
$2,202,000, respectively. The Company's annual minimum lease commitment under
non-cancelable operating leases are as follows:
<TABLE>
<CAPTION>
(In thousands)
<C> <C>
1997 $ 1,443
1998 845
1999 604
2000 574
2001 483
2002 and thereafter 2,508
--------
$ 6,457
========
</TABLE>
In the normal course of business, the Company provides credit to its customers
who are principally distributors of its products and original equipment
manufacturers who incorporate the Company's products into equipment which they
resell to end users. The Company performs ongoing credit evaluations of its
customers and maintains allowances for potential credit losses which, when
realized, have been within the range of management's expectations. As of
February 25, 1996, the Company had no significant concentrations of credit risk
other than two European customers which each had accounts receivable balances
over $300,000. Both of these customers have placed and paid for large orders in
the past.
The Company's current involvement with litigation is as follows:
Carlos Garralda and Andre Warnier, employees of the Company's former subsidiary,
Alpha Microsystems Belgium, S.A. ("AMB"), filed an action in November 1995
against AMB and the Company in Orange County Superior Court alleging that AMB is
in breach of its obligations under Belgium employment law to pay salaries for a
notice period of up to two years following termination of employment. The
Plaintiffs allege, among other things, that the Company has alter ego liability
for these obligations. The plaintiffs are claiming compensatory damages in
excess of $780,000 and unspecified punitive damages. The Court has temporarily
stayed this lawsuit until July 18, 1996 in order to await the outcome of
virtually identical litigation instituted by the plaintiffs against AMB in
Belgium. Although no assurances as to the outcome of the litigation can be
given, management believes that its defenses to the litigation are meritorious.
In December 1995, Phoenix Marketing, Inc. dba Electronic Business Systems, Inc.,
in response to the Company's collection efforts for a past due account, filed an
amended cross-complaint alleging damages of $3,200,000 for defective
merchandise, loss of business reputation and loss of future business. Although
no assurances as to the outcome of the litigation can be given, management
believes that the plaintiff's claims are without merit. Trial is presently set
for November 1996.
The Company is currently involved in certain other claims and litigation. The
Company does not consider any of these other claims or litigation to be
material. Management has made provisions in the Company's financial statements
for the settlement of lawsuits for which unfavorable outcomes are both probable
and estimable. In the opinion of management, results of known existing claims
and litigation will not have a material adverse effect on the Company's
consolidated financial position, results of operations or cash flows.
10. STOCK OPTIONS
During fiscal 1985, the Company adopted a Non-Qualified Stock Option Plan
("Non-Qualified Plan"). The Non-Qualified Plan provides for the granting of
options at prices which must be at least 50% of the fair
51
<PAGE> 52
market value of the shares at either date of grant, date of employment, or date
an employment agreement became binding. The Non-Qualified Plan was amended in
fiscal 1990 to extend the plan indefinitely. In the event of termination,
non-qualified stock options outstanding will continue to be in effect until
expiring under each individual option agreement.
In May 1992, the Non-Qualified Plan was amended to increase the shares
authorized for grant under the Plan from 235,000 shares to 465,000 shares.
In August 1993, the Board of Directors adopted the Company's 1993 Employee Stock
Option Plan, which was approved at the 1994 annual meeting of shareholders, that
enables the Board of Directors to award up to 550,000 shares of common stock to
employees of the Company.
In April 1994, the Board of Directors adopted the Company's 1993 Director Stock
Plan, which was approved at the 1994 annual meeting of shareholders, that
provides to non-employee Directors automatic grants of non-statutory stock
options at exercise prices at fair market value of common stock on the date of
grant, up to an aggregate of 100,000 shares of common stock.
In October 1995, the Financial Accounting Standards Board issued Statement of
Financial Standards No. 123, "Accounting for Stock-Based Compensation" (SFAS No.
123). The Company will be required to adopt SFAS No. 123 in Fiscal 1997. As
provided by the provisions of SFAS No. 123, the Company intends to continue to
account for employee stock options in accordance with APB Opinion No. 25 and to
adopt the "disclosure only" alternative described in SFAS No. 123.
The following table contains a summary of transactions related to Incentive and
Non-Qualified Stock Options for the year ended February 25, 1996:
<TABLE>
<CAPTION>
Non-Qualified Stock Options Incentive Stock Options
------------------------------ -------------------------
Shares Price per share Shares Price per share
-------- --------------- ------ ---------------
<S> <C> <C> <C> <C>
Outstanding at
February 26, 1995 307,653 $1-5 328,702 $1.875
Granted 22,500 $1-2 100,000 1.625
Expired/canceled (110,568) $1-2 (136,763) 1.875
Exercised -- -- -- --
-------- --------
Outstanding at
February 25, 1996 219,585 291,939
======== ========
Exercisable at
February 26, 1995 231,653 $1-5 82,176 $1.875
February 25, 1996 189,335 $1-5 95,970 1.875
Available for grant:
February 26, 1995 61,410 221,298
February 25, 1996 149,478 258,061
</TABLE>
52
<PAGE> 53
11. INDUSTRY SEGMENT INFORMATION
The Company operates in two business segments: the manufacture and sale of
computer systems, software and related products, and the servicing of computer
systems and related products.
Operations by business segment are as follows:
<TABLE>
<CAPTION>
(In thousands) PRODUCT SERVICE CORPORATE CONSOLIDATED
<S> <C> <C> <C> <C>
1996
Net sales $ 14,466 $18,297 $ -- $ 32,763
Operating income (loss) (4,785) 2,849 (2,016) (4,152)
Identifiable assets 7,431 4,651 979 13,061
Depreciation and
amortization expense 773 1,230 322 2,325
Capital expenditures 427 496 901 1,824
1995
Net sales $ 18,823 $19,962 $ -- $ 38,785
Operating income (loss) (7,349) 2,690 (1,773) (6,392)
Identifiable assets 8,134 5,020 4,748 17,902
Depreciation and
amortization expense 1,322 1,880 186 3,388
Capital expenditures 578 845 72 1,495
1994
Net sales $ 20,582 $18,747 $ -- $ 39,329
Operating income (loss) (2,739) 4,314 (1,152) 423
Identifiable assets 11,004 5,267 6,829 23,100
Depreciation and
amortization expense 990 1,173 108 2,271
Capital expenditures 655 1,413 72 2,140
</TABLE>
Identifiable assets by industry segment include both assets directly identified
with operations and an allocated share of jointly used assets. Corporate assets
consist primarily of cash and other assets. Depreciation and amortization
expense exclude intangible asset write-downs. Capital expenditures include
purchases of equipment and acquisitions of service assets. The effect of
capitalizing software costs is included in the product sales segment.
Intersegment transfers are recorded at cost.
The Company operates in the United States and through foreign subsidiaries in
Europe. Total consolidated foreign sales (including export sales of $906,000,
$1,596,000 and $1,523,000 in fiscal 1996, 1995 and 1994, respectively) were
$9,776,000, $11,639,000 and $12,324,000 for fiscal 1996, 1995 and 1994,
respectively.
53
<PAGE> 54
OPERATIONS BY GEOGRAPHIC AREA
<TABLE>
<CAPTION>
(In thousands) UNITED CANADA EUROPE & ADJUSTMENTS & CONSOLIDATED
STATES AUSTRALIA ELIMINATIONS
<S> <C> <C> <C> <C> <C>
1996
Sales to unaffiliated customers $ 23,893 $621 $ 8,249 $ -- $ 32,763
Transfers between
geographic areas 1,147 -- -- (1,147) --
-------- ---- -------- ------- --------
Net sales $ 25,040 $621 $ 8,249 $(1,147) $ 32,763
======== ==== ======== ======= ========
Net income (loss) $ (3,723) $221 $ (83) $ 9 $ (3,576)
Identifiable assets $ 15,351 $160 $ 5,070 $(7,520) $ 13,061
1995
Sales to unaffiliated customers $ 28,743 $609 $ 9,433 $ -- $ 38,785
Transfers between
geographic areas 1,518 -- -- (1,518) --
-------- ---- -------- ------- --------
Net sales $ 30,261 $609 $ 9,433 $(1,518) $ 38,785
======== ==== ======== ======= ========
Net income (loss) $ (5,005) $166 $ (1,397) $ (11) $ (6,247)
Identifiable assets $ 19,827 $277 $ 5,947 $(8,149) $ 17,902
1994
Sales to unaffiliated customers $ 28,527 $543 $ 10,259 $ -- $ 39,329
Transfers between
geographic areas 1,613 -- -- (1,613) --
-------- ---- -------- ------- --------
Net sales $ 30,140 $543 $ 10,259 $(1,613) $ 39,329
======== ==== ======== ======= ========
Net income (loss) $ (116) $132 $ 12 $ 308 $ 336
Identifiable assets $ 23,335 $285 $ 8,232 $(8,752) $ 23,100
</TABLE>
No single customer or other foreign geographic area accounted for as much as 10%
of the Company's sales.
54
<PAGE> 55
ALPHA MICROSYSTEMS
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(In thousands)
<TABLE>
<CAPTION>
Balance at Additions
Beginning Charged to Balance at
of Year Expense Deductions End of Year
-------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Allowance for
doubtful receivables:
February 25, 1996 $1,004 $ (21) $ 56 $ 927
February 26, 1995 1,728 467 1,191 1,004
February 27, 1994 2,573 (329) 516 1,728
Reserve for inventories:
February 25, 1996 $1,723 $ 196 $ 193 $1,726
February 26, 1995 1,430 694 401 1,723
February 27, 1994 2,509 (96) 983 1,430
</TABLE>
55
<PAGE> 56
SIGNATURES
Pursuant to the requirements of Section 13 pr 159d) 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
Date: May 3, 1996 By: /s/ DOUGLAS J. TULLIO
---------------------------
Douglas J. Tullio
President, Chief
Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below hereby appoints Clarke E. Reynolds,
Douglas J. Tullio and John F. Glade, and each and any of them, as
attorneys-in-fact and agents with full powers of substitution to sign on his
behalf, individually and in the capacity stated below, and to file any
amendments to this Annual Report on Form 10-K with the Securities and Exchange
Commission, granting to said attorneys-in-fact and agents full power and
authority to perform any other act on behalf of the undersigned required to be
done in the premises.
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
Date: May 3, 1996 By: /s/ CLARKE E. REYNOLDS
--------------------------------
Clarke E. Reynolds
Chairman of the Board
Date: May 3, 1996 By: /s/ DOUGLAS J. TULLIO
--------------------------------
Douglas J. Tullio
President, Chief Executive Officer,
Director
Date: May 3, 1996 By: /s/ JOHN F. GLADE
--------------------------------
John F. Glade
Vice President, Engineering and
Manufacturing, Secretary and Director
Date: May 3, 1996 By: /s/ MICHAEL J. LOWELL
--------------------------------
Michael J. Lowell
Vice President
Chief Financial Officer
Date: May 3, 1996 By: /s/ ROCKELL N. HANKIN
--------------------------------
Rockell N. Hankin
Director
56
<PAGE> 57
Date: May 3, 1996 By: /s/ RICHARD E. MAHMARIAN
--------------------------------
Richard E. Mahmarian
Director
57
<PAGE> 58
EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
Number Description Pages
- ------- ----------- ------------
<S> <C> <C>
2.1 Agreement of Purchase and Sale by and between Registrant and Alpha
Computer Services, Inc., dated February 24, 1994 (incorporated herein
by reference to Exhibit 2.9 to the Quarterly Report on Form 10-Q for
the quarter ended May 29, 1994)
2.2 Agreement to transfer shares by and between Registrant and Alpha
Microsystems Great Britain, Mr. Patrick Bolle, and Alpha Microsystems
Belgium dated February 28, 1995 (incorporated herein by reference to
Exhibit 2.10 to the Annual Report on Form 10-K of Registrant for the
Year Ended February 26, 1995 (the "1995 10-K")
3.1 Amended Articles of Incorporation of Registrant dated as of September
28, 1984 (incorporated herein by reference to Exhibit 4.0 to the
Quarterly Report on Form 10-Q of Registrant for the Quarter Ended
August 26, 1984)
3.2 Amended and Restated Bylaws, as amended, of Registrant (incorporated
herein by reference Exhibit 3.2 to the Annual Report on Form 10-K of
Registrant for the Year Ended February 28, 1988)
3.3 Amendment to Article III, Section 2 of the Amended and Restated Bylaws
of Registrant dated August 18, 1989 (incorporated herein by reference
to Exhibit 3.3 to the Quarterly Report on Form 10-Q of Registrant for
the Quarter Ended August 27, 1989)
3.4 Amendment to Article II of the Amended and Restated Bylaws of
Registrant dated August 21, 1991 (incorporated herein by reference to
Exhibit 3.7 to the Quarterly Report on Form 10-Q of Registrant for the
Quarter Ended August 25, 1991)
3.5 Amendment and Restatement to Article IV of the Articles of
Incorporation of Registrant dated June 24, 1992 (incorporated herein
by reference to Exhibit 10.71 to the Quarterly Report on Form 10-Q of
Registrant for the Quarter Ended May 31, 1992)
4.1 Warrant to purchase 50,000 shares of Common Stock dated July 10, 1995,
issued to Silicon Valley Bank (incorporated herein by reference to
Exhibit 10.140 to the Quarterly Report on Form 10-Q of Registrant for
the Quarter Ended May 28, 1995 (the "May 1995 10-Q")
4.2 Registration Rights Agreement by and between Registrant and Silicon
Valley Bank dated July 10, 1995 (incorporated herein by reference to
Exhibit 10.141 to the May 1995 10-Q)
4.3 Antidilution Agreement by and between Registrant and Silicon Valley
Bank dated July 10, 1995 (incorporated herein by reference to Exhibit
10.142 to the May 1995 10-Q)
4.4 Warrant to purchase 10,000 shares of Common Stock dated as of December
1, 1993, issued to John Westergaard
</TABLE>
<PAGE> 59
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
Number Description Pages
- ------- ----------- ------------
<S> <C> <C>
4.5 Warrant to purchase 170,000 shares of Common Stock dated as of
December 17, 1993 issued to Dominick & Dominick, Inc.
4.6 Warrant to purchase 60,000 shares of Common Stock dated as of December
17, 1993 issued to John F. Doss
4.7 Warrant to purchase 60,000 shares of Common Stock dated as of December
17, 1993 issued to John R. Doss
4.8 Warrant to purchase 10,000 shares of Common Stock dated as of December
17, 1993 issued to Jonathan T. McKeage
4.9 Underwriters' Warrant to purchase 85,137 units dated April 30, 1996
issued to Barclay Investments, Inc.
4.10 Underwriters' Warrant to purchase 4,000 units dated April 30, 1996
issued to Robert G. Palmeiro
4.11 Underwriters' Warrant to purchase 14,379 units dated April 30, 1996
issued to G. L. Cabot Henderson
4.12 Underwriters' Warrant to purchase 10,000 units dated April 30, 1996
issued to Edward R. Henderson
4.13 Underwriters' Warrant to purchase 56,758 units dated April 30, 1996
issued to James F. Twaddell
4.14 Form of First Amendment to Underwriters' Warrant entered into between
the Registrant and each of Barclay Investments, Inc., Princeton
Securities Corporation, Robert G. Palmeiro, G. L. Cabot Henderson,
Edward R. Henderson and James F. Twaddell
4.15 Form of warrant certificate of Registrant (incorporated herein by
reference to Exhibit 4.3 to Amendment No. 4 to Registration
Statement on Form S-2, Registration No. 33-66424, of Registrant
("Amendment No. 4 to Form S-2") filed with the Securities and
Exchange Commission on November 1, 1993)
4.16 Form of Warrant Agreement with Mellon Securities Trust Company
(incorporated herein by reference to Exhibit 4.1 to Amendment No. 1
to Registration Statement on Form S-2, Registration No. 33-66424, of
Registrant ("Amendment No. 1 to Form S-2") filed with the Securities
and Exchange Commission on September 30, 1993)
4.17 Form of Underwriters' Warrant (incorporated herein by reference to
Exhibit 4.2 to Amendment No. 4 to Form S-2)
*10.1 Registrant's Second Amended and Restated Incentive Stock Option Plan
(incorporated herein by reference to Exhibit 4.1 to the Post-Effective
Amendment No. 1 to the Registration Statement on Form S-8 of
Registrant (Registration No. 2-76012) (the "Amended S-8") filed on May
12, 1983)
*10.2 Form of Incentive Stock Option Agreement (incorporated herein by
reference to Exhibit 10.1 to Amendment No. 1 of the Form S-2
Registration Statement filed with the Securities and Exchange
Commission on September 30, 1993)
*10.3 Form of Amended and Restated Incentive Stock Option Agreement
(incorporated herein by reference to Exhibit 10.51 to the Amendment
No. 2 of the Form S-2 Registration Statement filed with the Securities
Exchange Commission on October 15, 1993)
*10.4 Third Amended and Restated Incentive Stock Option Plan of Registrant
(incorporated herein by reference to Exhibit 10.9 to the Annual Report
on Form 10-K of Registrant for the Year Ended February 26, 1984)
*10.5 Stock Incentive Award Plan of Registrant (incorporated herein by
reference to Exhibit 10.21 to the Annual Report on Form 10-K of
Registrant for the Year Ended February 26, 1984)
*10.6 Non-Qualified Stock Option Plan of Registrant (incorporated herein by
reference to Exhibit 10.22 to the Annual Report on Form 10-K of
Registrant for the Year Ended February 26, 1984)
*10.7 Form of Incentive Option Agreement for use in connection with Third
Amended and Restated Incentive Stock Option Plan (incorporated herein
by reference to Exhibit 4.7 to the Post-Effective Amendment No. 1 to
the Registration Statement on Form 8 of the Registrant (Registration
Statement No. 2-9252) filed on August 23, 1984)
*10.8 Form of Non-Qualified Stock Option Agreement for use in connection
with Non-Qualified Stock Option Plan (incorporated herein by reference
to Exhibit 4.8 to the Post-Effective Amendment No. 1 to the
Registration Statement on Form 8 of the Registrant (Registration
Statement No. 29252) filed on August 23, 1984)
*10.9 Form of Stock Incentive Award and Escrow Agreement for use in
connection with the Stock Incentive Award Plan (incorporated herein by
reference to Exhibit 4.9 to the Post-Effective Amendment No. 1 to the
Registration Statement on Form 8 of the Registrant (Registration
Statement No. 2-9252) filed on August 23, 1984)
*10.10 Revised Form of Non-Qualified Stock Option Agreement for use in
connection with Non-Qualified Stock Option Plan (incorporated herein
by reference to Exhibit 10.30 to the Annual Report on Form 10-K of
Registrant for the Year Ended February 23, 1986)
</TABLE>
<PAGE> 60
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
Number Description Pages
- ------- ----------- ------------
<S> <C> <C>
*10.11 Form of Contingent Non-Qualified Stock Option Agreement for use in
connection with Non-Qualified Stock Option Plan (incorporated herein
by reference to Exhibit 10.31 to the Annual Report on Form 10-K of
Registrant for the Year Ended February 23, 1986)
*10.12 Alpha Microsystems Profit Sharing Trust Agreement between Alpha
Microsystems and Bank of America N.T. & S.A. as Trustee dated May 24,
1985 (incorporated herein by reference to Exhibit 10.32 to the Annual
Report on Form 10-K of Registrant for the Year Ended February 23,
1986)
*10.13 Alpha Microsystems Profit Sharing Plan (as amended and restated) dated
May 15, 1986 (incorporated herein by reference to Exhibit 10.33 to the
Annual Report on Form 10-K of Registrant for the Year Ended February
23, 1986)
*10.14 Acceptance of Trust by Trustee dated September 30, 1986 pursuant to
Registrant's Profit Sharing Plan (incorporated herein by reference to
Exhibit 10.29 to the Annual Report on Form 10-K of Registrant for the
Year Ended February 22, 1987)
*10.15 First Amendment dated March 1, 1987 to the Registrant's Profit Sharing
Plan (incorporated herein by reference to Exhibit 10.30 to the Annual
Report on Form 10-K of Registrant for the Year Ended February 22,
1987)
*10.16 Revised Form of Non-Qualified Stock Option Agreement for use in
connection with Non-Qualified Stock Option Plan (incorporated herein
by reference to Exhibit 10.31 to the Annual Report on Form 10-K of
Registrant for the Year Ended February 22, 1987)
*10.17 Indemnification Agreement dated October 23, 1987 by and between Alpha
Microsystems and John F. Glade (incorporated herein by reference to
Exhibit 10.34 to the Quarterly Report on Form 10-Q of Registrant for
the Quarter Ended November 22, 1987)
*10.18 Indemnification Agreement dated October 23, 1987 by and between Alpha
Microsystems and Rockell N. Hankin (incorporated herein by reference
to Exhibit 10.36 to the Quarterly Report on Form 10-Q of Registrant
for the Quarter Ended November 22, 1987)
*10.19 Indemnification Agreement dated October 23, 1987 by and between Alpha
Microsystems and Harry L. Hathaway (incorporated herein by reference
to Exhibit 10.39 to the Quarterly Report on Form 10-Q of Registrant
for the Quarter Ended November 22, 1987)
*10.20 Second Amendment to Alpha Microsystems Profit Sharing Plan dated
January 22, 1988 (incorporated herein by reference to Exhibit 10.31 to
the Annual Report on Form 10-K of Registrant for the Year Ended
February 28, 1988)
*10.21 Alpha Microsystems Profit Sharing Plan Amendments Under IRS Notice
88-131 dated May 24, 1989 (incorporated herein by reference to Exhibit
</TABLE>
<PAGE> 61
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
Number Description Pages
- ------- ----------- ------------
<S> <C> <C>
10.38 to the Quarterly Report on Form 10-Q of Registrant for the
Quarter Ended May 28, 1989)
*10.22 Alpha Microsystems Profit Sharing Plan Amendment dated December 15,
1989 (incorporated herein by reference to Exhibit 10.45 to the
Quarterly Report on Form 10-Q of Registrant for the Quarter Ended
November 26, 1989)
*10.23 Employment Agreement by and between the Registrant and Douglas J.
Tullio dated January 8, 1990 (incorporated herein by reference to
Exhibit 10.49 to the Quarterly Report on Form 10-Q of Registrant for
the Quarter Ended November 26, 1989)
*10.24 Indemnification Agreement by and between the Registrant and Douglas J.
Tullio dated January 8, 1990 (incorporated herein by reference to
Exhibit 10.50 to the Quarterly Report on Form 10-Q of Registrant for
the Quarter Ended November 26, 1989)
*10.25 Non-Qualified Stock Option Agreement by and between the Registrant and
Douglas J. Tullio dated January 8, 1990 (incorporated herein by
reference to Exhibit 10.51 to the Quarterly Report on Form 10-Q of
Registrant for the Quarter Ended November 26, 1989)
*10.26 Addendum to Employment Agreement by and between the Registrant and
Douglas J. Tullio dated May 21, 1990 (incorporated herein by reference
to Exhibit 10.54 to the Annual Report on Form 10-K of Registrant for
the Year Ended February 25, 1990)
*10.27 Revised Form of Non-Qualified Stock Option Agreement for use in
connection with Registrant's Non-Qualified Stock Option Plan
(incorporated herein by reference to Exhibit 10.59 to the Quarterly
Report on Form 10-Q of Registrant for the Quarter Ended August 26,
1990)
*10.28 Indemnification Agreement by and between Registrant and Clarke E.
Reynolds dated June 16, 1989 (incorporated herein by reference to
Exhibit 10.67 to the Annual Report on Form 10-K of Registrant for the
Year Ended February 23, 1992)
*10.29 Stock Incentive Award and Escrow Agreement by and between Registrant
and John F. Glade for 9,000 shares of the Company's common stock dated
August 11, 1992 (incorporated herein by reference to Exhibit 10.81 to
the Quarterly Report on Form 10-Q of Registrant for the Year Ended
August 30, 1992)
*10.30 Stock Incentive Award and Escrow Agreement by and between Registrant
and Clarke E. Reynolds for 9,000 shares of the Company's common stock
dated August 11, 1992 (incorporated herein by reference to Exhibit
10.80 to the Quarterly Report on Form 10-Q of Registrant for the
Quarter Ended August 30, 1992)
*10.31 Stock Incentive Award and Escrow Agreement by and between Registrant
and Douglas J. Tullio for 14,000 shares of the Company's common stock
dated August 11, 1992 (incorporated herein by reference
</TABLE>
<PAGE> 62
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
Number Description Pages
- ------- ----------- ------------
<S> <C> <C>
to Exhibit 10.79 to the Quarterly Report on Form 10-Q of Registrant
for the Quarter Ended August 30, 1992)
*10.32 Non-Qualified Stock Option Agreement by and between Registrant and
Douglas J. Tullio for 40,000 shares of the Company's common stock
dated August 21, 1992 (incorporated herein by reference to Exhibit
10.76 to the Quarterly Report on Form 10-Q of Registrant for the Year
Ended August 30, 1992)
*10.33 Non-Qualified Stock Option Agreement by and between the Registrant and
Clarke E. Reynolds for 10,000 shares of the Company's Common Stock
dated April 20, 1993 (incorporated herein by reference to Exhibit
10.73 to Amendment No. 1 to Form S-2)
*10.34 Non-Qualified Stock Option Agreement by and between the Registrant and
Douglas J. Tullio for 60,000 shares of the Company's Common Stock
dated April 20, 1993 (incorporated herein by reference to Exhibit
10.74 to Amendment No. 1 to Form S-2)
*10.35 Non-Qualified Stock Option Agreement by and between the Registrant and
John Glade for 10,000 shares of the Company's Common Stock dated April
20, 1993 (incorporated herein by reference to Exhibit 10.75 to
Amendment No. 1 to Form S-2)
*10.36 Form of Stock Option Agreement by and between the Registrant and
Douglas J. Tullio dated August 31, 1993 (incorporated herein by
reference to Exhibit 10.85 to Amendment No. 1 to Form S-2)
*10.37 Consulting Agreement by and between the Registrant and Clarke E.
Reynolds dated June 1, 1993 (incorporated herein by reference to
Exhibit 10.87 to Amendment No. 1 to Form S-2)
*10.38 Alpha Microsystems 1993 Employee Stock Option Plan (incorporated
herein by reference to Exhibit 10.109 to the Quarterly Report on Form
10-Q for the quarter ended May 29, 1994)
10.39 Alpha Microsystems 1993 Directors' Stock Option Plan (incorporated
herein by reference to Exhibit 10.110 to the Quarterly Report on Form
10-Q for the quarter ended May 29, 1994)
10.40 Non-Qualified Stock Option Agreement by and between Registrant and
Clarke E. Reynolds dated May 31, 1994 (incorporated herein by
reference to Exhibit 10.109 to the Quarterly Report on Form 10-Q for
the quarter ended November 27, 1994)
*10.41 Non-Qualified Stock Option Agreement by and between Registrant and
Rockell N. Hankin dated May 31, 1994 (incorporated herein by reference
</TABLE>
<PAGE> 63
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
Number Description Pages
- ------- ----------- ------------
<S> <C> <C>
to Exhibit 10.111 to the Quarterly Report on Form 10-Q for the quarter
ended November 27, 1994)
*10.42 Non-Qualified Stock Option Agreement by and between Registrant and
Harry L. Hathaway dated May 31, 1994 (incorporated herein by reference
to Exhibit 10.112 to the Quarterly Report on Form 10-Q for the quarter
ended November 27, 1994)
10.43 Industrial Lease between Fairview Investors Ltd. and Registrant dated
October 28, 1994 (incorporated herein by reference to Exhibit 10.113
to the Quarterly Report on Form 10-Q for the quarter ended November
27, 1994)
*10.44 Separation Agreement and Agreement to provide consulting services by
and between Registrant and John D. Murray dated December 22, 1994
(incorporated herein by reference to Exhibit 10.114 to the Quarterly
Report on Form 10-Q for the quarter ended November 27, 1994)
10.45 Letter to John Murray from Sumitomo Bank dated January 5, 1995
amending the Loan Agreement (incorporated herein by reference to
Exhibit 10.115 to the Quarterly Report on Form 10-Q for the quarter
ended November 27, 1994)
*10.46 First Amended and Restated Non-Qualified Stock Option Plan of
Registrant dated August 18, 1989 (incorporated herein by reference to
Exhibit 19.14 to the Quarterly Report on Form 10-Q of Registrant for
the Quarter Ended August 27, 1989)
*10.47 First Amendment to Stock Incentive Award Plan of Registrant dated
August 15, 1990 (incorporated herein by reference to Exhibit 19.16 to
the Quarterly Report on Form 10-Q of Registrant for the Quarter Ended
August 26, 1990)
*10.48 First Amendment to Employment Agreement by and between Registrant and
John F. Glade dated May 3, 1991 (incorporated herein by reference to
Exhibit 19.8 to the Annual Report on Form 10-K of Registrant for the
Year Ended February 23, 1992)
*10.49 First Amendment to Employment Agreement by and between Registrant and
Douglas J. Tullio dated May 3, 1991 (incorporated herein by reference
to Exhibit 19.10 to the Annual Report on Form 10-K of Registrant for
the Year Ended February 23, 1992)
*10.50 Second Amendment and Restatement to the Non-Qualified Stock Option
Plan of Alpha Microsystems dated June 24, 1992 (incorporated herein by
reference to Exhibit 10.70 to the Quarterly Report on Form 10-Q for
the Quarter Ended May 31, 1992)
*10.51 Second Amendment and Restatement of the Alpha Microsystems Profit
Sharing Plan dated July 1, 1992 (incorporated herein by reference to
Exhibit 10.72 to the Quarterly Report on Form 10-Q for the Quarter
Ended May 31, 1992)
</TABLE>
<PAGE> 64
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
Number Description Pages
- ------- ----------- ------------
<S> <C> <C>
10.52 Memorandum to Lease by and between Registrant and Fairview Investors,
Ltd. dated January 24, 1995 (incorporated herein by reference to
Exhibit 10.136 to the 1995 10-K)
*10.53 Separation Agreement and General Release by and between Registrant and
Gerald Knight dated March 10, 1995 (incorporated herein by reference
to Exhibit 10.137 to the 1995 10-K)
10.54 Letter to Mike Lowell from Silicon Valley Bank dated May 3, 1995 re:
new credit line (incorporated herein by reference to Exhibit 10.138 to
the 1995 10-K)
10.55 Loan and Security Agreement by and between Registrant and Silicon
Valley Bank dated July 10, 1995 (incorporated herein by reference to
Exhibit 10.139 to the May 1995 10-Q)
10.56 Collateral Assignment, Patent Mortgage and Security Agreement by and
between Registrant and Silicon Valley Bank dated July 10, 1995
(incorporated herein by reference to Exhibit 10.143 to the May 1995
10-Q)
10.57 Security Agreement by and between Alpha HealthCare, Inc., and Silicon
Valley Bank dated July 10, 1995 (incorporated herein by reference to
Exhibit 10.144 to the May 1995 10-Q)
10.58 Continuing Guaranty by and between Alpha HealthCare, Inc., and
Silicone Valley Bank dated July 10, 1995 (incorporated herein by
reference to Exhibit 10.145 to the May 1995 10-Q)
*10.59 Agreement to Grant Nonqualified Stock Option by and between Registrant
and Clarke E. Reynolds dated July 14, 1995 (incorporated herein by
reference to Exhibit 10.146 to the Quarterly Report on Form 10-Q for
the Quarter Ended August 27, 1995 (the "August 1995 10-Q")
*10.60 Agreement to Grant Nonqualified Stock Option by and between Registrant
and Rockell N. Hankin dated July 14, 1995 (incorporated herein by
reference to Exhibit 10.147 to the August 1995 10-Q)
*10.61 Agreement to Grant Nonqualified Stock Option by and between Registrant
and Harry L. Hathaway dated July 14, 1995 (incorporated herein by
reference to Exhibit 10.148 to the August 1995 10-Q)
*10.62 Agreement to Grant Nonqualified Stock Option by and between Registrant
and Richard E. Mahmarian dated July 14, 1995 (incorporated herein by
reference to Exhibit 10.149 to the August 1995 10-Q)
10.63 Amendment to Loan Agreement by and between Registrant and Silicon
Valley Bank dated November 30, 1995 (incorporated herein by reference
to Exhibit 10.150 to the Quarterly Report on Form 10-Q for the Quarter
Ended November 26, 1995 (the "November 1995 10-Q")
*10.64 Agreement to Grant Incentive Stock Option (Pursuant to 1993 Employee
Stock Option Plan) between Registrant and Philip D. Smith
</TABLE>
<PAGE> 65
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
Number Description Pages
- ------- ----------- ------------
<S> <C> <C>
dated April 3, 1995 for 40,000 shares of common stock (incorporated
herein by reference to Exhibit 10.151 to the November 1995 10-Q)
*10.65 Agreement to Grant Incentive Stock Option (Pursuant to 1993 Employee
Stock Option Plan) between Registrant and Michael J. Lowell dated
April 3, 1995 for 40,000 shares of common stock (incorporated herein
by reference to Exhibit 10.152 to the November 1995 10-Q)
*10.66 Agreement to Grant Incentive Stock Option (Pursuant to 1993 Employee
Stock Option Plan) between Registrant and Randy Parks dated April 3,
1995 for 10,000 shares of common stock (incorporated herein by
reference to Exhibit 10.153 to the November 1995 10-Q)
*10.67 Agreement to Grant Incentive Stock Option (Pursuant to 1993 Employee
Stock Option Plan) between Registrant and Peggy Denson dated April 3,
1995 for 10,000 shares of common stock (incorporated herein by
reference to Exhibit 10.154 to the November 1995 10-Q)
*10.68 Agreement to Grant Incentive Stock Option (Pursuant to 1993 Employee
Stock Option Plan) between Registrant and Douglas J. Tullio dated May
5, 1995 for 15,000 shares of common stock (incorporated herein by
reference to Exhibit 10.155 to the November 1995 10-Q)
*10.69 Agreement to Grant Incentive Stock Option (Pursuant to 1993 Employee
Stock Option Plan) between Registrant and John F. Glade dated May 5,
1995 for 7,500 shares of common stock (incorporated herein by
reference to Exhibit 10.156 to the November 1995 10-Q)
10.70 Amendment to Loan Agreement by and between Registrant and Silicon
Valley Bank dated February 7, 1996
10.71 Amendment to Loan Agreement by and between Registrant and Silicon
Valley Bank dated March 7, 1996
10.72 Engagement Letter between Registrant and Sutro & Co. Incorporated
dated May 2, 1996
21 Subsidiaries
23 Consent of Independent Auditors
24 Power of Attorney (included on signature pages of this Annual Report)
27 Financial Data Schedule
</TABLE>
(*Denotes Management Contract or Compensation Plan)
<PAGE> 1
EXHIBIT 4.4
WARRANT TO PURCHASE COMMON STOCK
GRANT DATE: Effective as of December 1, 1993 10,000 Warrants
ALPHA MICROSYSTEMS
In consideration of value received, Alpha Microsystems, a
California corporation (the "Company"), grants to JOHN WESTERGAARD or permitted
transferees or assigns (the "Holder") the right, subject to the terms of this
Warrant, to purchase at any time and from time to time during the period
commencing upon the date hereof, and ending on 5:00 p.m. New York City Time on
November 1, 1998, unless extended or terminated as provided herein (the
"Expiration Date"), up to 10,000 shares of Common Stock (the "Shares") at $2.50
per share (the "Basic Exercise Price). The Basic Exercise Price and the number
of shares of Common Stock that may be purchased are subject to adjustment under
the terms of this Warrant.
SECTION 1
DEFINITIONS
As used in this Warrant, unless the context otherwise
requires:
1.1 "Basic Exercise Price" means the price at which each
share of Common Stock may be purchased upon exercise of this Warrant as stated
in the first sentence of this Warrant.
1.2 "Blue Sky Application" means an application or other
document filed pursuant to a Blue Sky Law to register, qualify or obtain an
exemption for any offer or sale by or for the account of the Holder of all or
part of this Warrant or any of the Shares.
1.3 "Blue Sky Law" means the laws and regulations of any
state or other jurisdiction applicable to any sale by or for the account of the
Holder of all or part of this Warrant or any of the Shares.
1.4 "Common Stock" means the Common Stock (no par value)
of the Company existing on the Grant Date and for purposes of Sections 7.1(a)
through (e) also has the meaning set forth in Section 7.1(g).
1.5 "Exercise Date" means any date when this Warrant is
exercised, in whole or in part, in the manner indicated in Sections 2.1 and
2.2.
1.6 "Exercise Price" means the Basic Exercise Price;
provided, however, that if an adjustment is required under Section 7 of this
Warrant, then the "Exercise Price" means, after each such adjustment, the price
at which each Share may be purchased upon exercise of this Warrant immediately
after the last such adjustment.
<PAGE> 2
1.7 "Expiration Date" means the Expiration Date indicated
on the first page of this Warrant.
1.8 "Grant Date" means the date this Warrant was first
granted as stated at the beginning of this Warrant.
1.9 "Prospectus" means a preliminary prospectus or final
prospectus (including any supplement) or any offering circular or similar
offering document, included in a Registration Statement.
1.10 "Registrable Securities" means Shares of Common Stock
issued upon the exercise of the Warrant.
1.11 "Registration Statement" means a Registration or
Offering Statement, a pre-effective or post-effective amendment to a
Registration Statement or other document proposed for filing or filed by the
Company under the Securities Act which is or would be available under
applicable laws, rules and regulations to register for a public offering or
sale any shares of Common Stock. The term "Registration Statement" shall not
apply to any registration statement relating to the sale of securities to
participants in a Company stock or option plan or a registration on any form
which does not include substantially the same information as would be required
to be included in a registration statement covering the sale of Registrable
Securities (as defined in Section 1.10 above).
1.11 "Securities Act" means the Securities Act of 1933, as
amended from time to time, and all rules and regulations promulgated
thereunder, or any act, rules or regulations which replace the Securities Act
or any such rules and regulations.
1.12 "Warrant" means this Warrant.
SECTION 2
DURATION AND EXERCISE OF WARRANT
2.1 Exercise Period. The Warrants may be exercised at
any time after the Grant Date and on or before the Expiration Date. After the
Expiration Date this Warrant shall become void, and all rights to purchase
Shares hereunder shall thereupon cease.
2.2 Method of Exercise. This Warrant may be exercised by
the Holder, in whole or in part, by (i) surrendering this Warrant to the
Company, and (ii) tendering to the Company payment of the Exercise Price for
the Shares for which exercise is made. Upon proper exercise, the Holder shall
be deemed to be the holder of record of the Shares for which exercise is made,
even though the transfer or register books of the Company may then be closed or
certificates representing such Shares may not then be actually delivered to the
Holder.
2.3 Certificates. Within a reasonable time but no more
than twenty (20) days after exercise, certificates for the shares of Common
Stock comprising such Shares shall be delivered to the Holder and, unless this
Warrant has expired, a Related Warrant representing the
-2-
<PAGE> 3
number of Shares, if any, with respect to which this Warrant shall not have
been exercised shall be issued to the Holder.
2.4 Taxes. The Company covenants and agrees that it will
pay when due and payable any and all taxes which may be payable in connection
with the issuance of this Warrant, or the issuance of any Shares upon the
exercise of this Warrant. The Company shall not, however, be required to pay
any tax which may be payable in respect of any subsequent transfer of this
Warrant or of the Shares.
SECTION 3
VALIDITY AND RESERVATIONS OF SHARES
The Company covenants that this Warrant and all Shares of
Common Stock issued upon exercise of this Warrant will be validly issued, fully
paid, nonassessable and free of pre-emptive rights.
SECTION 4
FRACTIONAL SHARES
No fractional Shares shall be issued upon the exercise of this
Warrant. With respect to any fraction of a Share otherwise issuable upon any
such exercise, the Company shall pay to the Holder an amount in cash equal to
such fraction multiplied by the Exercise Price.
SECTION 5
LIMITED RIGHTS OF THE WARRANT HOLDER
The Holder shall not, solely by virtue of being the Holder of
this Warrant, have any of the rights of a holder of Common Stock of the
Company, either at law or equity, until such Warrant shall have been exercised
and the Holder shall be deemed to be the holder of record of Shares as provided
in this Warrant.
SECTION 6
EXCHANGE, TRANSFER OR LOSS OF WARRANT
6.1 Exchange. This Warrant is exchangeable, without
expense to the Holder and upon surrender hereof to the Company, for Warrants of
different denominations entitling the Holder to purchase Shares equal in total
number and identical in type to the Shares covered by this Warrant.
6.2 Transfer. Subject to the provisions of Section 10,
upon surrender of this Warrant to the Company with assignment duly executed and
the tender of funds sufficient to pay any transfer tax, the Company shall,
without charge, execute and deliver a new Warrant to the
-3-
<PAGE> 4
assignee named in such Assignment Form, and this Warrant shall be cancelled
concurrent with such issuance.
6.3 Loss, Theft, Destruction or Mutilation. Upon receipt
by the Company of satisfactory evidence of the loss, theft, destruction or
mutilation of this Warrant and either (in the case of loss, theft or
destruction) reasonable indemnification or (in the case of mutilation) the
surrender of this Warrant for cancellation, the Company will execute and
deliver to the Holder, without charge, a new Warrant of like denomination. Any
such new Warrant executed and delivered shall constitute an additional
obligation of the Company, whether or not this Warrant, reportedly lost,
stolen, destroyed or mutilated, shall be at any time enforceable by anyone.
SECTION 7
ANTI-DILUTION ADJUSTMENT OF NUMBER OF SHARES AND EXERCISE PRICE
7.1 Adjustment of Exercise Price. If any of the
following events shall occur at any time or from time to time prior to the
exercise in full or expiration of this Warrant, the following adjustments shall
be made in the Exercise Price, with the exception hereinafter provided:
(a) Recapitalization. In case the Company
effects a subdivision, combination, reclassification or other recapitalization
of its outstanding shares of Common Stock into a greater or lesser number of
shares of Common Stock, the Exercise Price in effect immediately after such
subdivision, combination, reclassification or other recapitalization shall be
proportionately decreased or increased, as the case may be.
(b) Dividend Other Than in Cash. If the Company
shall declare a dividend on its Common Stock payable in stock or other
securities of the Company or of any other corporation, or in property or
otherwise than in cash, or the functional equivalent thereof, to the holders of
its Common Stock, the Holder shall, without additional cost, be entitled to
receive upon the exercise of this Warrant, in addition to the Shares to which
such Holder is otherwise entitled upon such exercise, the number of shares of
stock or other securities or property which such Holder would have been
entitled to receive if such Holder had been a holder, on the record date for
such dividend, of the number of shares of Common Stock so purchased under this
Warrant.
(c) Merger or Consolidation - No Change in
Control. In case of any merger, consolidation or reorganization of the Company
with or into one or more corporations which results in holders of the Company's
Common Stock immediately prior to such event owning a majority of the voting
securities of the surviving corporation immediately following such event, and
as a result of which holders of the Company's Common Stock receive other stock,
securities or property in lieu of or in addition to, but on account of, their
Common Stock, the Holder, upon the exercise of this Warrant after the record
date for determination of shareholders entitled thereto, shall receive, in lieu
of or in addition to the Shares, the proportionate shares of all stock, or
other securities (appropriately adjusted for any subsequent events of the
issuer of such stock or securities which are of the kind which would cause
adjustment of the Exercise Price
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<PAGE> 5
hereunder) or other property issued, paid or delivered for or on all of the
Common Stock of the Company as would have been allowable to the Shares so
purchased under this Warrant had this Warrant been exercised immediately prior
to said record date.
(d) Merger of Consolidation - Change in Control.
In case of any merger, consolidation or reorganization of the Company with or
into one or more other corporations, which results in the holders of the
Company's Common Stock immediately prior to such event owning less than a
majority interest of the voting securities of the surviving corporation
immediately following such event, or in the case of any sale, lease, transfer
or conveyance to another corporation of all or substantially all the assets of
the Company or proposed liquidation of the Company, then in either such event
the Holder shall be given notice of such proposed action at approximately the
same time and in substantially the same manner as the holders of the Company's
Common Stock. The Holder may attend the meeting of the Company's shareholders
at which such action is considered and voted upon. If the proposed action is
approved according to applicable law by the shareholders of all corporations or
other entities which are parties to the proposed action, the Holder shall be so
notified in writing by the Company by registered or certified mail, and
thereupon, notwithstanding the period of exercisability stated on the face of
this Warrant, this Warrant shall automatically become immediately exercisable
and become forever null and void to the extent not exercised on or before 5:00
P.M., California time, on the tenth (10th) business day following the delivery
of such notice.
(e) Minimum Adjustment Not Required. Anything in
this Section 7.1 to the contrary notwithstanding, the Company shall not be
required, except as hereinafter provided, to make any adjustment of the
Exercise Price in any case in which the amount by which such Exercise Price
would be increased or reduced, in accordance with the foregoing provisions,
would be less than $.05, but in such a case, such adjustment shall be carried
forward and when such adjustment, together with any and all such other
adjustments so carried forward, shall amount to not less than $.10 the Exercise
Price shall be adjusted; provided, however, that adjustments of less than $.05
in the Exercise Price shall be required and made in accordance with the
provisions of this Section 7.1 (other than this subparagraph) not later than
such time as may be required in order to preserve the tax-free nature of any
distribution (within the meaning of Section 305 of the United States Internal
Revenue Code of 1986, as amended) to the Holder or the holders of Common Stock.
In the event of any subdivisions, combination, reclassification or other
recapitalization of shares of Common Stock, said amount (as theretofore
decreased or increased) shall be proportionately decreased or increased.
(f) Other Adjustments. The Company, by action of
its Board of Directors, shall make such other equitable adjustments to the
Exercise Price as may be necessary to protect the Holder against dilution of
this Warrant, with or without a request of a Holder, where such an adjustment
is appropriate in light of the occurrence of an event or the existence of
circumstances similar to those otherwise contemplated by this Section 7.1.
(g) Term "Common Stock." Whenever reference is
made in Sections 7.1(a) through (e) above to Common Stock, the term "Common
Stock" shall include any stock of any class of the Company, other than
preferred stock with a fixed limit on dividends,
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<PAGE> 6
with no rights of conversion into "Common Stock" and with a fixed amount
payable in the event of any voluntary or involuntary liquidation, dissolution
or winding up of the Company.
7.2 Number of Shares Adjusted. After any adjustment of
the Exercise Price pursuant to Section 7.1, the number of Shares issuable at
the new Exercise Price shall be adjusted to the number obtained by (i)
multiplying the number of Shares issuable upon exercise of this Warrant
immediately before such adjustment by the Exercise Price in effect immediately
before such adjustment and (ii) dividing the product so obtained by the new
Exercise Price.
7.3 Notice of Adjustment. Whenever events occur
requiring the Exercise Price to be adjusted, the Company shall promptly file
with its Secretary or an Assistant Secretary at its principal office and with
its stock transfer agent, if any, a certificate of its chief financial officer
showing the adjusted Exercise Price, setting forth in reasonable detail the
facts requiring such adjustment, and stating such other facts as shall be
necessary to show the manner and figures used to compute such adjustments.
Such chief financial officers certificate shall be made available at all
reasonable times for inspection by the Holder. Promptly after each such
adjustment, the Company shall mail a copy of such certificate by certified mail
to the Holder together with information relating to the adjustment under
Section 7.2. The Company shall endorse on any Warrant executed and delivered
by the Company a description of each adjustment, if any, under this Section as
the result of events occurring before the execution and delivery of the
Warrant, and the Warrant so issued shall reflect the number of Shares issuable
on exercise, as adjusted to reflect such charges.
If, within forty-five (45) days of the mailing of such
certificate, Holders holding in the aggregate not less than 25% of the Warrants
notify the Company in writing of their disagreements with the adjusted Exercise
Price contained in the Company certificate, then the Company will promptly
obtain a certificate of a firm of independent certified public accountants of
recognized standing selected by the Company's Board of Directors (who shall not
be the regular auditors of the Company) certifying the same items required by
the Company certificate or making such adjustments as are appropriate. The
Company will promptly mail a copy of the firm of independent public
accountants' certificate to the Holder of the this Warrant. Under the
circumstances described in this paragraph, the Holders of the Warrants giving
notice shall be obligated to reimburse the Company for half of the charges
imposed by the independent certified accountants if their certificate confirms
the Company's prior calculations.
SECTION 8
NOTICE TO HOLDER
So long as this Warrant is outstanding, whenever the Company
shall expect to (i) pay any dividend or distribution upon Common Stock, (ii)
offer to the holders of Common Stock any right to subscribe for or to purchase
any other securities of the Company, (iii) effect any recapitalization, merger,
consolidation, reorganization, transfer, sale, lease or conveyance as referred
to in Section 7, or (iv) be involved in any voluntary or involuntary
dissolution, liquidation or winding up of the Company, at least twenty-one (21)
days before the proposed action or any applicable record date, the Company, by
certified mail, shall give the Holder written notice
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describing the proposed action and stating the date on which (x) a record date
is to be fixed for the purposes of such dividend, distribution or rights or (y)
such recapitalization, merger, consolidation, reorganization, transfer, sale,
lease, conveyance, dissolution, liquidation or winding up is to take place and
when, if any date is to be fixed, the record holders of Common Stock shall be
entitled to exchange the shares of Common Stock for securities or other
property deliverable upon such recapitalization, merger, consolidation,
reorganization, transfer, sale, lease, conveyance, dissolution, liquidation or
winding up.
SECTION 9
REGISTRATION OF THE SHARES
9.1 Registration Rights.
(a) Piggy-back Registration. The Company shall
advise each Holder of Registrable Securities by written notice at least five
days prior to the filing of any Registration Statement pertaining to securities
to be offered to the public solely for cash, and will, upon the request of any
such Holders, and without any charge to them, include in any such Registration
Statement such information as may be required to permit a public offering of
their Registrable Securities. If any such Registration Statement or
notification is being filed by the Company in connection with an underwritten
public offering of securities of the Company, the Company shall have the right
to require such Holders (provided that Rule 415 applies to the sale of the
Registrable Securities) to postpone the offering of their securities for a
period of ninety (90) days following the effective date of such Registration
Statement or notification. If any such Registration Statement or notification
is being filed by the Company solely for the benefit of selling security
holders, the Company will permit such Holders of the Registrable Securities to
include for sale with such shareholders in such Registration Statement or
notification at least a pro rata portion (based upon the ratio of the number of
shares of Common Stock which such selling security holders desire to sell to
the number of Registrable Securities which such Holders of the Registrable
Securities desire to sell) of the total Registrable Securities being
registered, and the offering of the balance of the Registrable Securities owned
by holders of the Registrable Securities may then be postponed by the Company
for a period of ninety (90) days following effectiveness of the Registration
Statement or notification.
(b) General Provisions. The following provisions
shall also be applicable to any such Registration:
(i) The Holders whose Registrable
Securities are to be included therein (the "Sellers") shall furnish the Company
with such appropriate information (relating to the intentions of such Holders)
in connection therewith as the Company shall reasonably request in writing.
Following the effective date of such Registration Statement or notification,
the Company shall, upon the request of the Seller, forthwith supply such number
of Prospectuses or offering circulars meeting the requirements of the
Securities Act as shall be reasonably requested by such Seller to permit such
Seller to make a public offering of all such securities of such Seller included
therein. The Company shall file such Blue Sky Applications and use its best
efforts to
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qualify such securities included therein for sale in such states as the Sellers
shall reasonably designate.
(ii) The Company shall bear the cost and
expense directly relating to any registration securities pursuant to this
Section 9.1, provided, however, that the Company shall not be required to pay
for any expenses of any registration proceeding begun pursuant to this Section
9.1 if the Registration request is subsequently withdrawn at the request of the
Holders of a majority of the Registrable Securities to be registered (in which
case all Holders requesting such Registration shall bear such expenses). The
Company shall not be required to pay any selling commissions, but shall pay all
applicable listing fees.
(iii) The Company shall indemnify and hold
harmless each Seller who may purchase from or sell for any Seller any
Registrable Securities from and against any and all losses, claims, damages and
liabilities caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or any Prospectus
included therein, required to be filed or furnished by reason of this Section
9.1, or caused by any omission or alleged omissions to state therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, except insofar as such losses, claims,
damages or liabilities are caused by any such untrue statement or alleged
untrue statement or omission or alleged omission which was based upon
information furnished or required to be furnished in writing to the Company by
and about such Seller expressly for use therein, which indemnification shall
include each person, if any, who controls any such Seller within the meaning of
the Securities Act; provided, however, that the Company shall not be obliged so
to indemnify any such Seller or controlling persons unless such Seller shall at
the same time indemnify the Company, its directors, each officer signing a
Registration Statement or notification and each person, if any who controls the
Company within the meaning of the Securities Act from and against any and all
losses, claims, damages and liabilities caused by any untrue statement or
alleged untrue statement of a material fact contained in any Registration
Statement or notification or any Prospectus or offering circular required to be
filed or furnished by reason of this Section 9.1, or caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statement therein, in light of the circumstances under
which they were made, not misleading, insofar as such losses, claims, damages
or liabilities are caused by any untrue statement or alleged untrue statement
or omission or alleged omission which was based upon information furnished in
writing to the Company by and about such Seller expressly for use therein.
(iv) The Company will, or will use its best
efforts to (i) prepare and file with the Commission a Registration Statement or
notification with respect to the Registrable Securities to be registered or
qualified and cause such Registration Statement or notification to become and
remain effective; provided, that the Company will not be required to keep the
Registration Statement or notification effective, or to prepare and file any
amendments or supplements, later than nine months after the date on which the
Registration Statement or notification becomes effective under the Securities
Act.
(v) The Company shall, in case of a registration
or notification, furnish to the Holders of the Registrable Securities for whom
such Registrable Securities are
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<PAGE> 9
registered or are to be registered or are filed for notification, at the time
such Registration Statement becomes effective, an opinion of counsel, dated
such date, for the Company reasonably acceptable to the Holders to the effect
that a Registration Statement or notification covering the Registrable
Securities has been filed with the commission under the Securities Act and has
become effective, that a prospectus or offering circular complying in form with
the requirements of the Securities Act is available for delivery, that to the
best of such counsel's knowledge, no stop order has been issued by the
Commission suspending the effectiveness of the Registration Statement or
suspending the availability of the offering exemption and that, to the best of
the counsel's knowledge, no proceedings for the issuance of a stop order are
threatened or contemplated, and that the Registrable Securities have been
registered or qualified under the securities or Blue Sky Laws of each state in
which the Company is required, pursuant to subsection (b)(i) of this Section
9.1 to register or qualify the Registrable Securities.
(vi) It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Section 9.1 with
respect to the Registrable Securities of any selling Holder that such Holder
shall furnish to the Company such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of such
securities as shall be reasonably required to effect the Registration of such
Holder's Registrable Securities.
9.2 Exchange Listing. In connection with the issuance of
any Shares upon the exercise of this Warrant, the Company shall secure the
listing of the underlying shares of Common Stock upon any securities exchange
upon which shares of the Company's Common Stock are listed.
9.3 No Obligations to Sell. Neither the giving of any
notice nor the making of any request hereunder shall impose any obligation
on the selling Holder to sell any Registrable Securities.
9.4 Registration Rights Survive Exercise. The Company's
obligations under this Section 9 shall continue in effect, regardless of the
exercise or surrender of this Warrant. The Company's obligations under this
Section 9 shall expire, however, with respect to a Warrant or Shares which have
been sold by a broker or dealer or in a public offering registered under the
Securities Act or a public offering exempt from such registration.
SECTION 10
SECURITIES LAW COMPLIANCE
Except pursuant to the requirements of Rule 144 of the
Securities Act, this Warrant and the Shares may not be sold, transferred,
assigned or otherwise disposed of except as follows:
(a) to a person who, in the opinion of counsel
reasonably satisfactory to the Company, is a person to whom this Warrants or
the Shares may legally be transferred
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<PAGE> 10
without registration and without the delivery of a current prospectus or
offering circular with respect thereto; or
(b) to any person upon delivery of a prospectus
or offering circular then meeting the requirements of the Securities Act
relating to such securities (as to which a Registration Statement or
notification under the Securities Act shall then be in effect) and the offering
thereof for such sale or disposition.
SECTION 11
REDEMPTION
The Company may call the Warrants for redemption, in whole or
in part, upon at least thirty (30) days' prior written notice at any time
during the exercise period at a price of $.05 per Warrant, provided that the
closing bid price for a share of the Company's Common Stock has been an average
of at least $3.375 for twenty (20) trading days immediately preceding the date
of the written notice. In the event the Company exercises its right to redeem
the Warrants, such Warrants will be exercisable until the close of business on
the date fixed for redemption in such notice. If any Warrant called for
redemption is not exercised by such time, it will cease to be exercisable and
the Holder thereof will be entitled to the redemption price.
SECTION 12
MISCELLANEOUS
12.1 Successors and Assigns. All the covenants and
provisions of this Warrant which are by or for the benefit of the Company or
the Holder shall bind and inure to the benefit of their respective successors
and assigns hereunder.
12.2 Notice. Notice or demand pursuant to this Warrant to
be given or made by the Holder to or on the Company shall be sufficiently given
or made if sent by registered mail, postage prepaid, receipt requested,
addressed, until another address is designated in writing by the Company, as
follows:
Alpha Microsystems
2722 South Fairview Street
Santa Ana, California 92704
Any notice or demand authorized by this Warrant to be given or made by the
Company to or on the Holder shall be given to the Holder by registered mail,
postage prepaid, receipt requested, addressed at his last known address as it
shall appear on the books of the Company, until another address is designated
in writing by like mail.
12.3 Applicable Law. The validity, interpretation and
performance of this Warrant shall be governed by the laws of the State of
California.
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<PAGE> 11
12.4 Headings. The Article headings herein are for
convenience only and are not part of this Warrant and shall not affect the
interpretation thereof.
Dated as of December 1, 1993 ALPHA MICROSYSTEMS
By:
---------------------------------
Douglas J. Tullio, President
Attest:
------------------------------------------
Secretary
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<PAGE> 12
EXERCISE FORM
(To be Executed by the Warrant Holder if He, or She
Desires to Exercise the Warrant in Whole or in Part)
To: Alpha Microsystems
The undersigned (____________________________________________________________)
Please insert name and Social Security or number E.I.N. of Holder
hereby irrevocably elects to exercise the rights of purchase represented by the
within Warrant for, and to purchase thereunder, ___________ Shares provided for
therein and tenders payment herewith to the order of Alpha Microsystems in the
amount of $________.
The undersigned requests that certificates for such Shares be issued as follows:
Name:___________________________________________________________________________
Address:________________________________________________________________________
Deliver to:_____________________________________________________________________
Address:________________________________________________________________________
and, if said number of Shares shall not be all the Shares purchasable
hereunder, that a new Warrant for the balance remaining of the Shares
purchasable under the within Warrant be registered in the name of, and
delivered to, the undersigned at the address stated below.
Address:________________________________________________________________________
Dated:________________,19_____
Signature:___________________________
Note: Signature must correspond with
the name as written upon the face of
this Warrant in every particular,
without alteration or enlargement or
any change whatsoever.
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FORM OF ASSIGNMENT
(To be Signed Only Upon Assignment)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
_______________ the right to purchase _______ Shares evidenced by the within
Warrant, and appoints ____________________ to transfer the same on the books of
Alpha Microsystems with the full power of substitution in the premises.
Dated:________________,19_____
Signature:__________________________
Note: Signature must correspond
with the name as written upon the
face of this Warrant in every
particular, without alteration or
enlargement or any change
whatsoever, and the signature must
be guaranteed in the usual manner.
Signature Guaranteed:
________________________________
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<PAGE> 1
EXHIBIT 4.5
WARRANT TO PURCHASE COMMON STOCK
GRANT DATE: Effective as of December 17, 1993 170,000 Shares
ALPHA MICROSYSTEMS
In consideration of Two Hundred Dollars ($200.00) and other
value received, ALPHA MICROSYSTEMS, a California corporation (the "Company"),
grants to DOMINICK & DOMINICK INCORPORATED or permitted transferees or assigns
(the "Holder") the right, subject to the terms of this Warrant, to purchase at
any time and from time to time during the period commencing immediately upon
the approval of the Letter Agreement between Company and Dominick & Dominick
dated December 17, 1993 by the Company's Board of Directors, and ending on 5:00
p.m. New York City Time on November 1, 1998, unless extended or terminated as
provided herein (the "Expiration Date"), up to 170,000 shares of Common Stock
(the "Shares") at $2.50 per share (the "Basic Exercise Price). The Basic
Exercise Price and the number of shares of Common Stock that may be purchased
are subject to adjustment under the terms of this Warrant.
SECTION 1
DEFINITIONS
As used in this Warrant, unless the context otherwise requires:
1.1 "Basic Exercise Price" means the price at which each
share of Common Stock may be purchased upon exercise of this Warrant as stated
in the first sentence of this Warrant.
1.2 "Blue Sky Application" means an application or other
document filed pursuant to a Blue Sky Law to register, qualify or obtain an
exemption for any offer or sale by or for the account of the Holder of all or
part of this Warrant or any of the Shares.
1.3 "Blue Sky Law" means the laws and regulations of any
state or other jurisdiction applicable to any sale by or for the account of the
Holder of all or part of this Warrant or any of the Shares.
1.4 "Common Stock" means the Common Stock (no par value)
of the Company existing on the Grant Date and for purposes of Sections 7.1(a)
through (e) also has the meaning set forth in Section 7.1(g).
1.5 "Exercise Date" means any date when this Warrant is
exercised, in whole or in part, in the manner indicated in Sections 2.1 and
2.2.
<PAGE> 2
1.6 "Exercise Price" means the Basic Exercise Price;
provided, however, that if an adjustment is required under Section 7 of this
Warrant, then the "Exercise Price" means, after each such adjustment, the price
at which each Share may be purchased upon exercise of this Warrant immediately
after the last such adjustment.
1.7 "Expiration Date" means the Expiration Date indicated
on the first page of this Warrant.
1.8 "Grant Date" means the date this Warrant was first
granted as stated at the beginning of this Warrant.
1.9 "Prospectus" means a preliminary prospectus or final
prospectus (including any supplement) or any offering circular or similar
offering document, included in a Registration Statement.
1.10 "Registrable Securities" means Shares of Common Stock
issued upon the exercise of the Warrant.
1.11 "Registration Statement" means a Registration or
Offering Statement, a pre-effective or post-effective amendment to a
Registration Statement or other document proposed for filing or filed by the
Company under the Securities Act which is or would be available under
applicable laws, rules and regulations to register for a public offering or
sale any shares of Common Stock. The term "Registration Statement" shall not
apply to any registration statement relating to the sale of securities to
participants in a Company stock or option plan or a registration on any form
which does not include substantially the same information as would be required
to be included in a registration statement covering the sale of Registrable
Securities (as defined in Section 1.10 above).
1.11 "Securities Act" means the Securities Act of 1933, as
amended from time to time, and all rules and regulations promulgated
thereunder, or any act, rules or regulations which replace the Securities Act
or any such rules and regulations.
1.12 "Warrant" means this Warrant.
SECTION 2
DURATION AND EXERCISE OF WARRANT
2.1 Exercise Period. The Warrants may be exercised at
any time after the Grant Date and on or before the Expiration Date. After the
Expiration Date this Warrant shall become void, and all rights to purchase
Shares hereunder shall thereupon cease.
2.2 Method of Exercise. This Warrant may be exercised by
the Holder, in whole or in part, by (i) surrendering this Warrant to the
Company, and (ii) tendering to the Company payment of the Exercise Price for
the Shares for which exercise is
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<PAGE> 3
made. Upon proper exercise, the Holder shall be deemed to be the holder of
record of the Shares for which exercise is made, even though the transfer or
register books of the Company may then be closed or certificates representing
such Shares may not then be actually delivered to the Holder.
2.3 Certificates. Within a reasonable time but no more
than twenty (20) days after exercise, certificates for the shares of Common
Stock comprising such Shares shall be delivered to the Holder and, unless this
Warrant has expired, a Related Warrant representing the number of Shares, if
any, with respect to which this Warrant shall not have been exercised shall be
issued to the Holder.
2.4 Taxes. The Company covenants and agrees that it will
pay when due and payable any and all taxes which may be payable in connection
with the issuance of this Warrant, or the issuance of any Shares upon the
exercise of this Warrant. The Company shall not, however, be required to pay
any tax which may be payable in respect of any subsequent transfer of this
Warrant or of the Shares.
SECTION 3
VALIDITY AND RESERVATIONS OF SHARES
The Company covenants that this Warrant and all Shares of
Common Stock issued upon exercise of this Warrant will be validly issued, fully
paid, nonassessable and free of pre-emptive rights.
SECTION 4
FRACTIONAL SHARES
No fractional Shares shall be issued upon the exercise of this
Warrant. With respect to any fraction of a Share otherwise issuable upon any
such exercise, the Company shall pay to the Holder an amount in cash equal to
such fraction multiplied by the Exercise Price.
SECTION 5
LIMITED RIGHTS OF THE WARRANT HOLDER
The Holder shall not, solely by virtue of being the Holder of
this Warrant, have any of the rights of a holder of Common Stock of the
Company, either at law or equity, until such Warrant shall have been exercised
and the Holder shall be deemed to be the holder of record of Shares as provided
in this Warrant.
SECTION 6
EXCHANGE, TRANSFER OR LOSS OF WARRANT
6.1 Exchange. This Warrant is exchangeable, without
expense to the Holder and upon surrender hereof to the Company, for Warrants of
different denominations entitling the
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<PAGE> 4
Holder to purchase Shares equal in total number and identical in type to the
Shares covered by this Warrant.
6.2 Transfer. Subject to the provisions of Section 10,
upon surrender of this Warrant to the Company with assignment duly executed and
the tender of funds sufficient to pay any transfer tax, the Company shall,
without charge, execute and deliver a new Warrant to the assignee named in such
Assignment Form, and this Warrant shall be cancelled concurrent with such
issuance.
6.3 Loss, Theft, Destruction or Mutilation. Upon receipt
by the Company of satisfactory evidence of the loss, theft, destruction or
mutilation of this Warrant and either (in the case of loss, theft or
destruction) reasonable indemnification or (in the case of mutilation) the
surrender of this Warrant for cancellation, the Company will execute and
deliver to the Holder, without charge, a new Warrant of like denomination. Any
such new Warrant executed and delivered shall constitute an additional
obligation of the Company, whether or not this Warrant, reportedly lost,
stolen, destroyed or mutilated, shall be at any time enforceable by anyone.
SECTION 7
ANTI-DILUTION ADJUSTMENT OF NUMBER OF SHARES AND EXERCISE PRICE
7.1 Adjustment of Exercise Price. If any of the
following events shall occur at any time or from time to time prior to the
exercise in full or expiration of this Warrant, the following adjustments shall
be made in the Exercise Price, with the exception hereinafter provided:
(a) Recapitalization. In case the Company
effects a subdivision, combination, reclassification or other recapitalization
of its outstanding shares of Common Stock into a greater or lesser number of
shares of Common Stock, the Exercise Price in effect immediately after such
subdivision, combination, reclassification or other recapitalization shall be
proportionately decreased or increased, as the case may be.
(b) Dividend Other Than in Cash. If the Company
shall declare a dividend on its Common Stock payable in stock or other
securities of the Company or of any other corporation, or in property or
otherwise than in cash, or the functional equivalent thereof, to the holders of
its Common Stock, the Holder shall, without additional cost, be entitled to
receive upon the exercise of this Warrant, in addition to the Shares to which
such Holder is otherwise entitled upon such exercise, the number of shares of
stock or other securities or property which such Holder would have been
entitled to receive if such Holder had been a holder, on the record date for
such dividend, of the number of shares of Common Stock so purchased under this
Warrant.
(c) Merger or Consolidation - No Change in
Control. In case of any merger, consolidation or reorganization of the Company
with or into one or more corporations which results in holders of the Company's
Common Stock immediately prior to such event owning a majority of the voting
securities of the surviving corporation immediately following such
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<PAGE> 5
event, and as a result of which holders of the Company's Common Stock receive
other stock, securities or property in lieu of or in addition to, but on
account of, their Common Stock, the Holder, upon the exercise of this Warrant
after the record date for determination of shareholders entitled thereto, shall
receive, in lieu of or in addition to the Shares, the proportionate shares of
all stock, or other securities (appropriately adjusted for any subsequent
events of the issuer of such stock or securities which are of the kind which
would cause adjustment of the Exercise Price hereunder) or other property
issued, paid or delivered for or on all of the Common Stock of the Company as
would have been allowable to the Shares so purchased under this Warrant had
this Warrant been exercised immediately prior to said record date.
(d) Merger of Consolidation - Change in Control.
In case of any merger, consolidation or reorganization of the Company with or
into one or more other corporations, which results in the holders of the
Company's Common Stock immediately prior to such event owning less than a
majority interest of the voting securities of the surviving corporation
immediately following such event, or in the case of any sale, lease, transfer
or conveyance to another corporation of all or substantially all the assets of
the Company or proposed liquidation of the Company, then in either such event
the Holder shall be given notice of such proposed action at approximately the
same time and in substantially the same manner as the holders of the Company's
Common Stock. The Holder may attend the meeting of the Company's shareholders
at which such action is considered and voted upon. If the proposed action is
approved according to applicable law by the shareholders of all corporations or
other entities which are parties to the proposed action, the Holder shall be so
notified in writing by the Company by registered or certified mail, and
thereupon, notwithstanding the period of exercisability stated on the face of
this Warrant, this Warrant shall automatically become immediately exercisable
and become forever null and void to the extent not exercised on or before 5:00
P.M., California time, on the tenth (10th) business day following the delivery
of such notice.
(e) Minimum Adjustment Not Required. Anything in
this Section 7.1 to the contrary notwithstanding, the Company shall not be
required, except as hereinafter provided, to make any adjustment of the
Exercise Price in any case in which the amount by which such Exercise Price
would be increased or reduced, in accordance with the foregoing provisions,
would be less than $.05, but in such a case, such adjustment shall be carried
forward and when such adjustment, together with any and all such other
adjustments so carried forward, shall amount to not less than $.10 the Exercise
Price shall be adjusted; provided, however, that adjustments of less than $.05
in the Exercise Price shall be required and made in accordance with the
provisions of this Section 7.1 (other than this subparagraph) not later than
such time as may be required in order to preserve the tax-free nature of any
distribution (within the meaning of Section 305 of the United States Internal
Revenue Code of 1986, as amended) to the Holder or the holders of Common Stock.
In the event of any subdivisions, combination, reclassification or other
recapitalization of shares of Common Stock, said amount (as theretofore
decreased or increased) shall be proportionately decreased or increased.
(f) Other Adjustments. The Company, by action of
its Board of Directors, shall make such other equitable adjustments to the
Exercise Price as may be necessary to protect the Holder against dilution of
this Warrant, with or without a request of a Holder,
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<PAGE> 6
where such an adjustment is appropriate in light of the occurrence of an event
or the existence of circumstances similar to those otherwise contemplated by
this Section 7.1.
(g) Term "Common Stock." Whenever reference is
made in Sections 7.1(a) through (e) above to Common Stock, the term "Common
Stock" shall include any stock of any class of the Company, other than
preferred stock with a fixed limit on dividends, with no rights of conversion
into "Common Stock" and with a fixed amount payable in the event of any
voluntary or involuntary liquidation, dissolution or winding up of the Company.
7.2 Number of Shares Adjusted. After any adjustment of
the Exercise Price pursuant to Section 7.1, the number of Shares issuable at
the new Exercise Price shall be adjusted to the number obtained by (i)
multiplying the number of Shares issuable upon exercise of this Warrant
immediately before such adjustment by the Exercise Price in effect immediately
before such adjustment and (ii) dividing the product so obtained by the new
Exercise Price.
7.3 Notice of Adjustment. Whenever events occur
requiring the Exercise Price to be adjusted, the Company shall promptly file
with its Secretary or an Assistant Secretary at its principal office and with
its stock transfer agent, if any, a certificate of its chief financial officer
showing the adjusted Exercise Price, setting forth in reasonable detail the
facts requiring such adjustment, and stating such other facts as shall be
necessary to show the manner and figures used to compute such adjustments.
Such chief financial officers certificate shall be made available at all
reasonable times for inspection by the Holder. Promptly after each such
adjustment, the Company shall mail a copy of such certificate by certified mail
to the Holder together with information relating to the adjustment under
Section 7.2. The Company shall endorse on any Warrant executed and delivered
by the Company a description of each adjustment, if any, under this Section as
the result of events occurring before the execution and delivery of the
Warrant, and the Warrant so issued shall reflect the number of Shares issuable
on exercise, as adjusted to reflect such charges.
If, within forty-five (45) days of the mailing of such
certificate, Holders holding in the aggregate not less than 25% of the Warrants
notify the Company in writing of their disagreements with the adjusted Exercise
Price contained in the Company certificate, then the Company will promptly
obtain a certificate of a firm of independent certified public accountants of
recognized standing selected by the Company's Board of Directors (who shall not
be the regular auditors of the Company) certifying the same items required by
the Company certificate or making such adjustments as are appropriate. The
Company will promptly mail a copy of the firm of independent public
accountants' certificate to the Holder of the this Warrant. Under the
circumstances described in this paragraph, the Holders of the Warrants giving
notice shall be obligated to reimburse the Company for half of the charges
imposed by the independent certified accountants if their certificate confirms
the Company's prior calculations.
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<PAGE> 7
SECTION 8
NOTICE TO HOLDER
So long as this Warrant is outstanding, whenever the Company
shall expect to (i) pay any dividend or distribution upon Common Stock, (ii)
offer to the holders of Common Stock any right to subscribe for or to purchase
any other securities of the Company, (iii) effect any recapitalization, merger,
consolidation, reorganization, transfer, sale, lease or conveyance as referred
to in Section 7, or (iv) be involved in any voluntary or involuntary
dissolution, liquidation or winding up of the Company, at least twenty-one (21)
days before the proposed action or any applicable record date, the Company, by
certified mail, shall give the Holder written notice describing the proposed
action and stating the date on which (x) a record date is to be fixed for the
purposes of such dividend, distribution or rights or (y) such recapitalization,
merger, consolidation, reorganization, transfer, sale, lease, conveyance,
dissolution, liquidation or winding up is to take place and when, if any date
is to be fixed, the record holders of Common Stock shall be entitled to
exchange the shares of Common Stock for securities or other property
deliverable upon such recapitalization, merger, consolidation, reorganization,
transfer, sale, lease, conveyance, dissolution, liquidation or winding up.
SECTION 9
REGISTRATION OF THE SHARES
9.1 Registration Rights.
(a) Piggy-back Registration. The Company shall
advise each Holder of Registrable Securities by written notice at least five
days prior to the filing of any Registration Statement pertaining to securities
to be offered to the public solely for cash, and will, upon the request of any
such Holders, and without any charge to them, include in any such Registration
Statement such information as may be required to permit a public offering of
their Registrable Securities. If any such Registration Statement or
notification is being filed by the Company in connection with an underwritten
public offering of securities of the Company, the Company shall have the right
to require such Holders (provided that Rule 415 applies to the sale of the
Registrable Securities) to postpone the offering of their securities for a
period of ninety (90) days following the effective date of such Registration
Statement or notification. If any such Registration Statement or notification
is being filed by the Company solely for the benefit of selling security
holders, the Company will permit such Holders of the Registrable Securities to
include for sale with such shareholders in such Registration Statement or
notification at least a pro rata portion (based upon the ratio of the number of
shares of Common Stock which such selling security holders desire to sell to
the number of Registrable Securities which such Holders of the Registrable
Securities desire to sell) of the total Registrable Securities being
registered, and the offering of the balance of the Registrable Securities owned
by holders of the Registrable Securities may then be postponed by the Company
for a period of ninety (90) days following effectiveness of the Registration
Statement or notification.
-7-
<PAGE> 8
(b) General Provisions. The following provisions
shall also be applicable to any such Registration:
(i) The Holders whose Registrable
Securities are to be included therein (the "Sellers") shall furnish the Company
with such appropriate information (relating to the intentions of such Holders)
in connection therewith as the Company shall reasonably request in writing.
Following the effective date of such Registration Statement or notification,
the Company shall, upon the request of the Seller, forthwith supply such number
of Prospectuses or offering circulars meeting the requirements of the
Securities Act as shall be reasonably requested by such Seller to permit such
Seller to make a public offering of all such securities of such Seller included
therein. The Company shall file such Blue Sky Applications and use its best
efforts to qualify such securities included therein for sale in such states as
the Sellers shall reasonably designate.
(ii) The Company shall bear the cost and
expense directly relating to any registration securities pursuant to this
Section 9.1, provided, however, that the Company shall not be required to pay
for any expenses of any registration proceeding begun pursuant to this Section
9.1 if the Registration request is subsequently withdrawn at the request of the
Holders of a majority of the Registrable Securities to be registered (in which
case all Holders requesting such Registration shall bear such expenses). The
Company shall not be required to pay any selling commissions, but shall pay all
applicable listing fees.
(iii) The Company shall indemnify and hold
harmless each Seller who may purchase from or sell for any Seller any
Registrable Securities from and against any and all losses, claims, damages and
liabilities caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or any Prospectus
included therein, required to be filed or furnished by reason of this Section
9.1, or caused by any omission or alleged omissions to state therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, except insofar as such losses, claims,
damages or liabilities are caused by any such untrue statement or alleged
untrue statement or omission or alleged omission which was based upon
information furnished or required to be furnished in writing to the Company by
and about such Seller expressly for use therein, which indemnification shall
include each person, if any, who controls any such Seller within the meaning of
the Securities Act; provided, however, that the Company shall not be obliged so
to indemnify any such Seller or controlling persons unless such Seller shall at
the same time indemnify the Company, its directors, each officer signing a
Registration Statement or notification and each person, if any who controls the
Company within the meaning of the Securities Act from and against any and all
losses, claims, damages and liabilities caused by any untrue statement or
alleged untrue statement of a material fact contained in any Registration
Statement or notification or any Prospectus or offering circular required to be
filed or furnished by reason of this Section 9.1, or caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statement therein, in light of the circumstances under
which they were made, not misleading, insofar as such losses, claims, damages
or liabilities are caused by any untrue statement or alleged untrue statement
or omission or alleged omission which was based upon information furnished in
writing to the Company by and about such Seller expressly for use therein.
-8-
<PAGE> 9
(iv) The Company will, or will use its
best efforts to (i) prepare and file with the Commission a Registration
Statement or notification with respect to the Registrable Securities to be
registered or qualified and cause such Registration Statement or notification
to become and remain effective; provided, that the Company will not be required
to keep the Registration Statement or notification effective, or to prepare and
file any amendments or supplements, later than nine months after the date on
which the Registration Statement or notification becomes effective under the
Securities Act.
(v) The Company shall, in case of a
registration or notification, furnish to the Holders of the Registrable
Securities for whom such Registrable Securities are registered or are to be
registered or are filed for notification, at the time such Registration
Statement becomes effective, an opinion of counsel, dated such date, for the
Company reasonably acceptable to the Holders to the effect that a Registration
Statement or notification covering the Registrable Securities has been filed
with the commission under the Securities Act and has become effective, that a
prospectus or offering circular complying in form with the requirements of the
Securities Act is available for delivery, that to the best of such counsel's
knowledge, no stop order has been issued by the Commission suspending the
effectiveness of the Registration Statement or suspending the availability of
the offering exemption and that, to the best of the counsel's knowledge, no
proceedings for the issuance of a stop order are threatened or contemplated,
and that the Registrable Securities have been registered or qualified under the
securities or Blue Sky Laws of each state in which the Company is required,
pursuant to subsection (b)(i) of this Section 9.1 to register or qualify the
Registrable Securities.
(vi) It shall be a condition precedent to
the obligations of the Company to take any action pursuant to this Section 9.1
with respect to the Registrable Securities of any selling Holder that such
Holder shall furnish to the Company such information regarding itself, the
Registrable Securities held by it, and the intended method of disposition of
such securities as shall be reasonably required to effect the Registration of
such Holder's Registrable Securities.
9.2 Exchange Listing. In connection with the issuance of
any Shares upon the exercise of this Warrant, the Company shall secure the
listing of the underlying shares of Common Stock upon any securities exchange
upon which shares of the Company's Common Stock are listed.
9.3 No Obligations to Sell. Neither the giving of any
notice nor the making of any request hereunder shall impose any obligation on
the selling Holder to sell any Registrable Securities.
9.4 Registration Rights Survive Exercise. The Company's
obligations under this Section 9 shall continue in effect, regardless of the
exercise or surrender of this Warrant. The Company's obligations under this
Section 9 shall expire, however, with respect to a Warrant or Shares which have
been sold by a broker or dealer or in a public offering registered under the
Securities Act or a public offering exempt from such registration.
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<PAGE> 10
SECTION 10
SECURITIES LAW COMPLIANCE
Except pursuant to the requirements of Rule 144 of the
Securities Act, this Warrant and the Shares may not be sold, transferred,
assigned or otherwise disposed of except as follows:
(a) to a person who, in the opinion of counsel
reasonably satisfactory to the Company, is a person to whom this Warrants or
the Shares may legally be transferred without registration and without the
delivery of a current prospectus or offering circular with respect thereto; or
(b) to any person upon delivery of a prospectus
or offering circular then meeting the requirements of the Securities Act
relating to such securities (as to which a Registration Statement or
notification under the Securities Act shall then be in effect) and the offering
thereof for such sale or disposition.
SECTION 11
REDEMPTION
The Company may call the Warrants for redemption, in whole or
in part, upon at least thirty (30) days' prior written notice at any time
during the exercise period at a price of $.05 per Warrant, provided that the
closing bid price for a share of the Company's Common Stock has been an average
of at least $3.375 for twenty (20) trading days immediately preceding the date
of the written notice. In the event the Company exercises its right to redeem
the Warrants, such Warrants will be exercisable until the close of business on
the date fixed for redemption in such notice. If any Warrant called for
redemption is not exercised by such time, it will cease to be exercisable and
the Holder thereof will be entitled to the redemption price.
SECTION 12
MISCELLANEOUS
12.1 Successors and Assigns. All the covenants and
provisions of this Warrant which are by or for the benefit of the Company or
the Holder shall bind and inure to the benefit of their respective successors
and assigns hereunder.
12.2 Notice. Notice or demand pursuant to this Warrant to
be given or made by the Holder to or on the Company shall be sufficiently given
or made if sent by registered mail, postage prepaid, receipt requested,
addressed, until another address is designated in writing by the Company, as
follows:
Alpha Microsystems
2722 South Fairview Street
Santa Ana, California 92704
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<PAGE> 11
Any notice or demand authorized by this Warrant to be given or made by the
Company to or on the Holder shall be given to the Holder by registered mail,
postage prepaid, receipt requested, addressed at his last known address as it
shall appear on the books of the Company, until another address is designated
in writing by like mail.
12.3 Applicable Law. The validity, interpretation and
performance of this Warrant shall be governed by the laws of the State of
California.
12.4 Headings. The Article headings herein are for
convenience only and are not part of this Warrant and shall not affect the
interpretation thereof.
Dated as of December 17, 1993
ALPHA MICROSYSTEMS
By: /s/ DOUGLAS J. TULLIO
-----------------------------
Douglas J. Tullio, President
Attest: s/John Glade
Secretary
-11-
<PAGE> 12
EXERCISE FORM
(To be Executed by the Warrant Holder if He, or She
Desires to Exercise the Warrant in Whole or in Part)
To: Alpha Microsystems
The undersigned
(_____________________________________________________________________________)
Please insert name and Social Security or number E.I.N. of Holder
hereby irrevocably elects to exercise the rights of purchase represented by the
within Warrant for, and to purchase thereunder, ___________ Shares provided for
therein and tenders payment herewith to the order of Alpha Microsystems in the
amount of $________.
The undersigned requests that certificates for such Shares be issued as
follows:
Name:___________________________________________________________________________
Address:________________________________________________________________________
Deliver to:_____________________________________________________________________
Address:________________________________________________________________________
and, if said number of Shares shall not be all the Shares purchasable
hereunder, that a new Warrant for the balance remaining of the Shares
purchasable under the within Warrant be registered in the name of, and
delivered to, the undersigned at the address stated below.
Address:________________________________________________________________________
Dated:________________,19_____
Signature:______________________________
Note: Signature must correspond with
the name as written upon the face of
this Warrant in every particular, without
alteration or enlargement or any change
whatsoever.
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<PAGE> 13
FORM OF ASSIGNMENT
(To be Signed Only Upon Assignment)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
_______________ the right to purchase _______ Shares evidenced by the within
Warrant, and appoints ____________________ to transfer the same on the books of
Alpha Microsystems with the full power of substitution in the premises.
Dated:________________,19_____
Signature:______________________________
Note: Signature must correspond with the
name as written upon the face of this
Warrant in every particular, without
alteration or enlargement or any change
whatsoever, and the signature must be
guaranteed in the usual manner.
Signature Guaranteed:
___________________________________________________
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<PAGE> 1
EXHIBIT 4.6
WARRANT TO PURCHASE COMMON STOCK
GRANT DATE: Effective as of December 17, 1993 60,000 Shares
ALPHA MICROSYSTEMS
In consideration of value received, ALPHA MICROSYSTEMS, a
California corporation (the "Company"), grants to JOHN F. DOSS or permitted
transferees or assigns (the "Holder") the right, subject to the terms of this
Warrant, to purchase at any time and from time to time during the period
commencing immediately upon the approval of the Letter Agreement between
Company and Dominick & Dominick dated December 17, 1993 by the Company's Board
of Directors, and ending on 5:00 p.m. New York City Time on November 1, 1998,
unless extended or terminated as provided herein (the "Expiration Date"), up to
60,000 shares of Common Stock (the "Shares") at $2.50 per share (the "Basic
Exercise Price). The Basic Exercise Price and the number of shares of Common
Stock that may be purchased are subject to adjustment under the terms of this
Warrant.
SECTION 1
DEFINITIONS
As used in this Warrant, unless the context otherwise
requires:
1.1 "Basic Exercise Price" means the price at which each
share of Common Stock may be purchased upon exercise of this Warrant as stated
in the first sentence of this Warrant.
1.2 "Blue Sky Application" means an application or other
document filed pursuant to a Blue Sky Law to register, qualify or obtain an
exemption for any offer or sale by or for the account of the Holder of all or
part of this Warrant or any of the Shares.
1.3 "Blue Sky Law" means the laws and regulations of any
state or other jurisdiction applicable to any sale by or for the account of the
Holder of all or part of this Warrant or any of the Shares.
1.4 "Common Stock" means the Common Stock (no par value)
of the Company existing on the Grant Date and for purposes of Sections 7.1(a)
through (e) also has the meaning set forth in Section 7.1(g).
1.5 "Exercise Date" means any date when this Warrant is
exercised, in whole or in part, in the manner indicated in Sections 2.1 and
2.2.
1.6 "Exercise Price" means the Basic Exercise Price;
provided, however, that if an adjustment is required under Section 7 of this
Warrant, then the "Exercise Price" means, after
<PAGE> 2
each such adjustment, the price at which each Share may be purchased upon
exercise of this Warrant immediately after the last such adjustment.
1.7 "Expiration Date" means the Expiration Date indicated
on the first page of this Warrant.
1.8 "Grant Date" means the date this Warrant was first
granted as stated at the beginning of this Warrant.
1.9 "Prospectus" means a preliminary prospectus or final
prospectus (including any supplement) or any offering circular or similar
offering document, included in a Registration Statement.
1.10 "Registrable Securities" means Shares of Common Stock
issued upon the exercise of the Warrant.
1.11 "Registration Statement" means a Registration or
Offering Statement, a pre-effective or post-effective amendment to a
Registration Statement or other document proposed for filing or filed by the
Company under the Securities Act which is or would be available under
applicable laws, rules and regulations to register for a public offering or
sale any shares of Common Stock. The term "Registration Statement" shall not
apply to any registration statement relating to the sale of securities to
participants in a Company stock or option plan or a registration on any form
which does not include substantially the same information as would be required
to be included in a registration statement covering the sale of Registrable
Securities (as defined in Section 1.10 above).
1.11 "Securities Act" means the Securities Act of 1933, as
amended from time to time, and all rules and regulations promulgated
thereunder, or any act, rules or regulations which replace the Securities Act
or any such rules and regulations.
1.12 "Warrant" means this Warrant.
SECTION 2
DURATION AND EXERCISE OF WARRANT
2.1 Exercise Period. The Warrants may be exercised at
any time after the Grant Date and on or before the Expiration Date. After the
Expiration Date this Warrant shall become void, and all rights to purchase
Shares hereunder shall thereupon cease.
2.2 Method of Exercise. This Warrant may be exercised by
the Holder, in whole or in part, by (i) surrendering this Warrant to the
Company, and (ii) tendering to the Company payment of the Exercise Price for
the Shares for which exercise is made. Upon proper exercise, the Holder shall
be deemed to be the holder of record of the Shares for which exercise is made,
even though the transfer or register books of the Company may then be closed or
certificates representing such Shares may not then be actually delivered to the
Holder.
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<PAGE> 3
2.3 Certificates. Within a reasonable time but no more
than twenty (20) days after exercise, certificates for the shares of Common
Stock comprising such Shares shall be delivered to the Holder and, unless this
Warrant has expired, a Related Warrant representing the number of Shares, if
any, with respect to which this Warrant shall not have been exercised shall be
issued to the Holder.
2.4 Taxes. The Company covenants and agrees that it will
pay when due and payable any and all taxes which may be payable in connection
with the issuance of this Warrant, or the issuance of any Shares upon the
exercise of this Warrant. The Company shall not, however, be required to pay
any tax which may be payable in respect of any subsequent transfer of this
Warrant or of the Shares.
SECTION 3
VALIDITY AND RESERVATIONS OF SHARES
The Company covenants that this Warrant and all Shares of
Common Stock issued upon exercise of this Warrant will be validly issued, fully
paid, nonassessable and free of pre-emptive rights.
SECTION 4
FRACTIONAL SHARES
No fractional Shares shall be issued upon the exercise of this
Warrant. With respect to any fraction of a Share otherwise issuable upon any
such exercise, the Company shall pay to the Holder an amount in cash equal to
such fraction multiplied by the Exercise Price.
SECTION 5
LIMITED RIGHTS OF THE WARRANT HOLDER
The Holder shall not, solely by virtue of being the Holder of
this Warrant, have any of the rights of a holder of Common Stock of the
Company, either at law or equity, until such Warrant shall have been exercised
and the Holder shall be deemed to be the holder of record of Shares as provided
in this Warrant.
SECTION 6
EXCHANGE, TRANSFER OR LOSS OF WARRANT
6.1 Exchange. This Warrant is exchangeable, without
expense to the Holder and upon surrender hereof to the Company, for Warrants of
different denominations entitling the Holder to purchase Shares equal in total
number and identical in type to the Shares covered by this Warrant.
-3-
<PAGE> 4
6.2 Transfer. Subject to the provisions of Section 10,
upon surrender of this Warrant to the Company with assignment duly executed and
the tender of funds sufficient to pay any transfer tax, the Company shall,
without charge, execute and deliver a new Warrant to the assignee named in such
Assignment Form, and this Warrant shall be cancelled concurrent with such
issuance.
6.3 Loss, Theft, Destruction or Mutilation. Upon receipt
by the Company of satisfactory evidence of the loss, theft, destruction or
mutilation of this Warrant and either (in the case of loss, theft or
destruction) reasonable indemnification or (in the case of mutilation) the
surrender of this Warrant for cancellation, the Company will execute and
deliver to the Holder, without charge, a new Warrant of like denomination. Any
such new Warrant executed and delivered shall constitute an additional
obligation of the Company, whether or not this Warrant, reportedly lost,
stolen, destroyed or mutilated, shall be at any time enforceable by anyone.
SECTION 7
ANTI-DILUTION ADJUSTMENT OF NUMBER OF SHARES AND EXERCISE PRICE
7.1 Adjustment of Exercise Price. If any of the
following events shall occur at any time or from time to time prior to the
exercise in full or expiration of this Warrant, the following adjustments shall
be made in the Exercise Price, with the exception hereinafter provided:
(a) Recapitalization. In case the Company
effects a subdivision, combination, reclassification or other recapitalization
of its outstanding shares of Common Stock into a greater or lesser number of
shares of Common Stock, the Exercise Price in effect immediately after such
subdivision, combination, reclassification or other recapitalization shall be
proportionately decreased or increased, as the case may be.
(b) Dividend Other Than in Cash. If the Company
shall declare a dividend on its Common Stock payable in stock or other
securities of the Company or of any other corporation, or in property or
otherwise than in cash, or the functional equivalent thereof, to the holders of
its Common Stock, the Holder shall, without additional cost, be entitled to
receive upon the exercise of this Warrant, in addition to the Shares to which
such Holder is otherwise entitled upon such exercise, the number of shares of
stock or other securities or property which such Holder would have been
entitled to receive if such Holder had been a holder, on the record date for
such dividend, of the number of shares of Common Stock so purchased under this
Warrant.
(c) Merger or Consolidation - No Change in
Control. In case of any merger, consolidation or reorganization of the Company
with or into one or more corporations which results in holders of the Company's
Common Stock immediately prior to such event owning a majority of the voting
securities of the surviving corporation immediately following such event, and
as a result of which holders of the Company's Common Stock receive other stock,
securities or property in lieu of or in addition to, but on account of, their
Common Stock, the Holder, upon the exercise of this Warrant after the record
date for determination of shareholders
-4-
<PAGE> 5
entitled thereto, shall receive, in lieu of or in addition to the Shares, the
proportionate shares of all stock, or other securities (appropriately adjusted
for any subsequent events of the issuer of such stock or securities which are
of the kind which would cause adjustment of the Exercise Price hereunder) or
other property issued, paid or delivered for or on all of the Common Stock of
the Company as would have been allowable to the Shares so purchased under this
Warrant had this Warrant been exercised immediately prior to said record date.
(d) Merger of Consolidation - Change in Control.
In case of any merger, consolidation or reorganization of the Company with or
into one or more other corporations, which results in the holders of the
Company's Common Stock immediately prior to such event owning less than a
majority interest of the voting securities of the surviving corporation
immediately following such event, or in the case of any sale, lease, transfer
or conveyance to another corporation of all or substantially all the assets of
the Company or proposed liquidation of the Company, then in either such event
the Holder shall be given notice of such proposed action at approximately the
same time and in substantially the same manner as the holders of the Company's
Common Stock. The Holder may attend the meeting of the Company's shareholders
at which such action is considered and voted upon. If the proposed action is
approved according to applicable law by the shareholders of all corporations or
other entities which are parties to the proposed action, the Holder shall be so
notified in writing by the Company by registered or certified mail, and
thereupon, notwithstanding the period of exercisability stated on the face of
this Warrant, this Warrant shall automatically become immediately exercisable
and become forever null and void to the extent not exercised on or before 5:00
P.M., California time, on the tenth (10th) business day following the delivery
of such notice.
(e) Minimum Adjustment Not Required. Anything in
this Section 7.1 to the contrary notwithstanding, the Company shall not be
required, except as hereinafter provided, to make any adjustment of the
Exercise Price in any case in which the amount by which such Exercise Price
would be increased or reduced, in accordance with the foregoing provisions,
would be less than $.05, but in such a case, such adjustment shall be carried
forward and when such adjustment, together with any and all such other
adjustments so carried forward, shall amount to not less than $.10 the Exercise
Price shall be adjusted; provided, however, that adjustments of less than $.05
in the Exercise Price shall be required and made in accordance with the
provisions of this Section 7.1 (other than this subparagraph) not later than
such time as may be required in order to preserve the tax-free nature of any
distribution (within the meaning of Section 305 of the United States Internal
Revenue Code of 1986, as amended) to the Holder or the holders of Common Stock.
In the event of any subdivisions, combination, reclassification or other
recapitalization of shares of Common Stock, said amount (as theretofore
decreased or increased) shall be proportionately decreased or increased.
(f) Other Adjustments. The Company, by action of
its Board of Directors, shall make such other equitable adjustments to the
Exercise Price as may be necessary to protect the Holder against dilution of
this Warrant, with or without a request of a Holder, where such an adjustment
is appropriate in light of the occurrence of an event or the existence of
circumstances similar to those otherwise contemplated by this Section 7.1.
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<PAGE> 6
(g) Term "Common Stock." Whenever reference is
made in Sections 7.1(a) through (e) above to Common Stock, the term "Common
Stock" shall include any stock of any class of the Company, other than
preferred stock with a fixed limit on dividends, with no rights of conversion
into "Common Stock" and with a fixed amount payable in the event of any
voluntary or involuntary liquidation, dissolution or winding up of the Company.
7.2 Number of Shares Adjusted. After any adjustment of
the Exercise Price pursuant to Section 7.1, the number of Shares issuable at
the new Exercise Price shall be adjusted to the number obtained by (i)
multiplying the number of Shares issuable upon exercise of this Warrant
immediately before such adjustment by the Exercise Price in effect immediately
before such adjustment and (ii) dividing the product so obtained by the new
Exercise Price.
7.3 Notice of Adjustment. Whenever events occur
requiring the Exercise Price to be adjusted, the Company shall promptly file
with its Secretary or an Assistant Secretary at its principal office and with
its stock transfer agent, if any, a certificate of its chief financial officer
showing the adjusted Exercise Price, setting forth in reasonable detail the
facts requiring such adjustment, and stating such other facts as shall be
necessary to show the manner and figures used to compute such adjustments.
Such chief financial officers certificate shall be made available at all
reasonable times for inspection by the Holder. Promptly after each such
adjustment, the Company shall mail a copy of such certificate by certified mail
to the Holder together with information relating to the adjustment under
Section 7.2. The Company shall endorse on any Warrant executed and delivered
by the Company a description of each adjustment, if any, under this Section as
the result of events occurring before the execution and delivery of the
Warrant, and the Warrant so issued shall reflect the number of Shares issuable
on exercise, as adjusted to reflect such charges.
If, within forty-five (45) days of the mailing of such
certificate, Holders holding in the aggregate not less than 25% of the Warrants
notify the Company in writing of their disagreements with the adjusted Exercise
Price contained in the Company certificate, then the Company will promptly
obtain a certificate of a firm of independent certified public accountants of
recognized standing selected by the Company's Board of Directors (who shall not
be the regular auditors of the Company) certifying the same items required by
the Company certificate or making such adjustments as are appropriate. The
Company will promptly mail a copy of the firm of independent public
accountants' certificate to the Holder of the this Warrant. Under the
circumstances described in this paragraph, the Holders of the Warrants giving
notice shall be obligated to reimburse the Company for half of the charges
imposed by the independent certified accountants if their certificate confirms
the Company's prior calculations.
SECTION 8
NOTICE TO HOLDER
So long as this Warrant is outstanding, whenever the Company
shall expect to (i) pay any dividend or distribution upon Common Stock, (ii)
offer to the holders of Common Stock any right to subscribe for or to purchase
any other securities of the Company, (iii) effect any recapitalization, merger,
consolidation, reorganization, transfer, sale, lease or conveyance as
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<PAGE> 7
referred to in Section 7, or (iv) be involved in any voluntary or involuntary
dissolution, liquidation or winding up of the Company, at least twenty-one (21)
days before the proposed action or any applicable record date, the Company, by
certified mail, shall give the Holder written notice describing the proposed
action and stating the date on which (x) a record date is to be fixed for the
purposes of such dividend, distribution or rights or (y) such recapitalization,
merger, consolidation, reorganization, transfer, sale, lease, conveyance,
dissolution, liquidation or winding up is to take place and when, if any date
is to be fixed, the record holders of Common Stock shall be entitled to
exchange the shares of Common Stock for securities or other property
deliverable upon such recapitalization, merger, consolidation, reorganization,
transfer, sale, lease, conveyance, dissolution, liquidation or winding up.
SECTION 9
REGISTRATION OF THE SHARES
9.1 Registration Rights.
(a) Piggy-back Registration. The Company shall
advise each Holder of Registrable Securities by written notice at least five
days prior to the filing of any Registration Statement pertaining to securities
to be offered to the public solely for cash, and will, upon the request of any
such Holders, and without any charge to them, include in any such Registration
Statement such information as may be required to permit a public offering of
their Registrable Securities. If any such Registration Statement or
notification is being filed by the Company in connection with an underwritten
public offering of securities of the Company, the Company shall have the right
to require such Holders (provided that Rule 415 applies to the sale of the
Registrable Securities) to postpone the offering of their securities for a
period of ninety (90) days following the effective date of such Registration
Statement or notification. If any such Registration Statement or notification
is being filed by the Company solely for the benefit of selling security
holders, the Company will permit such Holders of the Registrable Securities to
include for sale with such shareholders in such Registration Statement or
notification at least a pro rata portion (based upon the ratio of the number of
shares of Common Stock which such selling security holders desire to sell to
the number of Registrable Securities which such Holders of the Registrable
Securities desire to sell) of the total Registrable Securities being
registered, and the offering of the balance of the Registrable Securities owned
by holders of the Registrable Securities may then be postponed by the Company
for a period of ninety (90) days following effectiveness of the Registration
Statement or notification.
(b) General Provisions. The following provisions
shall also be applicable to any such Registration:
(i) The Holders whose Registrable
Securities are to be included therein (the "Sellers") shall furnish the Company
with such appropriate information (relating to the intentions of such Holders)
in connection therewith as the Company shall reasonably request in writing.
Following the effective date of such Registration Statement or notification,
the Company shall, upon the request of the Seller, forthwith supply such number
of Prospectuses or offering circulars meeting the requirements of the
Securities Act as shall be reasonably requested
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<PAGE> 8
by such Seller to permit such Seller to make a public offering of all such
securities of such Seller included therein. The Company shall file such Blue
Sky Applications and use its best efforts to qualify such securities included
therein for sale in such states as the Sellers shall reasonably designate.
(ii) The Company shall bear the cost and
expense directly relating to any registration securities pursuant to this
Section 9.1, provided, however, that the Company shall not be required to pay
for any expenses of any registration proceeding begun pursuant to this Section
9.1 if the Registration request is subsequently withdrawn at the request of the
Holders of a majority of the Registrable Securities to be registered (in which
case all Holders requesting such Registration shall bear such expenses). The
Company shall not be required to pay any selling commissions, but shall pay all
applicable listing fees.
(iii) The Company shall indemnify and hold
harmless each Seller who may purchase from or sell for any Seller any
Registrable Securities from and against any and all losses, claims, damages and
liabilities caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or any Prospectus
included therein, required to be filed or furnished by reason of this Section
9.1, or caused by any omission or alleged omissions to state therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, except insofar as such losses, claims,
damages or liabilities are caused by any such untrue statement or alleged
untrue statement or omission or alleged omission which was based upon
information furnished or required to be furnished in writing to the Company by
and about such Seller expressly for use therein, which indemnification shall
include each person, if any, who controls any such Seller within the meaning of
the Securities Act; provided, however, that the Company shall not be obliged so
to indemnify any such Seller or controlling persons unless such Seller shall at
the same time indemnify the Company, its directors, each officer signing a
Registration Statement or notification and each person, if any who controls the
Company within the meaning of the Securities Act from and against any and all
losses, claims, damages and liabilities caused by any untrue statement or
alleged untrue statement of a material fact contained in any Registration
Statement or notification or any Prospectus or offering circular required to be
filed or furnished by reason of this Section 9.1, or caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statement therein, in light of the circumstances under
which they were made, not misleading, insofar as such losses, claims, damages
or liabilities are caused by any untrue statement or alleged untrue statement
or omission or alleged omission which was based upon information furnished in
writing to the Company by and about such Seller expressly for use therein.
(iv) The Company will, or will use its
best efforts to (i) prepare and file with the Commission a Registration
Statement or notification with respect to the Registrable Securities to be
registered or qualified and cause such Registration Statement or notification
to become and remain effective; provided, that the Company will not be required
to keep the Registration Statement or notification effective, or to prepare and
file any amendments or supplements, later than nine months after the date on
which the Registration Statement or notification becomes effective under the
Securities Act.
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<PAGE> 9
(v) The Company shall, in case of a
registration or notification, furnish to the Holders of the Registrable
Securities for whom such Registrable Securities are registered or are to be
registered or are filed for notification, at the time such Registration
Statement becomes effective, an opinion of counsel, dated such date, for the
Company reasonably acceptable to the Holders to the effect that a Registration
Statement or notification covering the Registrable Securities has been filed
with the commission under the Securities Act and has become effective, that a
prospectus or offering circular complying in form with the requirements of the
Securities Act is available for delivery, that to the best of such counsel's
knowledge, no stop order has been issued by the Commission suspending the
effectiveness of the Registration Statement or suspending the availability of
the offering exemption and that, to the best of the counsel's knowledge, no
proceedings for the issuance of a stop order are threatened or contemplated,
and that the Registrable Securities have been registered or qualified under the
securities or Blue Sky Laws of each state in which the Company is required,
pursuant to subsection (b)(i) of this Section 9.1 to register or qualify the
Registrable Securities.
(vi) It shall be a condition precedent to
the obligations of the Company to take any action pursuant to this Section 9.1
with respect to the Registrable Securities of any selling Holder that such
Holder shall furnish to the Company such information regarding itself, the
Registrable Securities held by it, and the intended method of disposition of
such securities as shall be reasonably required to effect the Registration of
such Holder's Registrable Securities.
9.2 Exchange Listing. In connection with the issuance of
any Shares upon the exercise of this Warrant, the Company shall secure the
listing of the underlying shares of Common Stock upon any securities exchange
upon which shares of the Company's Common Stock are listed.
9.3 No Obligations to Sell. Neither the giving of any
notice nor the making of any request hereunder shall impose any obligation on
the selling Holder to sell any Registrable Securities.
9.4 Registration Rights Survive Exercise. The Company's
obligations under this Section 9 shall continue in effect, regardless of the
exercise or surrender of this Warrant. The Company's obligations under this
Section 9 shall expire, however, with respect to a Warrant or Shares which have
been sold by a broker or dealer or in a public offering registered under the
Securities Act or a public offering exempt from such registration.
SECTION 10
SECURITIES LAW COMPLIANCE
Except pursuant to the requirements of Rule 144 of the
Securities Act, this Warrant and the Shares may not be sold, transferred,
assigned or otherwise disposed of except as follows:
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<PAGE> 10
(a) to a person who, in the opinion of counsel
reasonably satisfactory to the Company, is a person to whom this Warrants or
the Shares may legally be transferred without registration and without the
delivery of a current prospectus or offering circular with respect thereto; or
(b) to any person upon delivery of a prospectus
or offering circular then meeting the requirements of the Securities Act
relating to such securities (as to which a Registration Statement or
notification under the Securities Act shall then be in effect) and the offering
thereof for such sale or disposition.
SECTION 11
REDEMPTION
The Company may call the Warrants for redemption, in whole or
in part, upon at least thirty (30) days' prior written notice at any time
during the exercise period at a price of $.05 per Warrant, provided that the
closing bid price for a share of the Company's Common Stock has been an average
of at least $3.375 for twenty (20) trading days immediately preceding the date
of the written notice. In the event the Company exercises its right to redeem
the Warrants, such Warrants will be exercisable until the close of business on
the date fixed for redemption in such notice. If any Warrant called for
redemption is not exercised by such time, it will cease to be exercisable and
the Holder thereof will be entitled to the redemption price.
SECTION 12
MISCELLANEOUS
12.1 Successors and Assigns. All the covenants and
provisions of this Warrant which are by or for the benefit of the Company or
the Holder shall bind and inure to the benefit of their respective successors
and assigns hereunder.
12.2 Notice. Notice or demand pursuant to this Warrant to
be given or made by the Holder to or on the Company shall be sufficiently given
or made if sent by registered mail, postage prepaid, receipt requested,
addressed, until another address is designated in writing by the Company, as
follows:
Alpha Microsystems
2722 South Fairview Street
Santa Ana, California 92704
Any notice or demand authorized by this Warrant to be given or made by the
Company to or on the Holder shall be given to the Holder by registered mail,
postage prepaid, receipt requested, addressed at his last known address as it
shall appear on the books of the Company, until another address is designated
in writing by like mail.
12.3 Applicable Law. The validity, interpretation and
performance of this Warrant shall be governed by the laws of the State of
California.
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<PAGE> 11
12.4 Headings. The Article headings herein are for
convenience only and are not part of this Warrant and shall not affect the
interpretation thereof.
Dated as of December 17, 1993 ALPHA MICROSYSTEMS
By: s/Douglas J. Tullio
----------------------------
Douglas J. Tullio, President
Attest: s/John Glade
------------
Secretary
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<PAGE> 12
EXERCISE FORM
(To be Executed by the Warrant Holder if He, or She
Desires to Exercise the Warrant in Whole or in Part)
To: Alpha Microsystems
The undersigned (___________________________________________________________)
Please insert name and Social Security or number E.I.N. of Holder
hereby irrevocably elects to exercise the rights of purchase represented by the
within Warrant for, and to purchase thereunder, ___________ Shares provided for
therein and tenders payment herewith to the order of Alpha Microsystems in the
amount of $________. The undersigned requests that certificates for such
Shares be issued as follows:
Name:___________________________________________________________________________
Address:________________________________________________________________________
Deliver to:_____________________________________________________________________
Address:________________________________________________________________________
and, if said number of Shares shall not be all the Shares purchasable
hereunder, that a new Warrant for the balance remaining of the Shares
purchasable under the within Warrant be registered in the name of, and
delivered to, the undersigned at the address stated below.
Address:________________________________________________________________________
Dated:________________,19_____
Signature:______________________________
Note: Signature must correspond with
the name as written upon the face of
this Warrant in every particular,
without alteration or enlargement or
any change whatsoever.
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<PAGE> 13
FORM OF ASSIGNMENT
(To be Signed Only Upon Assignment)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
_______________ the right to purchase _______ Shares evidenced by the within
Warrant, and appoints ____________________ to transfer the same on the books of
Alpha Microsystems with the full power of substitution in the premises.
Dated:________________,19_____
Signature:______________________________
Note: Signature must correspond with
the name as written upon the face of
this Warrant in every particular,
without alteration or enlargement or
any change whatsoever, and the
signature must be guaranteed in the
usual manner.
Signature Guaranteed:
________________________________
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<PAGE> 1
EXHIBIT 4.7
WARRANT TO PURCHASE COMMON STOCK
GRANT DATE: Effective as of December 17, 1993 60,000 Shares
ALPHA MICROSYSTEMS
In consideration of value received, ALPHA MICROSYSTEMS, a
California corporation (the "Company"), grants to JOHN R. DOSS or permitted
transferees or assigns (the "Holder") the right, subject to the terms of this
Warrant, to purchase at any time and from time to time during the period
commencing immediately upon the approval of the Letter Agreement between
Company and Dominick & Dominick dated December 17, 1993 by the Company's Board
of Directors, and ending on 5:00 p.m. New York City Time on November 1, 1998,
unless extended or terminated as provided herein (the "Expiration Date"), up to
60,000 shares of Common Stock (the "Shares") at $2.50 per share (the "Basic
Exercise Price). The Basic Exercise Price and the number of shares of Common
Stock that may be purchased are subject to adjustment under the terms of this
Warrant.
SECTION 1
DEFINITIONS
As used in this Warrant, unless the context otherwise
requires:
1.1 "Basic Exercise Price" means the price at which each
share of Common Stock may be purchased upon exercise of this Warrant as stated
in the first sentence of this Warrant.
1.2 "Blue Sky Application" means an application or other
document filed pursuant to a Blue Sky Law to register, qualify or obtain an
exemption for any offer or sale by or for the account of the Holder of all or
part of this Warrant or any of the Shares.
1.3 "Blue Sky Law" means the laws and regulations of any
state or other jurisdiction applicable to any sale by or for the account of the
Holder of all or part of this Warrant or any of the Shares.
1.4 "Common Stock" means the Common Stock (no par value)
of the Company existing on the Grant Date and for purposes of Sections 7.1(a)
through (e) also has the meaning set forth in Section 7.1(g).
1.5 "Exercise Date" means any date when this Warrant is
exercised, in whole or in part, in the manner indicated in Sections 2.1 and
2.2.
1.6 "Exercise Price" means the Basic Exercise Price;
provided, however, that if an adjustment is required under Section 7 of this
Warrant, then the "Exercise Price" means, after
<PAGE> 2
each such adjustment, the price at which each Share may be purchased upon
exercise of this Warrant immediately after the last such adjustment.
1.7 "Expiration Date" means the Expiration Date indicated
on the first page of this Warrant.
1.8 "Grant Date" means the date this Warrant was first
granted as stated at the beginning of this Warrant.
1.9 "Prospectus" means a preliminary prospectus or final
prospectus (including any supplement) or any offering circular or similar
offering document, included in a Registration Statement.
1.10 "Registrable Securities" means Shares of Common Stock
issued upon the exercise of the Warrant.
1.11 "Registration Statement" means a Registration or
Offering Statement, a pre-effective or post-effective amendment to a
Registration Statement or other document proposed for filing or filed by the
Company under the Securities Act which is or would be available under
applicable laws, rules and regulations to register for a public offering or
sale any shares of Common Stock. The term "Registration Statement" shall not
apply to any registration statement relating to the sale of securities to
participants in a Company stock or option plan or a registration on any form
which does not include substantially the same information as would be required
to be included in a registration statement covering the sale of Registrable
Securities (as defined in Section 1.10 above).
1.11 "Securities Act" means the Securities Act of 1933, as
amended from time to time, and all rules and regulations promulgated
thereunder, or any act, rules or regulations which replace the Securities Act
or any such rules and regulations.
1.12 "Warrant" means this Warrant.
SECTION 2
DURATION AND EXERCISE OF WARRANT
2.1 Exercise Period. The Warrants may be exercised at
any time after the Grant Date and on or before the Expiration Date. After the
Expiration Date this Warrant shall become void, and all rights to purchase
Shares hereunder shall thereupon cease.
2.2 Method of Exercise. This Warrant may be exercised by
the Holder, in whole or in part, by (i) surrendering this Warrant to the
Company, and (ii) tendering to the Company payment of the Exercise Price for
the Shares for which exercise is made. Upon proper exercise, the Holder shall
be deemed to be the holder of record of the Shares for which exercise is made,
even though the transfer or register books of the Company may then be closed or
certificates representing such Shares may not then be actually delivered to the
Holder.
<PAGE> 3
2.3 Certificates. Within a reasonable time but no more
than twenty (20) days after exercise, certificates for the shares of Common
Stock comprising such Shares shall be delivered to the Holder and, unless this
Warrant has expired, a Related Warrant representing the number of Shares, if
any, with respect to which this Warrant shall not have been exercised shall be
issued to the Holder.
2.4 Taxes. The Company covenants and agrees that it will
pay when due and payable any and all taxes which may be payable in connection
with the issuance of this Warrant, or the issuance of any Shares upon the
exercise of this Warrant. The Company shall not, however, be required to pay
any tax which may be payable in respect of any subsequent transfer of this
Warrant or of the Shares.
SECTION 3
VALIDITY AND RESERVATIONS OF SHARES
The Company covenants that this Warrant and all Shares of
Common Stock issued upon exercise of this Warrant will be validly issued, fully
paid, nonassessable and free of pre-emptive rights.
SECTION 4
FRACTIONAL SHARES
No fractional Shares shall be issued upon the exercise of this
Warrant. With respect to any fraction of a Share otherwise issuable upon any
such exercise, the Company shall pay to the Holder an amount in cash equal to
such fraction multiplied by the Exercise Price.
SECTION 5
LIMITED RIGHTS OF THE WARRANT HOLDER
The Holder shall not, solely by virtue of being the Holder of
this Warrant, have any of the rights of a holder of Common Stock of the
Company, either at law or equity, until such Warrant shall have been exercised
and the Holder shall be deemed to be the holder of record of Shares as provided
in this Warrant.
SECTION 6
EXCHANGE, TRANSFER OR LOSS OF WARRANT
6.1 Exchange. This Warrant is exchangeable, without
expense to the Holder and upon surrender hereof to the Company, for Warrants of
different denominations entitling the Holder to purchase Shares equal in total
number and identical in type to the Shares covered by this Warrant.
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<PAGE> 4
6.2 Transfer. Subject to the provisions of Section 10,
upon surrender of this Warrant to the Company with assignment duly executed and
the tender of funds sufficient to pay any transfer tax, the Company shall,
without charge, execute and deliver a new Warrant to the assignee named in such
Assignment Form, and this Warrant shall be cancelled concurrent with such
issuance.
6.3 Loss, Theft, Destruction or Mutilation. Upon receipt
by the Company of satisfactory evidence of the loss, theft, destruction or
mutilation of this Warrant and either (in the case of loss, theft or
destruction) reasonable indemnification or (in the case of mutilation) the
surrender of this Warrant for cancellation, the Company will execute and
deliver to the Holder, without charge, a new Warrant of like denomination. Any
such new Warrant executed and delivered shall constitute an additional
obligation of the Company, whether or not this Warrant, reportedly lost,
stolen, destroyed or mutilated, shall be at any time enforceable by anyone.
SECTION 7
ANTI-DILUTION ADJUSTMENT OF NUMBER OF SHARES AND EXERCISE PRICE
7.1 Adjustment of Exercise Price. If any of the
following events shall occur at any time or from time to time prior to the
exercise in full or expiration of this Warrant, the following adjustments shall
be made in the Exercise Price, with the exception hereinafter provided:
(a) Recapitalization. In case the Company
effects a subdivision, combination, reclassification or other recapitalization
of its outstanding shares of Common Stock into a greater or lesser number of
shares of Common Stock, the Exercise Price in effect immediately after such
subdivision, combination, reclassification or other recapitalization shall be
proportionately decreased or increased, as the case may be.
(b) Dividend Other Than in Cash. If the Company
shall declare a dividend on its Common Stock payable in stock or other
securities of the Company or of any other corporation, or in property or
otherwise than in cash, or the functional equivalent thereof, to the holders of
its Common Stock, the Holder shall, without additional cost, be entitled to
receive upon the exercise of this Warrant, in addition to the Shares to which
such Holder is otherwise entitled upon such exercise, the number of shares of
stock or other securities or property which such Holder would have been
entitled to receive if such Holder had been a holder, on the record date for
such dividend, of the number of shares of Common Stock so purchased under this
Warrant.
(c) Merger or Consolidation - No Change in
Control. In case of any merger, consolidation or reorganization of the Company
with or into one or more corporations which results in holders of the Company's
Common Stock immediately prior to such event owning a majority of the voting
securities of the surviving corporation immediately following such event, and
as a result of which holders of the Company's Common Stock receive other stock,
securities or property in lieu of or in addition to, but on account of, their
Common Stock, the Holder, upon the exercise of this Warrant after the record
date for determination of shareholders
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<PAGE> 5
entitled thereto, shall receive, in lieu of or in addition to the Shares, the
proportionate shares of all stock, or other securities (appropriately adjusted
for any subsequent events of the issuer of such stock or securities which are
of the kind which would cause adjustment of the Exercise Price hereunder) or
other property issued, paid or delivered for or on all of the Common Stock of
the Company as would have been allowable to the Shares so purchased under this
Warrant had this Warrant been exercised immediately prior to said record date.
(d) Merger of Consolidation - Change in Control.
In case of any merger, consolidation or reorganization of the Company with or
into one or more other corporations, which results in the holders of the
Company's Common Stock immediately prior to such event owning less than a
majority interest of the voting securities of the surviving corporation
immediately following such event, or in the case of any sale, lease, transfer
or conveyance to another corporation of all or substantially all the assets of
the Company or proposed liquidation of the Company, then in either such event
the Holder shall be given notice of such proposed action at approximately the
same time and in substantially the same manner as the holders of the Company's
Common Stock. The Holder may attend the meeting of the Company's shareholders
at which such action is considered and voted upon. If the proposed action is
approved according to applicable law by the shareholders of all corporations or
other entities which are parties to the proposed action, the Holder shall be so
notified in writing by the Company by registered or certified mail, and
thereupon, notwithstanding the period of exercisability stated on the face of
this Warrant, this Warrant shall automatically become immediately exercisable
and become forever null and void to the extent not exercised on or before 5:00
P.M., California time, on the tenth (10th) business day following the delivery
of such notice.
(e) Minimum Adjustment Not Required. Anything in
this Section 7.1 to the contrary notwithstanding, the Company shall not be
required, except as hereinafter provided, to make any adjustment of the
Exercise Price in any case in which the amount by which such Exercise Price
would be increased or reduced, in accordance with the foregoing provisions,
would be less than $.05, but in such a case, such adjustment shall be carried
forward and when such adjustment, together with any and all such other
adjustments so carried forward, shall amount to not less than $.10 the Exercise
Price shall be adjusted; provided, however, that adjustments of less than $.05
in the Exercise Price shall be required and made in accordance with the
provisions of this Section 7.1 (other than this subparagraph) not later than
such time as may be required in order to preserve the tax-free nature of any
distribution (within the meaning of Section 305 of the United States Internal
Revenue Code of 1986, as amended) to the Holder or the holders of Common Stock.
In the event of any subdivisions, combination, reclassification or other
recapitalization of shares of Common Stock, said amount (as theretofore
decreased or increased) shall be proportionately decreased or increased.
(f) Other Adjustments. The Company, by action of
its Board of Directors, shall make such other equitable adjustments to the
Exercise Price as may be necessary to protect the Holder against dilution of
this Warrant, with or without a request of a Holder, where such an adjustment
is appropriate in light of the occurrence of an event or the existence of
circumstances similar to those otherwise contemplated by this Section 7.1.
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<PAGE> 6
(g) Term "Common Stock." Whenever reference is
made in Sections 7.1(a) through (e) above to Common Stock, the term "Common
Stock" shall include any stock of any class of the Company, other than
preferred stock with a fixed limit on dividends, with no rights of conversion
into "Common Stock" and with a fixed amount payable in the event of any
voluntary or involuntary liquidation, dissolution or winding up of the Company.
7.2 Number of Shares Adjusted. After any adjustment of
the Exercise Price pursuant to Section 7.1, the number of Shares issuable at
the new Exercise Price shall be adjusted to the number obtained by (i)
multiplying the number of Shares issuable upon exercise of this Warrant
immediately before such adjustment by the Exercise Price in effect immediately
before such adjustment and (ii) dividing the product so obtained by the new
Exercise Price.
7.3 Notice of Adjustment. Whenever events occur
requiring the Exercise Price to be adjusted, the Company shall promptly file
with its Secretary or an Assistant Secretary at its principal office and with
its stock transfer agent, if any, a certificate of its chief financial officer
showing the adjusted Exercise Price, setting forth in reasonable detail the
facts requiring such adjustment, and stating such other facts as shall be
necessary to show the manner and figures used to compute such adjustments.
Such chief financial officers certificate shall be made available at all
reasonable times for inspection by the Holder. Promptly after each such
adjustment, the Company shall mail a copy of such certificate by certified mail
to the Holder together with information relating to the adjustment under
Section 7.2. The Company shall endorse on any Warrant executed and delivered
by the Company a description of each adjustment, if any, under this Section as
the result of events occurring before the execution and delivery of the
Warrant, and the Warrant so issued shall reflect the number of Shares issuable
on exercise, as adjusted to reflect such charges.
If, within forty-five (45) days of the mailing of such
certificate, Holders holding in the aggregate not less than 25% of the Warrants
notify the Company in writing of their disagreements with the adjusted Exercise
Price contained in the Company certificate, then the Company will promptly
obtain a certificate of a firm of independent certified public accountants of
recognized standing selected by the Company's Board of Directors (who shall not
be the regular auditors of the Company) certifying the same items required by
the Company certificate or making such adjustments as are appropriate. The
Company will promptly mail a copy of the firm of independent public
accountants' certificate to the Holder of the this Warrant. Under the
circumstances described in this paragraph, the Holders of the Warrants giving
notice shall be obligated to reimburse the Company for half of the charges
imposed by the independent certified accountants if their certificate confirms
the Company's prior calculations.
SECTION 8
NOTICE TO HOLDER
So long as this Warrant is outstanding, whenever the Company
shall expect to (i) pay any dividend or distribution upon Common Stock, (ii)
offer to the holders of Common Stock any right to subscribe for or to purchase
any other securities of the Company, (iii) effect any recapitalization, merger,
consolidation, reorganization, transfer, sale, lease or conveyance as
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<PAGE> 7
referred to in Section 7, or (iv) be involved in any voluntary or involuntary
dissolution, liquidation or winding up of the Company, at least twenty-one (21)
days before the proposed action or any applicable record date, the Company, by
certified mail, shall give the Holder written notice describing the proposed
action and stating the date on which (x) a record date is to be fixed for the
purposes of such dividend, distribution or rights or (y) such recapitalization,
merger, consolidation, reorganization, transfer, sale, lease, conveyance,
dissolution, liquidation or winding up is to take place and when, if any date
is to be fixed, the record holders of Common Stock shall be entitled to
exchange the shares of Common Stock for securities or other property
deliverable upon such recapitalization, merger, consolidation, reorganization,
transfer, sale, lease, conveyance, dissolution, liquidation or winding up.
SECTION 9
REGISTRATION OF THE SHARES
9.1 Registration Rights.
(a) Piggy-back Registration. The Company shall
advise each Holder of Registrable Securities by written notice at least five
days prior to the filing of any Registration Statement pertaining to securities
to be offered to the public solely for cash, and will, upon the request of any
such Holders, and without any charge to them, include in any such Registration
Statement such information as may be required to permit a public offering of
their Registrable Securities. If any such Registration Statement or
notification is being filed by the Company in connection with an underwritten
public offering of securities of the Company, the Company shall have the right
to require such Holders (provided that Rule 415 applies to the sale of the
Registrable Securities) to postpone the offering of their securities for a
period of ninety (90) days following the effective date of such Registration
Statement or notification. If any such Registration Statement or notification
is being filed by the Company solely for the benefit of selling security
holders, the Company will permit such Holders of the Registrable Securities to
include for sale with such shareholders in such Registration Statement or
notification at least a pro rata portion (based upon the ratio of the number of
shares of Common Stock which such selling security holders desire to sell to
the number of Registrable Securities which such Holders of the Registrable
Securities desire to sell) of the total Registrable Securities being
registered, and the offering of the balance of the Registrable Securities owned
by holders of the Registrable Securities may then be postponed by the Company
for a period of ninety (90) days following effectiveness of the Registration
Statement or notification.
(b) General Provisions. The following provisions
shall also be applicable to any such Registration:
(i) The Holders whose Registrable
Securities are to be included therein (the "Sellers") shall furnish the Company
with such appropriate information (relating to the intentions of such Holders)
in connection therewith as the Company shall reasonably request in writing.
Following the effective date of such Registration Statement or notification,
the Company shall, upon the request of the Seller, forthwith supply such number
of Prospectuses or offering circulars meeting the requirements of the
Securities Act as shall be reasonably requested
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<PAGE> 8
by such Seller to permit such Seller to make a public offering of all such
securities of such Seller included therein. The Company shall file such Blue
Sky Applications and use its best efforts to qualify such securities included
therein for sale in such states as the Sellers shall reasonably designate.
(ii) The Company shall bear the cost and
expense directly relating to any registration securities pursuant to this
Section 9.1, provided, however, that the Company shall not be required to pay
for any expenses of any registration proceeding begun pursuant to this Section
9.1 if the Registration request is subsequently withdrawn at the request of the
Holders of a majority of the Registrable Securities to be registered (in which
case all Holders requesting such Registration shall bear such expenses). The
Company shall not be required to pay any selling commissions, but shall pay all
applicable listing fees.
(iii) The Company shall indemnify and hold
harmless each Seller who may purchase from or sell for any Seller any
Registrable Securities from and against any and all losses, claims, damages and
liabilities caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or any Prospectus
included therein, required to be filed or furnished by reason of this Section
9.1, or caused by any omission or alleged omissions to state therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, except insofar as such losses, claims,
damages or liabilities are caused by any such untrue statement or alleged
untrue statement or omission or alleged omission which was based upon
information furnished or required to be furnished in writing to the Company by
and about such Seller expressly for use therein, which indemnification shall
include each person, if any, who controls any such Seller within the meaning of
the Securities Act; provided, however, that the Company shall not be obliged so
to indemnify any such Seller or controlling persons unless such Seller shall at
the same time indemnify the Company, its directors, each officer signing a
Registration Statement or notification and each person, if any who controls the
Company within the meaning of the Securities Act from and against any and all
losses, claims, damages and liabilities caused by any untrue statement or
alleged untrue statement of a material fact contained in any Registration
Statement or notification or any Prospectus or offering circular required to be
filed or furnished by reason of this Section 9.1, or caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statement therein, in light of the circumstances under
which they were made, not misleading, insofar as such losses, claims, damages
or liabilities are caused by any untrue statement or alleged untrue statement
or omission or alleged omission which was based upon information furnished in
writing to the Company by and about such Seller expressly for use therein.
(iv) The Company will, or will use its
best efforts to (i) prepare and file with the Commission a Registration
Statement or notification with respect to the Registrable Securities to be
registered or qualified and cause such Registration Statement or notification
to become and remain effective; provided, that the Company will not be required
to keep the Registration Statement or notification effective, or to prepare and
file any amendments or supplements, later than nine months after the date on
which the Registration Statement or notification becomes effective under the
Securities Act.
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<PAGE> 9
(v) The Company shall, in case of a
registration or notification, furnish to the Holders of the Registrable
Securities for whom such Registrable Securities are registered or are to be
registered or are filed for notification, at the time such Registration
Statement becomes effective, an opinion of counsel, dated such date, for the
Company reasonably acceptable to the Holders to the effect that a Registration
Statement or notification covering the Registrable Securities has been filed
with the commission under the Securities Act and has become effective, that a
prospectus or offering circular complying in form with the requirements of the
Securities Act is available for delivery, that to the best of such counsel's
knowledge, no stop order has been issued by the Commission suspending the
effectiveness of the Registration Statement or suspending the availability of
the offering exemption and that, to the best of the counsel's knowledge, no
proceedings for the issuance of a stop order are threatened or contemplated,
and that the Registrable Securities have been registered or qualified under the
securities or Blue Sky Laws of each state in which the Company is required,
pursuant to subsection (b)(i) of this Section 9.1 to register or qualify the
Registrable Securities.
(vi) It shall be a condition precedent to
the obligations of the Company to take any action pursuant to this Section 9.1
with respect to the Registrable Securities of any selling Holder that such
Holder shall furnish to the Company such information regarding itself, the
Registrable Securities held by it, and the intended method of disposition of
such securities as shall be reasonably required to effect the Registration of
such Holder's Registrable Securities.
9.2 Exchange Listing. In connection with the issuance of
any Shares upon the exercise of this Warrant, the Company shall secure the
listing of the underlying shares of Common Stock upon any securities exchange
upon which shares of the Company's Common Stock are listed.
9.3 No Obligations to Sell. Neither the giving of any
notice nor the making of any request hereunder shall impose any obligation on
the selling Holder to sell any Registrable Securities.
9.4 Registration Rights Survive Exercise. The Company's
obligations under this Section 9 shall continue in effect, regardless of the
exercise or surrender of this Warrant. The Company's obligations under this
Section 9 shall expire, however, with respect to a Warrant or Shares which have
been sold by a broker or dealer or in a public offering registered under the
Securities Act or a public offering exempt from such registration.
SECTION 10
SECURITIES LAW COMPLIANCE
Except pursuant to the requirements of Rule 144 of the
Securities Act, this Warrant and the Shares may not be sold, transferred,
assigned or otherwise disposed of except as follows:
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<PAGE> 10
(a) to a person who, in the opinion of counsel
reasonably satisfactory to the Company, is a person to whom this Warrants or
the Shares may legally be transferred without registration and without the
delivery of a current prospectus or offering circular with respect thereto; or
(b) to any person upon delivery of a prospectus
or offering circular then meeting the requirements of the Securities Act
relating to such securities (as to which a Registration Statement or
notification under the Securities Act shall then be in effect) and the offering
thereof for such sale or disposition.
SECTION 11
REDEMPTION
The Company may call the Warrants for redemption, in whole or
in part, upon at least thirty (30) days' prior written notice at any time
during the exercise period at a price of $.05 per Warrant, provided that the
closing bid price for a share of the Company's Common Stock has been an average
of at least $3.375 for twenty (20) trading days immediately preceding the date
of the written notice. In the event the Company exercises its right to redeem
the Warrants, such Warrants will be exercisable until the close of business on
the date fixed for redemption in such notice. If any Warrant called for
redemption is not exercised by such time, it will cease to be exercisable and
the Holder thereof will be entitled to the redemption price.
SECTION 12
MISCELLANEOUS
12.1 Successors and Assigns. All the covenants and
provisions of this Warrant which are by or for the benefit of the Company or
the Holder shall bind and inure to the benefit of their respective successors
and assigns hereunder.
12.2 Notice. Notice or demand pursuant to this Warrant to
be given or made by the Holder to or on the Company shall be sufficiently given
or made if sent by registered mail, postage prepaid, receipt requested,
addressed, until another address is designated in writing by the Company, as
follows:
Alpha Microsystems
2722 South Fairview Street
Santa Ana, California 92704
Any notice or demand authorized by this Warrant to be given or made by the
Company to or on the Holder shall be given to the Holder by registered mail,
postage prepaid, receipt requested, addressed at his last known address as it
shall appear on the books of the Company, until another address is designated
in writing by like mail.
12.3 Applicable Law. The validity, interpretation and
performance of this Warrant shall be governed by the laws of the State of
California.
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<PAGE> 11
12.4 Headings. The Article headings herein are for
convenience only and are not part of this Warrant and shall not affect the
interpretation thereof.
Dated as of December 17, 1993 ALPHA MICROSYSTEMS
By: s/Douglas J.Tullio
------------------
Douglas J. Tullio, President
Attest: s/John Glade
------------
Secretary
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<PAGE> 12
EXERCISE FORM
(To be Executed by the Warrant Holder if He, or She
Desires to Exercise the Warrant in Whole or in Part)
To: Alpha Microsystems
The undersigned (_____________________________________________________________)
Please insert name and Social Security or number E.I.N. of Holder
hereby irrevocably elects to exercise the rights of purchase represented by the
within Warrant for, and to purchase thereunder, ___________ Shares provided for
therein and tenders payment herewith to the order of Alpha Microsystems in the
amount of $________.
The undersigned requests that certificates for such Shares be issued as
follows:
Name:__________________________________________________________________________
Address:_______________________________________________________________________
Deliver to:____________________________________________________________________
Address:_______________________________________________________________________
and, if said number of Shares shall not be all the Shares purchasable
hereunder, that a new Warrant for the balance remaining of the Shares
purchasable under the within Warrant be registered in the name of, and
delivered to, the undersigned at the address stated below.
Address:_______________________________________________________________________
Dated:________________,19_____
Signature:___________________________________
Note: Signature must correspond with the
name as written upon the face of this
Warrant in every particular, without
alteration or enlargement or any change
whatsoever.
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<PAGE> 13
FORM OF ASSIGNMENT
(To be Signed Only Upon Assignment)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
_______________ the right to purchase _______ Shares evidenced by the within
Warrant, and appoints ____________________ to transfer the same on the books of
Alpha Microsystems with the full power of substitution in the premises.
Dated:________________,19_____
Signature:___________________________________
Note: Signature must correspond with the
name as written upon the face of this
Warrant in every particular, without
alteration or enlargement or any change
whatsoever, and the signature must be
guaranteed in the usual manner.
Signature Guaranteed:
_______________________________
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<PAGE> 1
EXHIBIT 4.8
WARRANT TO PURCHASE COMMON STOCK
GRANT DATE: Effective as of December 17, 1993 10,000 Shares
ALPHA MICROSYSTEMS
In consideration of value received, ALPHA MICROSYSTEMS, a
California corporation (the "Company"), grants to JONATHAN T. MCKEAGE or
permitted transferees or assigns (the "Holder") the right, subject to the terms
of this Warrant, to purchase at any time and from time to time during the
period commencing immediately upon the approval of the Letter Agreement between
Company and Dominick & Dominick dated December 17, 1993 by the Company's Board
of Directors, and ending on 5:00 p.m. New York City Time on November 1, 1998,
unless extended or terminated as provided herein (the "Expiration Date"), up to
10,000 shares of Common Stock (the "Shares") at $2.50 per share (the "Basic
Exercise Price). The Basic Exercise Price and the number of shares of Common
Stock that may be purchased are subject to adjustment under the terms of this
Warrant.
SECTION 1
DEFINITIONS
As used in this Warrant, unless the context otherwise
requires:
1.1 "Basic Exercise Price" means the price at which each
share of Common Stock may be purchased upon exercise of this Warrant as stated
in the first sentence of this Warrant.
1.2 "Blue Sky Application" means an application or other
document filed pursuant to a Blue Sky Law to register, qualify or obtain an
exemption for any offer or sale by or for the account of the Holder of all or
part of this Warrant or any of the Shares.
1.3 "Blue Sky Law" means the laws and regulations of any
state or other jurisdiction applicable to any sale by or for the account of the
Holder of all or part of this Warrant or any of the Shares.
1.4 "Common Stock" means the Common Stock (no par value)
of the Company existing on the Grant Date and for purposes of Sections 7.1(a)
through (e) also has the meaning set forth in Section 7.1(g).
1.5 "Exercise Date" means any date when this Warrant is
exercised, in whole or in part, in the manner indicated in Sections 2.1 and
2.2.
1.6 "Exercise Price" means the Basic Exercise Price;
provided, however, that if an adjustment is required under Section 7 of this
Warrant, then the "Exercise Price" means, after
<PAGE> 2
each such adjustment, the price at which each Share may be purchased upon
exercise of this Warrant immediately after the last such adjustment.
1.7 "Expiration Date" means the Expiration Date indicated
on the first page of this Warrant.
1.8 "Grant Date" means the date this Warrant was first
granted as stated at the beginning of this Warrant.
1.9 "Prospectus" means a preliminary prospectus or final
prospectus (including any supplement) or any offering circular or similar
offering document, included in a Registration Statement.
1.10 "Registrable Securities" means Shares of Common Stock
issued upon the exercise of the Warrant.
1.11 "Registration Statement" means a Registration or
Offering Statement, a pre-effective or post-effective amendment to a
Registration Statement or other document proposed for filing or filed by the
Company under the Securities Act which is or would be available under
applicable laws, rules and regulations to register for a public offering or
sale any shares of Common Stock. The term "Registration Statement" shall not
apply to any registration statement relating to the sale of securities to
participants in a Company stock or option plan or a registration on any form
which does not include substantially the same information as would be required
to be included in a registration statement covering the sale of Registrable
Securities (as defined in Section 1.10 above).
1.11 "Securities Act" means the Securities Act of 1933, as
amended from time to time, and all rules and regulations promulgated
thereunder, or any act, rules or regulations which replace the Securities Act
or any such rules and regulations.
1.12 "Warrant" means this Warrant.
SECTION 2
DURATION AND EXERCISE OF WARRANT
2.1 Exercise Period. The Warrants may be exercised at
any time after the Grant Date and on or before the Expiration Date. After the
Expiration Date this Warrant shall become void, and all rights to purchase
Shares hereunder shall thereupon cease.
2.2 Method of Exercise. This Warrant may be exercised by
the Holder, in whole or in part, by (i) surrendering this Warrant to the
Company, and (ii) tendering to the Company payment of the Exercise Price for
the Shares for which exercise is made. Upon proper exercise, the Holder shall
be deemed to be the holder of record of the Shares for which exercise is made,
even though the transfer or register books of the Company may then be closed or
certificates representing such Shares may not then be actually delivered to the
Holder.
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<PAGE> 3
2.3 Certificates. Within a reasonable time but no more
than twenty (20) days after exercise, certificates for the shares of Common
Stock comprising such Shares shall be delivered to the Holder and, unless this
Warrant has expired, a Related Warrant representing the number of Shares, if
any, with respect to which this Warrant shall not have been exercised shall be
issued to the Holder.
2.4 Taxes. The Company covenants and agrees that it will
pay when due and payable any and all taxes which may be payable in connection
with the issuance of this Warrant, or the issuance of any Shares upon the
exercise of this Warrant. The Company shall not, however, be required to pay
any tax which may be payable in respect of any subsequent transfer of this
Warrant or of the Shares.
SECTION 3
VALIDITY AND RESERVATIONS OF SHARES
The Company covenants that this Warrant and all Shares of
Common Stock issued upon exercise of this Warrant will be validly issued, fully
paid, nonassessable and free of pre-emptive rights.
SECTION 4
FRACTIONAL SHARES
No fractional Shares shall be issued upon the exercise of this
Warrant. With respect to any fraction of a Share otherwise issuable upon any
such exercise, the Company shall pay to the Holder an amount in cash equal to
such fraction multiplied by the Exercise Price.
SECTION 5
LIMITED RIGHTS OF THE WARRANT HOLDER
The Holder shall not, solely by virtue of being the Holder of
this Warrant, have any of the rights of a holder of Common Stock of the
Company, either at law or equity, until such Warrant shall have been exercised
and the Holder shall be deemed to be the holder of record of Shares as provided
in this Warrant.
SECTION 6
EXCHANGE, TRANSFER OR LOSS OF WARRANT
6.1 Exchange. This Warrant is exchangeable, without
expense to the Holder and upon surrender hereof to the Company, for Warrants of
different denominations entitling the Holder to purchase Shares equal in total
number and identical in type to the Shares covered by this Warrant.
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<PAGE> 4
6.2 Transfer. Subject to the provisions of Section 10,
upon surrender of this Warrant to the Company with assignment duly executed and
the tender of funds sufficient to pay any transfer tax, the Company shall,
without charge, execute and deliver a new Warrant to the assignee named in such
Assignment Form, and this Warrant shall be cancelled concurrent with such
issuance.
6.3 Loss, Theft, Destruction or Mutilation. Upon receipt
by the Company of satisfactory evidence of the loss, theft, destruction or
mutilation of this Warrant and either (in the case of loss, theft or
destruction) reasonable indemnification or (in the case of mutilation) the
surrender of this Warrant for cancellation, the Company will execute and
deliver to the Holder, without charge, a new Warrant of like denomination. Any
such new Warrant executed and delivered shall constitute an additional
obligation of the Company, whether or not this Warrant, reportedly lost,
stolen, destroyed or mutilated, shall be at any time enforceable by anyone.
SECTION 7
ANTI-DILUTION ADJUSTMENT OF NUMBER OF SHARES AND EXERCISE PRICE
7.1 Adjustment of Exercise Price. If any of the
following events shall occur at any time or from time to time prior to the
exercise in full or expiration of this Warrant, the following adjustments shall
be made in the Exercise Price, with the exception hereinafter provided:
(a) Recapitalization. In case the Company
effects a subdivision, combination, reclassification or other recapitalization
of its outstanding shares of Common Stock into a greater or lesser number of
shares of Common Stock, the Exercise Price in effect immediately after such
subdivision, combination, reclassification or other recapitalization shall be
proportionately decreased or increased, as the case may be.
(b) Dividend Other Than in Cash. If the Company
shall declare a dividend on its Common Stock payable in stock or other
securities of the Company or of any other corporation, or in property or
otherwise than in cash, or the functional equivalent thereof, to the holders of
its Common Stock, the Holder shall, without additional cost, be entitled to
receive upon the exercise of this Warrant, in addition to the Shares to which
such Holder is otherwise entitled upon such exercise, the number of shares of
stock or other securities or property which such Holder would have been
entitled to receive if such Holder had been a holder, on the record date for
such dividend, of the number of shares of Common Stock so purchased under this
Warrant.
(c) Merger or Consolidation - No Change in
Control. In case of any merger, consolidation or reorganization of the Company
with or into one or more corporations which results in holders of the Company's
Common Stock immediately prior to such event owning a majority of the voting
securities of the surviving corporation immediately following such event, and
as a result of which holders of the Company's Common Stock receive other stock,
securities or property in lieu of or in addition to, but on account of, their
Common Stock, the Holder, upon the exercise of this Warrant after the record
date for determination of shareholders
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<PAGE> 5
entitled thereto, shall receive, in lieu of or in addition to the Shares, the
proportionate shares of all stock, or other securities (appropriately adjusted
for any subsequent events of the issuer of such stock or securities which are
of the kind which would cause adjustment of the Exercise Price hereunder) or
other property issued, paid or delivered for or on all of the Common Stock of
the Company as would have been allowable to the Shares so purchased under this
Warrant had this Warrant been exercised immediately prior to said record date.
(d) Merger of Consolidation - Change in Control.
In case of any merger, consolidation or reorganization of the Company with or
into one or more other corporations, which results in the holders of the
Company's Common Stock immediately prior to such event owning less than a
majority interest of the voting securities of the surviving corporation
immediately following such event, or in the case of any sale, lease, transfer
or conveyance to another corporation of all or substantially all the assets of
the Company or proposed liquidation of the Company, then in either such event
the Holder shall be given notice of such proposed action at approximately the
same time and in substantially the same manner as the holders of the Company's
Common Stock. The Holder may attend the meeting of the Company's shareholders
at which such action is considered and voted upon. If the proposed action is
approved according to applicable law by the shareholders of all corporations or
other entities which are parties to the proposed action, the Holder shall be so
notified in writing by the Company by registered or certified mail, and
thereupon, notwithstanding the period of exercisability stated on the face of
this Warrant, this Warrant shall automatically become immediately exercisable
and become forever null and void to the extent not exercised on or before 5:00
P.M., California time, on the tenth (10th) business day following the delivery
of such notice.
(e) Minimum Adjustment Not Required. Anything in
this Section 7.1 to the contrary notwithstanding, the Company shall not be
required, except as hereinafter provided, to make any adjustment of the
Exercise Price in any case in which the amount by which such Exercise Price
would be increased or reduced, in accordance with the foregoing provisions,
would be less than $.05, but in such a case, such adjustment shall be carried
forward and when such adjustment, together with any and all such other
adjustments so carried forward, shall amount to not less than $.10 the Exercise
Price shall be adjusted; provided, however, that adjustments of less than $.05
in the Exercise Price shall be required and made in accordance with the
provisions of this Section 7.1 (other than this subparagraph) not later than
such time as may be required in order to preserve the tax-free nature of any
distribution (within the meaning of Section 305 of the United States Internal
Revenue Code of 1986, as amended) to the Holder or the holders of Common Stock.
In the event of any subdivisions, combination, reclassification or other
recapitalization of shares of Common Stock, said amount (as theretofore
decreased or increased) shall be proportionately decreased or increased.
(f) Other Adjustments. The Company, by action of
its Board of Directors, shall make such other equitable adjustments to the
Exercise Price as may be necessary to protect the Holder against dilution of
this Warrant, with or without a request of a Holder, where such an adjustment
is appropriate in light of the occurrence of an event or the existence of
circumstances similar to those otherwise contemplated by this Section 7.1.
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<PAGE> 6
(g) Term "Common Stock." Whenever reference is
made in Sections 7.1(a) through (e) above to Common Stock, the term "Common
Stock" shall include any stock of any class of the Company, other than
preferred stock with a fixed limit on dividends, with no rights of conversion
into "Common Stock" and with a fixed amount payable in the event of any
voluntary or involuntary liquidation, dissolution or winding up of the Company.
7.2 Number of Shares Adjusted. After any adjustment of
the Exercise Price pursuant to Section 7.1, the number of Shares issuable at
the new Exercise Price shall be adjusted to the number obtained by (i)
multiplying the number of Shares issuable upon exercise of this Warrant
immediately before such adjustment by the Exercise Price in effect immediately
before such adjustment and (ii) dividing the product so obtained by the new
Exercise Price.
7.3 Notice of Adjustment. Whenever events occur
requiring the Exercise Price to be adjusted, the Company shall promptly file
with its Secretary or an Assistant Secretary at its principal office and with
its stock transfer agent, if any, a certificate of its chief financial officer
showing the adjusted Exercise Price, setting forth in reasonable detail the
facts requiring such adjustment, and stating such other facts as shall be
necessary to show the manner and figures used to compute such adjustments.
Such chief financial officers certificate shall be made available at all
reasonable times for inspection by the Holder. Promptly after each such
adjustment, the Company shall mail a copy of such certificate by certified mail
to the Holder together with information relating to the adjustment under
Section 7.2. The Company shall endorse on any Warrant executed and delivered
by the Company a description of each adjustment, if any, under this Section as
the result of events occurring before the execution and delivery of the
Warrant, and the Warrant so issued shall reflect the number of Shares issuable
on exercise, as adjusted to reflect such charges.
If, within forty-five (45) days of the mailing of such
certificate, Holders holding in the aggregate not less than 25% of the Warrants
notify the Company in writing of their disagreements with the adjusted Exercise
Price contained in the Company certificate, then the Company will promptly
obtain a certificate of a firm of independent certified public accountants of
recognized standing selected by the Company's Board of Directors (who shall not
be the regular auditors of the Company) certifying the same items required by
the Company certificate or making such adjustments as are appropriate. The
Company will promptly mail a copy of the firm of independent public
accountants' certificate to the Holder of the this Warrant. Under the
circumstances described in this paragraph, the Holders of the Warrants giving
notice shall be obligated to reimburse the Company for half of the charges
imposed by the independent certified accountants if their certificate confirms
the Company's prior calculations.
SECTION 8
NOTICE TO HOLDER
So long as this Warrant is outstanding, whenever the Company
shall expect to (i) pay any dividend or distribution upon Common Stock, (ii)
offer to the holders of Common Stock any right to subscribe for or to purchase
any other securities of the Company, (iii) effect any recapitalization, merger,
consolidation, reorganization, transfer, sale, lease or conveyance as
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<PAGE> 7
referred to in Section 7, or (iv) be involved in any voluntary or involuntary
dissolution, liquidation or winding up of the Company, at least twenty-one (21)
days before the proposed action or any applicable record date, the Company, by
certified mail, shall give the Holder written notice describing the proposed
action and stating the date on which (x) a record date is to be fixed for the
purposes of such dividend, distribution or rights or (y) such recapitalization,
merger, consolidation, reorganization, transfer, sale, lease, conveyance,
dissolution, liquidation or winding up is to take place and when, if any date
is to be fixed, the record holders of Common Stock shall be entitled to
exchange the shares of Common Stock for securities or other property
deliverable upon such recapitalization, merger, consolidation, reorganization,
transfer, sale, lease, conveyance, dissolution, liquidation or winding up.
SECTION 9
REGISTRATION OF THE SHARES
9.1 Registration Rights.
(a) Piggy-back Registration. The Company shall
advise each Holder of Registrable Securities by written notice at least five
days prior to the filing of any Registration Statement pertaining to securities
to be offered to the public solely for cash, and will, upon the request of any
such Holders, and without any charge to them, include in any such Registration
Statement such information as may be required to permit a public offering of
their Registrable Securities. If any such Registration Statement or
notification is being filed by the Company in connection with an underwritten
public offering of securities of the Company, the Company shall have the right
to require such Holders (provided that Rule 415 applies to the sale of the
Registrable Securities) to postpone the offering of their securities for a
period of ninety (90) days following the effective date of such Registration
Statement or notification. If any such Registration Statement or notification
is being filed by the Company solely for the benefit of selling security
holders, the Company will permit such Holders of the Registrable Securities to
include for sale with such shareholders in such Registration Statement or
notification at least a pro rata portion (based upon the ratio of the number of
shares of Common Stock which such selling security holders desire to sell to
the number of Registrable Securities which such Holders of the Registrable
Securities desire to sell) of the total Registrable Securities being
registered, and the offering of the balance of the Registrable Securities owned
by holders of the Registrable Securities may then be postponed by the Company
for a period of ninety (90) days following effectiveness of the Registration
Statement or notification.
(b) General Provisions. The following provisions
shall also be applicable to any such Registration:
(i) The Holders whose Registrable
Securities are to be included therein (the "Sellers") shall furnish the Company
with such appropriate information (relating to the intentions of such Holders)
in connection therewith as the Company shall reasonably request in writing.
Following the effective date of such Registration Statement or notification,
the Company shall, upon the request of the Seller, forthwith supply such number
of Prospectuses or offering circulars meeting the requirements of the
Securities Act as shall be reasonably requested
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<PAGE> 8
by such Seller to permit such Seller to make a public offering of all such
securities of such Seller included therein. The Company shall file such Blue
Sky Applications and use its best efforts to qualify such securities included
therein for sale in such states as the Sellers shall reasonably designate.
(ii) The Company shall bear the cost and
expense directly relating to any registration securities pursuant to this
Section 9.1, provided, however, that the Company shall not be required to pay
for any expenses of any registration proceeding begun pursuant to this Section
9.1 if the Registration request is subsequently withdrawn at the request of the
Holders of a majority of the Registrable Securities to be registered (in which
case all Holders requesting such Registration shall bear such expenses). The
Company shall not be required to pay any selling commissions, but shall pay all
applicable listing fees.
(iii) The Company shall indemnify and hold
harmless each Seller who may purchase from or sell for any Seller any
Registrable Securities from and against any and all losses, claims, damages and
liabilities caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or any Prospectus
included therein, required to be filed or furnished by reason of this Section
9.1, or caused by any omission or alleged omissions to state therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, except insofar as such losses, claims,
damages or liabilities are caused by any such untrue statement or alleged
untrue statement or omission or alleged omission which was based upon
information furnished or required to be furnished in writing to the Company by
and about such Seller expressly for use therein, which indemnification shall
include each person, if any, who controls any such Seller within the meaning of
the Securities Act; provided, however, that the Company shall not be obliged so
to indemnify any such Seller or controlling persons unless such Seller shall at
the same time indemnify the Company, its directors, each officer signing a
Registration Statement or notification and each person, if any who controls the
Company within the meaning of the Securities Act from and against any and all
losses, claims, damages and liabilities caused by any untrue statement or
alleged untrue statement of a material fact contained in any Registration
Statement or notification or any Prospectus or offering circular required to be
filed or furnished by reason of this Section 9.1, or caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statement therein, in light of the circumstances under
which they were made, not misleading, insofar as such losses, claims, damages
or liabilities are caused by any untrue statement or alleged untrue statement
or omission or alleged omission which was based upon information furnished in
writing to the Company by and about such Seller expressly for use therein.
(iv) The Company will, or will use its
best efforts to (i) prepare and file with the Commission a Registration
Statement or notification with respect to the Registrable Securities to be
registered or qualified and cause such Registration Statement or notification
to become and remain effective; provided, that the Company will not be required
to keep the Registration Statement or notification effective, or to prepare and
file any amendments or supplements, later than nine months after the date on
which the Registration Statement or notification becomes effective under the
Securities Act.
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<PAGE> 9
(v) The Company shall, in case of a
registration or notification, furnish to the Holders of the Registrable
Securities for whom such Registrable Securities are registered or are to be
registered or are filed for notification, at the time such Registration
Statement becomes effective, an opinion of counsel, dated such date, for the
Company reasonably acceptable to the Holders to the effect that a Registration
Statement or notification covering the Registrable Securities has been filed
with the commission under the Securities Act and has become effective, that a
prospectus or offering circular complying in form with the requirements of the
Securities Act is available for delivery, that to the best of such counsel's
knowledge, no stop order has been issued by the Commission suspending the
effectiveness of the Registration Statement or suspending the availability of
the offering exemption and that, to the best of the counsel's knowledge, no
proceedings for the issuance of a stop order are threatened or contemplated,
and that the Registrable Securities have been registered or qualified under the
securities or Blue Sky Laws of each state in which the Company is required,
pursuant to subsection (b)(i) of this Section 9.1 to register or qualify the
Registrable Securities.
(vi) It shall be a condition precedent to
the obligations of the Company to take any action pursuant to this Section 9.1
with respect to the Registrable Securities of any selling Holder that such
Holder shall furnish to the Company such information regarding itself, the
Registrable Securities held by it, and the intended method of disposition of
such securities as shall be reasonably required to effect the Registration of
such Holder's Registrable Securities.
9.2 Exchange Listing. In connection with the issuance of
any Shares upon the exercise of this Warrant, the Company shall secure the
listing of the underlying shares of Common Stock upon any securities exchange
upon which shares of the Company's Common Stock are listed.
9.3 No Obligations to Sell. Neither the giving of any
notice nor the making of any request hereunder shall impose any obligation on
the selling Holder to sell any Registrable Securities.
9.4 Registration Rights Survive Exercise. The Company's
obligations under this Section 9 shall continue in effect, regardless of the
exercise or surrender of this Warrant. The Company's obligations under this
Section 9 shall expire, however, with respect to a Warrant or Shares which have
been sold by a broker or dealer or in a public offering registered under the
Securities Act or a public offering exempt from such registration.
SECTION 10
SECURITIES LAW COMPLIANCE
Except pursuant to the requirements of Rule 144 of the
Securities Act, this Warrant and the Shares may not be sold, transferred,
assigned or otherwise disposed of except as follows:
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<PAGE> 10
(a) to a person who, in the opinion of counsel
reasonably satisfactory to the Company, is a person to whom this Warrants or
the Shares may legally be transferred without registration and without the
delivery of a current prospectus or offering circular with respect thereto; or
(b) to any person upon delivery of a prospectus
or offering circular then meeting the requirements of the Securities Act
relating to such securities (as to which a Registration Statement or
notification under the Securities Act shall then be in effect) and the offering
thereof for such sale or disposition.
SECTION 11
REDEMPTION
The Company may call the Warrants for redemption, in whole or
in part, upon at least thirty (30) days' prior written notice at any time
during the exercise period at a price of $.05 per Warrant, provided that the
closing bid price for a share of the Company's Common Stock has been an average
of at least $3.375 for twenty (20) trading days immediately preceding the date
of the written notice. In the event the Company exercises its right to redeem
the Warrants, such Warrants will be exercisable until the close of business on
the date fixed for redemption in such notice. If any Warrant called for
redemption is not exercised by such time, it will cease to be exercisable and
the Holder thereof will be entitled to the redemption price.
SECTION 12
MISCELLANEOUS
12.1 Successors and Assigns. All the covenants and
provisions of this Warrant which are by or for the benefit of the Company or
the Holder shall bind and inure to the benefit of their respective successors
and assigns hereunder.
12.2 Notice. Notice or demand pursuant to this Warrant to
be given or made by the Holder to or on the Company shall be sufficiently given
or made if sent by registered mail, postage prepaid, receipt requested,
addressed, until another address is designated in writing by the Company, as
follows:
Alpha Microsystems
2722 South Fairview Street
Santa Ana, California 92704
Any notice or demand authorized by this Warrant to be given or made by the
Company to or on the Holder shall be given to the Holder by registered mail,
postage prepaid, receipt requested, addressed at his last known address as it
shall appear on the books of the Company, until another address is designated
in writing by like mail.
12.3 Applicable Law. The validity, interpretation and
performance of this Warrant shall be governed by the laws of the State of
California.
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<PAGE> 11
12.4 Headings. The Article headings herein are for
convenience only and are not part of this Warrant and shall not affect the
interpretation thereof.
Dated as of December 17, 1993 ALPHA MICROSYSTEMS
By: s/Douglas J. Tullio
---------------------------
Douglas J. Tullio, President
Attest: s/John Glade
------------
Secretary
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<PAGE> 12
EXERCISE FORM
(To be Executed by the Warrant Holder if He, or She
Desires to Exercise the Warrant in Whole or in Part)
To: Alpha Microsystems
The undersigned (___________________________________________________________)
Please insert name and Social Security or number E.I.N. of Holder
hereby irrevocably elects to exercise the rights of purchase represented by the
within Warrant for, and to purchase thereunder, ___________ Shares provided for
therein and tenders payment herewith to the order of Alpha Microsystems in the
amount of $________.
The undersigned requests that certificates for such Shares be issued as follows:
Name:___________________________________________________________________________
Address:________________________________________________________________________
Deliver to:_____________________________________________________________________
Address:________________________________________________________________________
and, if said number of Shares shall not be all the Shares purchasable
hereunder, that a new Warrant for the balance remaining of the Shares
purchasable under the within Warrant be registered in the name of, and
delivered to, the undersigned at the address stated below.
Address:________________________________________________________________________
Dated:________________,19_____
Signature:______________________________
Note: Signature must correspond with
the name as written upon the face of this
Warrant in every particular, without
alteration or enlargement or any
change whatsoever.
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<PAGE> 13
FORM OF ASSIGNMENT
(To be Signed Only Upon Assignment)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
_______________ the right to purchase _______ Shares evidenced by the within
Warrant, and appoints ____________________ to transfer the same on the books of
Alpha Microsystems with the full power of substitution in the premises.
Dated:________________,19_____
Signature:______________________________
Note: Signature must correspond with
the name as written upon the face of
this Warrant in every particular, without
alteration or enlargement or any change
whatsoever, and the signature must be
guaranteed in the usual manner.
Signature Guaranteed:
_______________________________
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<PAGE> 1
EXHIBIT 4.9
THE TRANSFER OF THIS WARRANT IS RESTRICTED
AS PROVIDED IN SECTION 10.
________________________________________________________________________________
No. W-7 WARRANT TO PURCHASE
GRANT DATE: December 7, 1993 85,137 UNITS
ALPHA MICROSYSTEMS
UNDERWRITER'S WARRANT
In consideration of other value received, Alpha Microsystems,
a California corporation (the "Company"), grants to Barclay Investments, Inc. or
permitted transferees or assigns (the "Holder") the right, subject to the terms
of this Warrant, to purchase at any time and from time to time during the
period commencing November 1, 1994, and ending on November 1, 1998, unless
extended or terminated as provided herein (the "Expiration Date"), up to 85,137
Units of the Company (each Unit to consist of one share of Common Stock and one
warrant to purchase one share of Common Stock) at $1.95 per Unit (the "Basic
Exercise Price") as more fully described in the Company's Prospectus dated
November 1, 1993 for the public offering of equivalent units ("Company's
Prospectus"). The Basic Exercise Price and the number of Units that may be
purchased are subject to adjustment under the terms of this Warrant.
Section 1. DEFINITIONS.
As used in this Warrant, unless the context otherwise
requires:
1.1 "Basic Exercise Price" means the price at which each
Unit may be purchased upon exercise of this Warrant as stated in the first
sentence of this Warrant.
1.2 "Blue Sky Application" means an application or other
document filed pursuant to a Blue Sky law to register, qualify or obtain an
exemption for any offer or sale by or for the account of the Holder of all or
part of this Warrant or any of the Units.
1.3 "Blue Sky law" means the laws and regulations of any
state or other jurisdiction applicable to any sale by or for the account of the
Holder of all or part of this Warrant or any of the Units.
1.4 "Common Stock" means the Common Stock (no par value)
of the Company existing on the Grant Date and for purposes of Sections 7.1(a)
through (e) also has the meaning set forth in Section 7.1(g).
1.5 "Exercise Date" means any date when this Warrant is
exercised, in whole or in part, in the manner indicated in Sections 2.1 and
2.2.
<PAGE> 2
1.6 "Exercise Price" means the Basic Exercise Price;
provided, however, that if an adjustment is required under Section 7 of this
Warrant, then the "Exercise Price" means, after each such adjustment, the price
at which each Unit may be purchased upon exercise of this Warrant immediately
after the last such adjustment.
1.7 "Expiration Date" means the Expiration Date indicated
on the first page of this Warrant as such date may be extended as provided in
Section 9.2(a) or the date indicated in Section 9.2(h) if the Warrant shall
have been sold in a public offering as provided therein.
1.8 "Grant Date" means the date this Warrant was first
granted as stated at the beginning of this Warrant.
1.9 "Prospectus" means a preliminary prospectus or final
prospectus (including any supplement) or any offering circular or similar
offering document, included in a Registration Statement.
1.10 "Registrable Securities" means the Warrants, the
Related Warrants, the Units, the Related Units, or shares of Common Stock or
Underlying Warrants issued pursuant to exercise of the Warrant.
1.11 "Registration Statement means a Registration or
Offering Statement, a pre-effective or post-effective amendment to a
Registration Statement or other document proposed for filing or filed by the
Company under the Securities Act which is or would be available under
applicable laws, rules and regulations to register for a public offering or
sale this Warrant, any Related Warrant, any Units or any Related Units. The
term "Registration Statement" shall not apply to any registration statement
relating to the sale of securities to participants in a Company stock or option
plan or a registration on any form which doesn't include substantially the same
information as would be required to be included in a registration statement
covering the sale of Registrable Securities (as defined in Section 1.10 below).
1.12 "Related Warrant" means any other Warrant executed
and delivered by the Company on terms identical with the terms of this Warrant
(except as to the identity of the Holder, number of Units or execution date)
granted in connection with the transaction pursuant to which this Warrant was
granted.
1.13 "Related Units" means any Units or other securities
issued or issuable upon exercise of' any Related Warrant.
1.14 "Securities Act" means the Securities Act of' 1933,
as amended from time to time, and all rules and regulations promulgated
thereunder, or any act, rules or regulations which replace the Securities Act
or any such rules and regulations.
1.15 "Underwriter" means any party who is an "underwriter"
within the meaning of the Securities act with respect to any sale by or for the
account of the Holder of' any of the Warrants or Unit.
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<PAGE> 3
1.16 "Unit" means any Units, consisting of one share of
Common Stock of the Company and one warrant to purchase one share of Common
Stock, or other securities issued or subject to issuance upon exercise of this
Warrant or upon exchange of a Unit or Units of different denominations.
1.17 "Underlying Warrant" means the common stock purchase
warrant to purchase shares of Common Stock of the Company which, together with
the Unit Share, comprises the Unit. The Underlying Warrant is identical in all
respects to the redeemable common stock purchase warrants issued pursuant to
the Warrant Agreement, as more fully described in the Company's Prospectus,
except that (i) the initial exercise date thereof shall be the date of exercise
of the Underwriters' Warrant, (ii) the initial exercise price thereof shall be
$2.50 and shall be thereafter determined as set forth herein, (iii) the Company
may not redeem the Underlying Warrants, (iv) no terms of the Underlying
Warrants may be modified without the consent of the Holders of a majority of
the Warrants, (v) the Underlying Warrants shall be exercisable until the
Expiration Date; and (vi) the Common Stock subject to the Underlying Warrants
shall initially be as set forth in the Warrant Agreement and thereafter
determined as set forth herein without regard to the terms of the Warrant
Agreement.
1.18 "Warrant" means this Underwriter's Warrant and each
previously executed and cancelled Underwriter's Warrant, if any, for which this
Warrant has been exchanged.
1.19 "Warrant Agreement" means the Warrant Agreement
associated with offering contemplated by the Registration Statement between
Mellon Securities Trust and the Company.
Section 2. DURATION AND EXERCISE OF WARRANT
2.1 Exercise Period. Subject to the provisions of
Sections 5 and 10 hereof, the Warrants may be exercised at any time after one
year from the Grant Date and on or before the Expiration Date. After the
Expiration Date this Warrant shall become void, and all rights to purchase
Units hereunder shall thereupon cease.
2.2 Method of Exercise. This Warrant may be exercised by
the Holder, in whole or in part, by (i) surrendering this Warrant to the
Company, (ii) tendering to the Company payment of the Exercise Price for the
Units for which exercise is made and (iii) executing and delivering to the
Company the attached Exercise Form. Upon proper exercise, the Holder shall be
deemed to be the holder of record of the Units for which exercise is made, even
though the transfer or register books of the Company may then be closed or
certificates representing such Units may not then be actually delivered to the
Holder.
2.3 Certificates. Within a reasonable time but no more
than 20 days after exercise, certificates for the shares of Common Stock and
the Underlying Warrants comprising such Units shall be delivered to the Holder
and, unless this Warrant has expired, a Related Warrant representing the number
of Units, if any, with respect to which this Warrant shall not have been
exercised shall be issued to the Holder.
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<PAGE> 4
2.4 Taxes. The Company covenants and agrees that it will
pay when due and payable any and all taxes which may be payable in connection
with the issuance of this Warrant, or the issuance of any Units upon the
exercise of this Warrant. The Company shall not, however, be required to pay
any tax which may be payable in respect of any subsequent transfer of this
Warrant or of the Units.
Section 3. VALIDITY AND RESERVATION OF UNITS
The Company covenants that this Warrant and all Units, shares
of Common Stock or Underlying Warrants issued upon exercise of this Warrant
will be validly issued, fully paid, nonassessable and free of preemptive
rights. The Company agrees that so long as this Warrant may be exercised, the
Company will have authorized and reserved for issuance upon exercise of this
Warrant a sufficient number of Units to provide for exercise in full.
Section 4. FRACTIONAL UNITS
No fractional Unit shall be issued upon the exercise of this
Warrant. With respect to any fraction of a Unit otherwise issuable upon any
such exercise, the Company shall pay to the Holder an amount in cash equal to
such fraction multiplied by the Exercise Price.
Section 5. LIMITED RIGHTS OF THE WARRANT HOLDER
The Holder shall not, solely by virtue of being the Holder of
this Warrant, have any of the rights of a holder of Common Stock of the
Company, either at law or equity, until such Warrant shall have been exercised
and the Holder shall be deemed to be the holder of record of Units as provided
in this Warrant.
Section 6. EXCHANGE, TRANSFER OR LOSS OF WARRANT
6.1 Exchange. This Warrant is exchangeable, without
expense to the Holder and upon surrender hereof to the Company, for Warrants of
different denominations entitling the Holder to purchase Units equal in total
number and identical in type to the Units covered by this Warrant.
6.2 Transfer. Subject to the provisions of Section 10,
upon surrender of this Warrant to the Company with the attached Assignment Form
duly executed and the tender of funds sufficient to pay any transfer tax, the
Company shall, without charge, execute and deliver a new Warrant to the
assignee named in such Assignment Form, and this Warrant shall be cancelled
concurrent with such issuance.
6.3 Loss, Theft, Destruction or Mutilation. Upon receipt
by the Company of satisfactory evidence of the loss, theft, destruction or
mutilation of this Warrant and either (in the case of loss, theft or
destruction) reasonable indemnification or (in the case of mutilation) the
surrender of this Warrant for cancellation, the Company will execute and
deliver to the Holder, without charge, a new Warrant of like denomination. Any
such new Warrant executed and delivered shall constitute an additional
obligation of the Company, whether or not this Warrant, reportedly lost, stolen,
destroyed or mutilated, shall be at any time enforceable by anyone.
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<PAGE> 5
Section 7. ANTI-DILUTION ADJUSTMENT OP NUMBER OP UNITS AND
EXERCISE PRICE
7.1 Adjustment of Exercise Price. If any of the
following events shall occur at any time or from time to time prior to the
exercise in full or expiration of this Warrant, the following adjustments shall
be made in the Exercise Price, with the exception hereinafter provided:
(a) Recapitalization. In case the Company effects a
subdivision, combination, reclassification or other Recapitalization of its
outstanding shares of Common Stock into a greater or lesser number of shares of
Common Stock, the Exercise Price in effect immediately after such subdivision,
combination, reclassification or other recapitalization shall be
proportionately decreased or increased, as the case may be.
(b) Dividend Other Than in Cash. If the Company shall
declare a dividend on its Common Stock payable in stock or other securities of
the Company or of any other corporation, or in property or otherwise than in
cash, or the functional equivalent thereof, to the holders of its Common Stock,
the Holder shall, without additional cost, be entitled to receive upon the
exercise of this Warrant, in addition to the Units to which such Holder is
otherwise entitled upon such exercise, the number of shares of stock or other
securities or property which such Holder would have been entitled to receive if
such Holder had been a holder, on the record date for such dividend, of the
number of shares of Common Stock so purchased under this Warrant (but not
including the number of shares of Common Stock acquirable upon subsequent
exercise of the Underlying Warrants).
(c) Merger or Consolidation - No Change in Control. In
case of any merger, consolidation or reorganization of the Company with or into
one or more corporations which results in holders of the Company's Common Stock
immediately prior to such event owning a majority of the voting securities of
the surviving corporation immediately following such event, and as a result of
which holders of the Company's Common Stock receive other stock, securities or
property in lieu of or in addition to, but on account of, their Common Stock,
the Holder, upon the exercise of this Warrant after the record date for
determination of shareholders entitled thereto, shall receive, in lieu of or in
addition to the Units, the proportionate shares of all stock, or other
securities (appropriately adjusted for any subsequent events of the issuer of
such stock or securities which are of the kind which would cause adjustment of
the Exercise Price hereunder) or other property issued, paid or delivered for
or on all of the Common Stock of the Company as would have been allowable to
the Units so purchased under this Warrant had this Warrant been exercised
immediately prior to said record date.
(d) Merger or Consolidation - Change in Control. In case
of any merger, consolidation or reorganization of the Company with or into one
or more other corporations, which results in the holders of the Company's
Common Stock immediately prior to such event owning less than a majority
interest of the voting securities of the surviving corporation immediately
following such event, or in the case of any sale, lease, transfer or conveyance
to another corporation of all or substantially all the assets of the Company or
proposed liquidation of the Company, then in either such event the Holder shall
be given notice of such proposed action
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<PAGE> 6
at approximately the same time and in substantially the same manner as the
holders of the Company's Common Stock. The Holder may attend the meeting of
the Company's shareholders at which such action is considered and voted upon.
If the proposed action is approved according to applicable law by the
shareholders of all corporations or other entities which are parties to the
proposed action, the Holder shall be so notified in writing by the Company by
registered or certified mail, and thereupon, notwithstanding the period of
exercisability stated on the face of this Warrant, this Warrant shall
automatically become immediately exercisable and become forever null and void
to the extent not exercised on or before 5:00 P.M., California time, on the
tenth Business Day following the delivery of such notice.
(e) Minimum Adjustment Not Required. Anything in this
Section 7.1 to the contrary notwithstanding, the Company shall not be required,
except as hereinafter provided, to make any adjustment of the Exercise Price in
any case in which the amount by which such Exercise Price would be increased or
reduced, in accordance with the foregoing provisions, would be less than $.05,
but in such a case, such adjustment shall be carried forward and when such
adjustment, together with any and all such other adjustments so carried
forward, shall amount to not less than $.10 the Exercise Price shall be
adjusted; provided, however, that adjustments of less than $.05 in the Exercise
Price shall be required and made in accordance with the provisions of this
Section 7.1 (other than this subparagraph) not later than such time as may be
required in order to preserve the tax free nature of any distribution (within
the meaning of Section 305 of the United States Internal Revenue Code of 1986,
as amended) to the Holder or the holders of Common Stock. In the event of any
subdivision, combination, reclassification or other recapitalization of shares
of Common Stock, said amount (as theretofore decreased or increased) shall be
proportionately decreased or increased.
(f) Other Adjustments. The Company, by action of its
Board of Directors, shall make such other equitable adjustments to the Exercise
Price as may be necessary to protect the Holder against dilution of this
Warrant, with or without a request of a Holder, where such an adjustment is
appropriate in light of the occurrence of an event or the existence of
circumstances similar to those otherwise contemplated by this Section 7.1.
(g) Term "Common Stock." Whenever reference is made in
Sections 7.1(a) through (e) above to Common Stock, the term "Common Stock"
shall include any stock of any class of the Company, other than preferred stock
with a fixed limit on dividends, with no rights of conversion into "Common
Stock" and with a fixed amount payable in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Company.
7.2 Number of Units Adjusted. After any adjustment of the
Exercise Price pursuant to Section 7.1, the number of Units issuable at the new
Exercise Price shall be adjusted to the number obtained by (i) multiplying the
number of Units issuable upon exercise of this Warrant immediately before such
adjustment by the Exercise Price in effect immediately before such adjustment
and (ii) dividing the product so obtained by the new Exercise Price.
7.3 Notice of Adjustment. Whenever events occur requiring the
Exercise Price to be adjusted, the Company shall promptly file with its
Secretary or an Assistant Secretary at its principal office and with its stock
transfer agent, if any, a certificate of its chief financial officer
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<PAGE> 7
showing the adjusted Exercise Price, setting forth in reasonable detail the
facts requiring such adjustment, and stating such other facts as shall be
necessary to show the manner and figures used to compute such adjustment. Such
chief financial officer's certificate shall be made available at all reasonable
times for inspection by the Holder. Promptly after each such adjustment, the
Company shall mail a copy of such certificate by certified mail to the Holder
together with information relating to the adjustment under Section 7.2. The
Company shall endorse on any Related Warrant executed and delivered by the
Company a description of each adjustment, if any, under this Section as the
result of events occurring before the execution and delivery of the Related
Warrant, and the Related Warrant so issued shall reflect the number of Units
issuable on exercise, as adjusted to reflect such changes.
If, within 45 days of the mailing of such certificate, Holders holding
in the aggregate not less than 25% of. the Warrants notify the Company in
writing of their disagreement with the adjusted Exercise Price contained in the
Company certificate, then the Company will promptly obtain a certificate of a
firm of independent certified public accountants of recognized standing
selected by the Company's Board of Directors (who shall not be the regular
auditors of the Company) certifying the same items required by the Company
certificate or making such adjustments as are appropriate. The Company will
promptly mail a copy of the firm of independent public accountants' certificate
to the Holder of this Warrant. Under the circumstances described in this
paragraph, the Holders of the Warrants giving notice shall be obligated to
reimburse the Company for half of the charges imposed by the independent
certified accountants if their certificate confirms the Company's prior
calculations.
Section 8. NOTICE TO HOLDER
So long as this Warrant is outstanding, whenever the Company shall
expect to (i) pay any dividend or distribution upon Common Stock, (ii) offer to
the holders of Common Stock any right to subscribe for or to purchase any other
securities of the Company, (iii) effect any recapitalization, merger,
consolidation, reorganization, transfer, sale, lease or conveyance as referred
to in Section 7, or (iv) be involved in any voluntary or involuntary
dissolution, liquidation or winding up of the Company, at least twenty-one days
before the proposed action or any applicable record date, the Company, by
certified mail, shall give the Holder written notice describing the proposed
action and stating the date on which (x) a record date is to be fixed for the
purposes of such dividend, distribution or right or (y) such recapitalization,
merger, consolidation, reorganization, transfer, sale, lease, conveyance,
dissolution, liquidation or winding up is to take place and when, if any date
is to be fixed, the record holders of Common Stock shall be entitled to
exchange the shares of Common Stock for securities or other property
deliverable upon such recapitalization, merger, consolidation, reorganization,
transfer, sale, lease, conveyance, dissolution, liquidation or winding up.
Section 9. REGISTRATION OF THE WARRANT OR UNITS
9.1 Registration Rights
(a) Piggy-back Registration. The Company shall advise
each Holder of Registrable Securities by written notice at least four weeks
prior to the filing of any Registration
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<PAGE> 8
Statement pertaining to securities to be offered to the public solely for cash
which is filed after twelve months but within six years after the Grant Date,
and will, upon the request of any such Holders, and without any charge to them,
include in any such Registration Statement such information as may be required
to permit a public offering of their Registrable Securities. If any such
Registration Statement or notification is being filed by the Company in
connection with an underwritten public offering of securities of the Company,
the Company shall have the right to require such Holders (provided that Rule
415 applies to the sale of the Registrable Securities) to postpone the offering
of their securities for a period of 90 days following the effective date of
such Registration Statement or notification. If any such Registration
Statement or notification is being filed by the Company solely for the benefit
of selling security holders, the Company will permit such Holders of the
Registrable Securities to include for sale with such shareholders in such
Registration Statement or notification at least a pro rata portion (based upon
the ratio of the number of shares of Common Stock which such selling security
holders desire to sell to the number of Registrable Securities which such
Holders of the Registrable Securities desire to sell) of the total Units being
registered, and the offering of the balance of the Registrable Securities owned
by holders of the Registrable Securities may then be postponed by the Company
for a period of 90 days following effectiveness of the Registration Statement
or notification.
(b) Demand Registration. If the Company shall be given
notice from persons holding more than 50% of the Registrable Securities any
time after twelve months but prior to six years from the Grant Date, to the
effect that such holders contemplate (i) the transfer of all or any part of
their Registrable Securities, or (ii) the exercise of all or any part of their
Warrants or Related Units, under such circumstances that a public offering
(within the meaning of the Securities Act) of such securities will be involved,
then the Company shall, (i) at its expense and as promptly as practicable after
receipt of such notice, if such securities may not then be sold in a public
offering under the Securities Act, file a Registration Statement or
notification pursuant to the Securities Act, and applicable Blue Sky laws, to
the end that such securities may be sold under the Securities Act and such Blue
Sky laws as promptly as practicable from the date of receipt of such notice by
the Company and (ii) immediately notify all Holders of its intention so to file
a Registration Statement and include any additional Registrable Securities in
said Registration Statement as Holders may thereafter request in writing prior
to the effective date of said Registration Statement; provided that no more
than one such demand may made upon the Company; provided that the Company shall
not be obligated to take any action to effect any such Registration pursuant to
this Section 9.1(b);
(i) During the period starting with the date
sixty (60) days prior to the Company's estimated date of filing of, and ending
on the date one hundred twenty (120) days immediately following the effective
date of, any Registration Statement pertaining to securities of the Company,
provided the Company is actively employing in good faith all reasonable efforts
to cause such Registration Statement to become effective; or
(ii) After the Company has effected one such
Registration pursuant to this Section 9.1(b).
(c) General Provisions. The following provisions shall
also be applicable to any such Registration:
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<PAGE> 9
(i) The Holders whose Registrable Securities are
to be included therein (the "Sellers") shall furnish the Company with such
appropriate information (relating to the intentions of such Holders) in
connection therewith as the Company shall reasonably request in writing.
Following the effective date of such Registration Statement or notification,
the Company shall, upon the request of any Seller, forthwith supply such number
of Prospectuses or offering circulars meeting the requirements of the
Securities Act as shall be reasonably requested by such Seller to permit such
Seller to make a public offering of all such securities of such Seller included
therein. The Company shall file such Blue Sky Applications and use its best
efforts to qualify such securities included therein for sale in such states as
the Sellers shall reasonable designate.
(ii) The Company shall bear the cost and expense
directly relating to any registration of securities pursuant to this Section
9.1, provided, however, that the Company shall not be required to pay for any
expenses of any registration proceeding begun pursuant to this Section 9.1 if
the Registration request is subsequently withdrawn at the request of the
Holders of a majority of the Registrable Securities to be registered (in which
case all Holders requesting such Registration shall bear such expenses). The
Company shall not be required to pay all selling commissions, but shall pay all
applicable listing fees.
(iii) The Company shall indemnify and hold harmless
each Seller and each Underwriter who may purchase from or sell for any Seller
any Registrable Securities from, and against any and all losses, claims,
damages and liabilities caused by any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or any
Prospectus included therein, required to be filed or furnished by reason of
this Section 9.1, or caused by any omission or alleged omission to stale
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, except insofar as
such losses, claims, damages or liabilities are caused by any such untrue
statement or omission or alleged omission was based upon information furnished
or required to be furnished in writing to the Company by and about such Seller
or Underwriter expressly for use therein, which indemnification shall include
each person, if any, who controls any such Seller or Underwriter within the
meaning of the Securities Act; provided, however, that the Company shall not be
obliged so to indemnify any such Seller or Underwriter or controlling person
unless such Seller and Underwriter shall at the same time indemnify the
Company, its directors, each officer signing a Registration Statement or
notification and each person, if any, who controls the Company within the
meaning of the Securities Act from and against any and all losses, claims,
damages and liabilities caused by any untrue statement or alleged untrue
statement of a material face contained in any Registration Statement or
notification or any Prospect us or offering circular required to be filed or
furnished by reason of this Section 9.1, or caused by any omission or alleged
omission to slate therein a material fact required to be stated therein or
necessary to make the statement therein, in light of the circumstances under
which they were made, not misleading, insofar as such losses, claims, damages
or liabilities are caused by any untrue statement or alleged untrue statement
or omission or alleged omission was based upon information furnished in writing
to the Company by and about such Seller or Underwriter expressly for use
therein.
(iv) The Company will, or will use its best
efforts to (i) prepare and file with the Commission a Registration Statement or
notification with respect to the Registrable
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<PAGE> 10
Securities to be registered or qualified and cause such Registration Statement
or notification to become and remain effective; provided, that the Company will
not be required to keep the Registration Statement or notification effective,
or to prepare and file any amendments or supplements, later than nine months
after the date on which the Registration Statement or notification becomes
effective under the Securities Act.
(v) The Company shall, in case of a registration
or notification, furnish to the Holders of the Registrable Securities for whom
such Registrable Securities are registered or are to be registered or are filed
for notification, at the time such Registration Statement becomes effective, an
opinion of counsel, dated such date, for the Company reasonably acceptable to
the Holders to the effect that a Registration Statement or notification
covering the Registrable Securities has been filed with the commission under
the Securities Act and has become effective, that a prospectus or offering
circular complying in form with the requirements of the Securities Act is
available for delivery, that to the best of such counsel's knowledge, no stop
order has been issued by the Commission suspending the effectiveness of the
Registration Statement or suspending the availability of the offering exemption
and that, to the best of the counsel's knowledge, no proceedings for the
issuance of a stop order are threatened or contemplated, and that the
Registrable Securities have been registered or qualified under the securities
or Blue Sky Laws of each state in which the Company is required, pursuant to
subsection (c)(i) of this Section 9.110 register or qualify the Registrable
Securities and in which such registration or qualification cannot be effected
without undue effort or expense.
(vi) It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Section 9.1 with
respect to the Registrable Securities of any selling Holder that such Holder
shall furnish to the Company such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of such
securities as shall be reasonably required to effect the Registration of such
Holder's Registrable Securities.
9.2 Adjustment of Expiration Date. Notwithstanding any provision
contained herein to the contrary, in the event that a timely request is made
hereunder by the Holder of this Warrant or a Related Warrant to sell such
Registrable Securities in a registered public offering or pursuant to a
notification, and the holders thereof use reasonable efforts to cause such sale
to be made in a prompt manner, the Expiration Date shall be extended to a date
90 days following the effective date of registration of the Registrable
Securities included in such registration or notification, if the Expiration
Date would otherwise occur within such 90 day period.
9.3 Exchange Listing. In connection with the issuance of any
Units upon the exercise of this Warrant, the Company shall secure the listing
of the underlying shares of Common Stock and the Underlying Warrants upon any
securities exchange upon which shares of the Company's Common Stock and
Warrants are listed.
9.4 No Obligation to Sell. Neither the giving of any notice nor
the making of any request hereunder shall impose any obligation on the selling
Holder to sell any Registrable Securities Warrant or Units.
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<PAGE> 11
9.5 Registration Rights Survive Exercise. The Company's
obligations under this Section 9 shall continue in effect, regardless of the
exercise or surrender of this Warrant. The Company's obligations under this
Section 9 shall expire, however, with respect to a Warrant, Related Warrant,
Unit or Related Unit or shares or Underlying Warrants which has been sold by a
broker or dealer or in a public offering registered under the Securities Act or
a public offering exempt from such registration.
Section 10. TRANSFER RESTRICTION
10.1 General. Anything contained herein to the contrary
notwithstanding, this Warrant may not be assigned, transferred, hypothecated or
sold during the initial twelve-month period of this Warrant, except that it (a)
may be transferred at any time by will or pursuant to the laws of descent and
distribution, or (b) may be assigned at any time in whole or in part to (i)
shareholders, directors, officers or partners (or shareholders of a corporate
partner) of the Underwriter(s) or family members who would take pursuant to a
will or the laws of descent and distribution (or trusts for their benefit) (i)
such persons, (ii) successors to the Underwriter(s) of the public offering in a
merger or consolidation or (iii) a purchaser of substantially all of the assets
of any Underwriter of the public offering. All of the foregoing shall be
deemed to be "Permitted Transfers". After the initial twelve-month period this
Warrant may be assigned, transferred, hypothecated or sold, provided, however,
that upon such transfer to a party other than a party included within the
definition of Permitted Transfers, above, (hereafter a Non-Related-Party
Transfer) the transferee must immediately (or as immediately as is
practicable), exercise their Warrant pursuant to Section 2 hereof. Any such
assignment or transfer shall be made by surrender of this Warrant to the
Company or at the office of its transfer agent, if any, with the Form of
Assignment annexed hereto duly executed and funds sufficient to pay any
transfer tax, whereupon the company shall, without charge, execute and deliver
a new Warrant in the name of the assignee and this Warrant shall promptly be
cancelled.
10.2 Securities Law Compliance. Except as provided in Section 10.1
above and except pursuant to the requirements of Rule 144 of the Securities
Act, this Warrant and the Units may not be sold, transferred, assigned or
otherwise disposed of except as follows:
(a) to a person who, in the opinion of counsel reasonably
satisfactory to the Company, is a person to whom this Warrant or the Units may
legally be transferred without registration and without the delivery of a
current prospectus or offering circular with respect thereto; or
(b) to any person upon delivery of a prospectus or
offering circular then meeting the requirements of the Securities Act relating
to such securities (as to which a Registration Statement or notification under
the Securities Act shall then be in effect) and the offering thereof for such
sale or disposition.
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<PAGE> 12
Section 11. MISCELLANEOUS
11.1 Successors and Assigns. All the covenants and provisions of
this Warrant which are by or for the benefit of the Company or the Holders
shall bind and inure to the benefit of their respective successors and assigns
hereunder.
11.2 Notice. Notice or demand pursuant to this Warrant to be
given) or made by the Holder to or on the Company shall be sufficiently given
or made if sent by registered mail, postage prepaid, receipt requested,
addressed, until another address is designated in writing by the Company, as
follows:
Alpha Microsystems
2722 South Fairview Street
Santa Ana, CA 92704
Any notice or demand authorized by this Warrant to be given or made by
the Company to or on the Holder shall be given to the Holder by registered
mail, postage prepaid, receipt requested, addressed at his last known address
as it shall appear on the books of the Company, until another address is
designated in writing, with a copy to Barclay Investments, Inc., 66 South Main
Street, Providence, Rhode Island, 02903, by like mail.
11.3 Applicable Law. The validity, interpretation and performance
of this Warrant shall be governed by the laws of the State of Rhode Island.
11.4 Headings. The Article headings herein are for convenience
only and are not part of this Warrant and shall not affect the interpretation
thereof.
Dated: April 30, 1996 ALPHA MICROSYSTEMS
By: /s/ DOUGLAS J. TULLIO
----------------------------------
Douglas J. Tullio, President
Attest: /s/ JOHN GLADE
------------------------
John Glade, Secretary
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<PAGE> 13
EXERCISE FORM
(To be Executed by the Warrant Holder if He, or She
Desires to Exercise the Warrant in Whole or in Part)
To: Alpha Microsystems
The undersigned
(______________________________________________________________________________)
Please insert name and Social Security or number E.I.N. of Holder
hereby irrevocably elects to exercise the rights of purchase represented by the
within Warrant for, and to purchase thereunder, ___________ Units provided for
therein and tenders payment herewith to the order of Alpha Microsystems in the
amount of $________.
The undersigned requests that certificates for such Units be issued as follows:
Name:___________________________________________________________________________
Address:________________________________________________________________________
Deliver to:_____________________________________________________________________
Address:________________________________________________________________________
and, if said number of Units shall not be all the Units purchasable hereunder,
that a new Warrant for the balance remaining of the Units purchasable under the
within Warrant be registered in the name of, and delivered to, the undersigned
at the address stated below.
Address:________________________________________________________________________
Dated:________________,19_____
Signature:________________________________
Note: Signature must correspond with the
name as written upon the face of this
Warrant in every particular, without
alteration or enlargement or any change
whatsoever.
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<PAGE> 14
FORM OF ASSIGNMENT
(To be Signed Only Upon Assignment)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
_______________ the right to purchase _______ Units evidenced by the within
Warrant, and appoints ____________________ to transfer the same on the books of
Alpha Microsystems with the full power of substitution in the premises.
Dated:________________,19_____
Signature:_______________________________
Note: Signature must correspond with the
name as written upon the face of this
Warrant in every particular, without
alteration or enlargement or any change
whatsoever, and the signature must be
guaranteed in the usual manner.
Signature Guaranteed:
______________________________
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<PAGE> 15
SCHEDULE OF WARRANT HOLDERS
Name ________________________________ Amount
Note: The Schedule is for use as a convenience at the closing of the
offering to which this Warrant relates so that only one Warrant need
be executed at the closing, it being understood that following the
closing, individual Warrants registered in the above names and amounts
will be issued promptly upon surrender of this Warrant.
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<PAGE> 1
EXHIBIT 4.10
THE TRANSFER OF THIS WARRANT IS RESTRICTED
AS PROVIDED IN SECTION 10.
- -------------------------------------------------------------------------------
No. W-6 WARRANT TO PURCHASE
GRANT DATE: December 7, 1993 4,000 UNITS
ALPHA MICROSYSTEMS
UNDERWRITER'S WARRANT
In consideration of other value received, Alpha Microsystems,
a California corporation (the "Company"), grants to Robert G. Palmeiro or
permitted transferees or assigns (the "Holder") the right, subject to the terms
of this Warrant, to purchase at any time and from time to time during the
period commencing November 1, 1994, and ending on November 1, 1998, unless
extended or terminated as provided herein (the "Expiration Date"), up to 4,000
Units of the Company (each Unit to consist of one share of Common Stock and one
warrant to purchase one share of Common Stock) at $1.95 per Unit (the "Basic
Exercise Price") as more fully described in the Company's Prospectus dated
November 1, 1993 for the public offering of equivalent units ("Company's
Prospectus"). The Basic Exercise Price and the number of Units that may be
purchased are subject to adjustment under the terms of this Warrant.
Section 1. DEFINITIONS.
As used in this Warrant, unless the context otherwise
requires:
1.1 "Basic Exercise Price" means the price at which each
Unit may be purchased upon exercise of this Warrant as stated in the first
sentence of this Warrant.
1.2 "Blue Sky Application" means an application or other
document filed pursuant to a Blue Sky law to register, qualify or obtain an
exemption for any offer or sale by or for the account of the Holder of all or
part of this Warrant or any of the Units.
1.3 "Blue Sky law" means the laws and regulations of any
state or other jurisdiction applicable to any sale by or for the account of the
Holder of all or part of this Warrant or any of the Units.
1.4 "Common Stock" means the Common Stock (no par value)
of the Company existing on the Grant Date and for purposes of Sections 7.1(a)
through (e) also has the meaning set forth in Section 7.1(g).
1.5 "Exercise Date" means any date when this Warrant is
exercised, in whole or in part, in the manner indicated in Sections 2.1 and
2.2.
<PAGE> 2
1.6 "Exercise Price" means the Basic Exercise Price;
provided, however, that if an adjustment is required under Section 7 of this
Warrant, then the "Exercise Price" means, after each such adjustment, the price
at which each Unit may be purchased upon exercise of this Warrant immediately
after the last such adjustment.
1.7 "Expiration Date" means the Expiration Date indicated
on the first page of this Warrant as such date may be extended as provided in
Section 9.2(a) or the date indicated in Section 9.2(h) if the Warrant shall
have been sold in a public offering as provided therein.
1.8 "Grant Date" means the date this Warrant was first
granted as stated at the beginning of this Warrant.
1.9 "Prospectus" means a preliminary prospectus or final
prospectus (including any supplement) or any offering circular or similar
offering document, included in a Registration Statement.
1.10 "Registrable Securities" means the Warrants, the
Related Warrants, the Units, the Related Units, or shares of Common Stock or
Underlying Warrants issued pursuant to exercise of the Warrant.
1.11 "Registration Statement means a Registration or
Offering Statement, a pre-effective or post-effective amendment to a
Registration Statement or other document proposed for filing or filed by the
Company under the Securities Act which is or would be available under
applicable laws, rules and regulations to register for a public offering or
sale this Warrant, any Related Warrant, any Units or any Related Units. The
term "Registration Statement" shall not apply to any registration statement
relating to the sale of securities to participants in a Company stock or option
plan or a registration on any form which doesn't include substantially the same
information as would be required to be included in a registration statement
covering the sale of Registrable Securities (as defined in Section 1.10 below).
1.12 "Related Warrant" means any other Warrant executed
and delivered by the Company on terms identical with the terms of this Warrant
(except as to the identity of the Holder, number of Units or execution date)
granted in connection with the transaction pursuant to which this Warrant was
granted.
1.13 "Related Units" means any Units or other securities
issued or issuable upon exercise of any Related Warrant.
1.14 "Securities Act" means the Securities Act of 1933,
as amended from time to time, and all rules and regulations promulgated
thereunder, or any act, rules or regulations which replace the Securities Act
or any such rules and regulations.
1.15 "Underwriter" means any party who is an "underwriter"
within the meaning of the Securities act with respect to any sale by or for the
account of the Holder of any of the Warrants or Unit.
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<PAGE> 3
1.16 "Unit" means any Units, consisting of one share of
Common Stock of the Company and one warrant to purchase one share of Common
Stock, or other securities issued or subject to issuance upon exercise of this
Warrant or upon exchange of a Unit or Units of different denominations.
1.17 "Underlying Warrant" means the common stock purchase
warrant to purchase shares of Common Stock of the Company which, together with
the Unit Share, comprises the Unit. The Underlying Warrant is identical in all
respects to the redeemable common stock purchase warrants issued pursuant to
the Warrant Agreement, as more fully described in the Company's Prospectus,
except that (i) the initial exercise date thereof shall be the date of exercise
of the Underwriters' Warrant, (ii) the initial exercise price thereof shall be
$2.50 and shall be thereafter determined as set forth herein, (iii) the Company
may not redeem the Underlying Warrants, (iv) no terms of the Underlying
Warrants may be modified without the consent of the Holders of a majority of
the Warrants, (v) the Underlying Warrants shall be exercisable until the
Expiration Date; and (vi) the Common Stock subject to the Underlying Warrants
shall initially be as set forth in the Warrant Agreement and thereafter
determined as set forth herein without regard to the terms of the Warrant
Agreement.
1.18 "Warrant" means -this Underwriter's Warrant and each
previously executed and cancelled Underwriter's Warrant, if any, for which this
Warrant has been exchanged.
1.19 "Warrant Agreement" means the Warrant Agreement
associated with offering contemplated by the Registration Statement between
Mellon Securities Trust and the Company.
Section 2. DURATION AND EXERCISE OF WARRANT
2.1 Exercise Period. Subject to the provisions of
Sections 5 and 10 hereof, the Warrants may be exercised at any time after one
year from the Grant Date and on or before the Expiration Date. After the
Expiration Date this Warrant shall become void, and all rights to purchase
Units hereunder shall thereupon cease.
2.2 Method of Exercise. This Warrant may be exercised by
the Holder, in whole or in part, by (i) surrendering this Warrant to the
Company, (ii) tendering to the Company payment of the Exercise Price for the
Units for which exercise is made and (iii) executing and delivering to the
Company the attached Exercise Form. Upon proper exercise, the Holder shall be
deemed to be the holder of record of the Units for which exercise is made, even
though the transfer or register books of the Company may then be closed or
certificates representing such Units may not then be actually delivered to the
Holder.
2.3 Certificates. Within a reasonable time but no more
than 20 days after exercise, certificates for the shares of Common Stock and
the Underlying Warrants comprising such Units shall be delivered to the Holder
and, unless this Warrant has expired, a Related Warrant representing the number
of Units, if any, with respect to which this Warrant shall not have been
exercised shall be issued to the Holder.
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<PAGE> 4
2.4 Taxes. The Company covenants and agrees that it will
pay when due and payable any and all taxes which may be payable in connection
with the issuance of this Warrant, or the issuance of any Units upon the
exercise of this Warrant. The Company shall not, however, be required to pay
any tax which may be payable in respect of any subsequent transfer of this
Warrant or of the Units.
Section 3. VALIDITY AND RESERVATION OF UNITS
The Company covenants that this Warrant and all Units, shares
of Common Stock or Underlying Warrants issued upon exercise of this Warrant
will be validly issued, fully paid, nonassessable and free of preemptive
rights. The Company agrees that so long as this Warrant may be exercised, the
Company will have authorized and reserved for issuance upon exercise of this
Warrant a sufficient number of Units to provide for exercise in full.
Section 4. FRACTIONAL UNITS
No fractional Unit shall be issued upon the exercise of this
Warrant. With respect to any fraction of a Unit otherwise issuable upon any
such exercise, the Company shall pay to the Holder an amount in cash equal to
such fraction multiplied by the Exercise Price.
Section 5. LIMITED RIGHTS OF THE WARRANT HOLDER
The Holder shall not, solely by virtue of being the Holder of
this Warrant, have any of the rights of a holder of Common Stock of the
Company, either at law or equity, until such Warrant shall have been exercised
and the Holder shall be deemed to be the holder of record of Units as provided
in this Warrant.
Section 6. EXCHANGE, TRANSFER OR LOSS OF WARRANT
6.1 Exchange. This Warrant is exchangeable, without
expense to the Holder and upon surrender hereof to the Company, for Warrants of
different denominations entitling the Holder to purchase Units equal in total
number and identical in type to the Units covered by this Warrant.
6.2 Transfer. Subject to the provisions of Section 10,
upon surrender of this Warrant to the Company with the attached Assignment Form
duly executed and the tender of funds sufficient to pay any transfer tax, the
Company shall, without charge, execute and deliver a new Warrant to the
assignee named in such Assignment Form, and this Warrant shall be cancelled
concurrent with such issuance.
6.3 Loss, Theft, Destruction or Mutilation. Upon receipt
by the Company of satisfactory evidence of the loss, theft, destruction or
mutilation of this Warrant and either (in the case of loss, theft or
destruction) reasonable indemnification or (in the case of mutilation) the
surrender of this Warrant for cancellation, the Company will execute and
deliver to the Holder, without charge, a new Warrant of like denomination. Any
such new Warrant executed and delivered shall constitute an additional
obligation of the Company, whether or not this Warrant, reportedly lost, stolen,
destroyed or mutilated, shall be at any time enforceable by anyone.
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<PAGE> 5
Section 7. ANTI-DILUTION ADJUSTMENT OP NUMBER OP UNITS AND
EXERCISE PRICE
7.1 Adjustment of Exercise Price. If any of the
following events shall occur at any time or from time to time prior to the
exercise in full or expiration of this Warrant, the following adjustments shall
be made in the Exercise Price, with the exception hereinafter provided:
(a) Recapitalization. In case the Company effects a
subdivision, combination, reclassification or other Recapitalization of its
outstanding shares of Common Stock into a greater or lesser number of shares of
Common Stock, the Exercise Price in effect immediately after such subdivision,
combination, reclassification or other recapitalization shall be
proportionately decreased or increased, as the case may be.
(b) Dividend Other Than in Cash. If the Company shall
declare a dividend on its Common Stock payable in stock or other securities of
the Company or of any other corporation, or in property or otherwise than in
cash, or the functional equivalent thereof, to the holders of its Common Stock,
the Holder shall, without additional cost, be entitled to receive upon the
exercise of this Warrant, in addition to the Units to which such Holder is
otherwise entitled upon such exercise, the number of shares of stock or other
securities or property which such Holder would have been entitled to receive if
such Holder had been a holder, on the record date for such dividend, of the
number of shares of Common Stock so purchased under this Warrant (but not
including the number of shares of Common Stock acquirable upon subsequent
exercise of the Underlying Warrants).
(c) Merger or Consolidation - No Change in Control. In
case of any merger, consolidation or reorganization of the Company with or into
one or more corporations which results in holders of the Company's Common Stock
immediately prior to such event owning a majority of the voting securities of
the surviving corporation immediately following such event, and as a result of
which holders of the Company's Common Stock receive other stock, securities or
property in lieu of or in addition to, but on account of, their Common Stock,
the Holder, upon the exercise of this Warrant after the record date for
determination of shareholders entitled thereto, shall receive, in lieu of or in
addition to the Units, the proportionate shares of all stock, or other
securities (appropriately adjusted for any subsequent events of the issuer of
such stock or securities which are of the kind which would cause adjustment of
the Exercise Price hereunder) or other property issued, paid or delivered for
or on all of the Common Stock of the Company as would have been allowable to
the Units so purchased under this Warrant had this Warrant been exercised
immediately prior to said record date.
(d) Merger or Consolidation - Change in Control. In case
of any merger, consolidation or reorganization of the Company with or into one
or more other corporations, which results in the holders of the Company's
Common Stock immediately prior to such event owning less than a majority
interest of the voting securities of the surviving corporation immediately
following such event, or in the case of any sale, lease, transfer or conveyance
to another corporation of all or substantially all the assets of the Company or
proposed liquidation of the Company, then in either such event the Holder shall
be given notice of such proposed action
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<PAGE> 6
at approximately the same time and in substantially the same manner as the
holders of the Company's Common Stock. The Holder may attend the meeting of
the Company's shareholders at which such action is considered and voted upon.
If the proposed action is approved according to applicable law by the
shareholders of all corporations or other entities which are parties to the
proposed action, the Holder shall be so notified in writing by the Company by
registered or certified mail, and thereupon, notwithstanding the period of
exercisability stated on the face of this Warrant, this Warrant shall
automatically become immediately exercisable and become forever null and void
to the extent not exercised on or before 5:00 P.M., California time, on the
tenth Business Day following the delivery of such notice.
(e) Minimum Adjustment Not Required. Anything in this
Section 7.1 to the contrary notwithstanding, the Company shall not be required,
except as hereinafter provided, to make any adjustment ofthe Exercise Price in
any case in which the amount by which such Exercise Price would be increased or
reduced, in accordance with the foregoing provisions, would be less than $.05,
but in such a case, such adjustment shall be carried forward and when such
adjustment, together with any and all such other adjustments so carried
forward, shall amount to not less than $.10 the Exercise Price shall be
adjusted; provided, however, that adjustments of less than $.05 in the Exercise
Price shall be required and made in accordance with the provisions of this
Section 7.1 (other than this subparagraph) not later than such time as may be
required in order to preserve the tax free nature of any distribution (within
the meaning of Section 305 of the United States Internal Revenue Code of 1986,
as amended) to the Holder or the holders of Common Stock. In the event of any
subdivision, combination, reclassification or other recapitalization of shares
of Common Stock, said amount (as theretofore decreased or increased) shall be
proportionately decreased or increased.
(f) Other Adjustments. The Company, by action of its
Board of Directors, shall make such other equitable adjustments to the Exercise
Price as may be necessary to protect the Holder against dilution of this
Warrant, with or without a request of a Holder, where such an adjustment is
appropriate in light of the occurrence of an event or the existence of
circumstances similar to those otherwise contemplated by this Section 7.1.
(g) Term "Common Stock." Whenever reference is made in
Sections 7.1(a) through (e) above to Common Stock, the term "Common Stock"
shall include any stock of any class of the Company, other than preferred stock
with a fixed limit on dividends, with no rights of conversion into "Common
Stock" and with a fixed amount payable in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Company.
7.2 Number of Units Adjusted. After any adjustment of the
Exercise Price pursuant to Section 7.1, the number of Units issuable at the new
Exercise Price shall be adjusted to the number obtained by (i) multiplying the
number of Units issuable upon exercise of this Warrant immediately before such
adjustment by the Exercise Price in effect immediately before such adjustment
and (ii) dividing the product so obtained by the new Exercise Price.
7.3 Notice of Adjustment. Whenever events occur requiring the
Exercise Price to be adjusted, the Company shall promptly file with its
Secretary or an Assistant Secretary at its principal office and with its stock
transfer agent, if any, a certificate of its chief financial officer
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<PAGE> 7
showing the adjusted Exercise Price, setting forth in reasonable detail the
facts requiring such adjustment, and stating such other facts as shall be
necessary to show the manner and figures used to compute such adjustment. Such
chief financial officer's certificate shall be made available at all reasonable
times for inspection by the Holder. Promptly after each such adjustment, the
Company shall mail a copy of such certificate by certified mail to the Holder
together with information relating to the adjustment under Section 7.2. The
Company shall endorse on any Related Warrant executed and delivered by the
Company a description of each adjustment, if any, under this Section as the
result of events occurring before the execution and delivery of the Related
Warrant, and the Related Warrant so issued shall reflect the number of Units
issuable on exercise, as adjusted to reflect such changes.
If, within 45 days of the mailing of such certificate, Holders holding
in the aggregate not less than 25% of. the Warrants notify the Company in
writing of their disagreement with the adjusted Exercise Price contained in the
Company certificate, then the Company will promptly obtain a certificate of a
firm of independent certified public accountants of recognized standing
selected by the Company's Board of Directors (who shall not be the regular
auditors of the Company) certifying the same items required by the Company
certificate or making such adjustments as are appropriate. The Company will
promptly mail a copy of the firm of independent public accountants' certificate
to the Holder of this Warrant. Under the circumstances described in this
paragraph, the Holders of the Warrants giving notice shall be obligated to
reimburse the Company for half of the charges imposed by the independent
certified accountants if their certificate confirms the Company's prior
calculations.
Section 8. NOTICE TO HOLDER
So long as this Warrant is outstanding, whenever the Company shall
expect to (i) pay any dividend or distribution upon Common Stock, (ii) offer to
the holders of Common Stock any right to subscribe for or to purchase any other
securities of the Company, (iii) effect any recapitalization, merger,
consolidation, reorganization, transfer, sale, lease or conveyance as referred
to in Section 7, or (iv) be involved in any voluntary or involuntary
dissolution, liquidation or winding up of the Company, at least twenty-one days
before the proposed action or any applicable record date, the Company, by
certified mail, shall give the Holder written notice describing the proposed
action and stating the date on which (x) a record date is to be fixed for the
purposes of such dividend, distribution or right or (y) such recapitalization,
merger, consolidation, reorganization, transfer, sale, lease, conveyance,
dissolution, liquidation or winding up is to take place and when, if any date
is to be fixed, the record holders of Common Stock shall be entitled to
exchange the shares of Common Stock for securities or other property
deliverable upon such recapitalization, merger, consolidation, reorganization,
transfer, sale, lease, conveyance, dissolution, liquidation or winding up.
Section 9. REGISTRATION OF THE WARRANT OR UNITS
9.1 Registration Rights
(a) Piggy-back Registration. The Company shall advise
each Holder of Registrable Securities by written notice at least four weeks
prior to the filing of any Registration
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<PAGE> 8
Statement pertaining to securities to be offered to the public solely for cash
which is filed after twelve months but within six years after the Grant Date,
and will, upon the request of any such Holders, and without any charge to them,
include in any such Registration Statement such information as may be required
to permit a public offering of their Registrable Securities. If any such
Registration Statement or notification is being filed by the Company in
connection with an underwritten public offering of securities of the Company,
the Company shall have the right to require such Holders (provided that Rule
415 applies to the sale of the Registrable Securities) to postpone the offering
of their securities for a period of 90 days following the effective date of
such Registration Statement or notification. If any such Registration
Statement or notification is being filed by the Company solely for the benefit
of selling security holders, the Company will permit such Holders of the
Registrable Securities to include for sale with such shareholders in such
Registration Statement or notification at least a pro rata portion (based upon
the ratio of the number of shares of Common Stock which such selling security
holders desire to sell to the number of Registrable Securities which such
Holders of the Registrable Securities desire to sell) of the total Units being
registered, and the offering of the balance of the Registrable Securities owned
by holders of the Registrable Securities may then be postponed by the Company
for a period of 90 days following effectiveness of the Registration Statement
or notification.
(b) Demand Registration. If the Company shall be given
notice from persons holding more than 50% of the Registrable Securities any
time after twelve months but prior to six years from the Grant Date, to the
effect that such holders contemplate (i) the transfer of all or any part of
their Registrable Securities, or (ii) the exercise of all or any part of their
Warrants or Related Units, under such circumstances that a public offering
(within the meaning of the Securities Act) of such securities will be involved,
then the Company shall, (i) at its expense and as promptly as practicable after
receipt of such notice, if such securities may not then be sold in a public
offering under the Securities Act, file a Registration Statement or
notification pursuant to the Securities Act, and applicable Blue Sky laws, to
the end that such securities may be sold under the Securities Act and such Blue
Sky laws as promptly as practicable from the date of receipt of such notice by
the Company and (ii) immediately notify all Holders of its intention so to file
a Registration Statement and include any additional Registrable Securities in
said Registration Statement as Holders may thereafter request in writing prior
to the effective date of said Registration Statement; provided that no more
than one such demand may made upon the Company; provided that the Company shall
not be obligated to take any action to effect any such Registration pursuant to
this Section 9.1(b);
(i) During the period starting with the date
sixty (60) days prior to the Company's estimated date of filing of, and ending
on the date one hundred twenty (120) days immediately following the effective
date of, any Registration Statement pertaining to securities of the Company,
provided the Company is actively employing in good faith all reasonable efforts
to cause such Registration Statement to become effective; or
(ii) After the Company has effected one such
Registration pursuant to this Section 9.1(b).
(c) General Provisions. The following provisions shall
also be applicable to any such Registration:
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<PAGE> 9
(i) The Holders whose Registrable Securities are
to be included therein (the "Sellers") shall furnish the Company with such
appropriate information (relating to the intentions of such Holders) in
connection therewith as the Company shall reasonably request in writing.
Following the effective date of such Registration Statement or notification,
the Company shall, upon the request of any Seller, forthwith supply such number
of Prospectuses or offering circulars meeting the requirements of the
Securities Act as shall be reasonably requested by such Seller to permit such
Seller to make a public offering of all such securities of such Seller included
therein. The Company shall file such Blue Sky Applications and use its best
efforts to qualify such securities included therein for sale in such states as
the Sellers shall reasonable designate.
(ii) The Company shall bear the cost and expense
directly relating to any registration of securities pursuant to this Section
9.1, provided, however, that the Company shall not be required to pay for any
expenses of any registration proceeding begun pursuant to this Section 9.1 if
the Registration request is subsequently withdrawn at the request of the
Holders of a majority of the Registrable Securities to be registered (in which
case all Holders requesting such Registration shall bear such expenses). The
Company shall not be required to pay all selling commissions, but shall pay all
applicable listing fees.
(iii) The Company shall indemnify and hold harmless
each Seller and each Underwriter who may purchase from or sell for any Seller
any Registrable Securities Iron, and against any and all losses, claims,
damages and liabilities caused by any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or any
Prospectus included therein, required to be filed or furnished by reason of
this Section 9.1, or caused by any omission or alleged omission to stale
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, except insofar as
such losses, claims, damages or liabilities are caused by any such untrue
statement or omission or alleged omission was based upon information furnished
or required to be furnished in writing to the Company by and about such Seller
or Underwriter expressly for use therein, which indemnification shall include
each person, if any, who controls any such Seller or Underwriter within the
meaning of the Securities Act; provided, however, that the Company shall not be
obliged so to indemnify any such Seller or Underwriter or controlling person
unless such Seller and Underwriter shall at the same time indemnify the
Company, its directors, each officer signing a Registration Statement or
notification and each person, if any, who controls the Company within the
meaning of the Securities Act from and against any and all losses, claims,
damages and liabilities caused by any untrue statement or alleged untrue
statement of a material face contained in any Registration Statement or
notification or any Prospect us or offering circular required to be filed or
furnished by reason of this Section 9.1, or caused by any omission or alleged
omission to slate therein a material fact required to be stated therein or
necessary to make the statement therein, in light of the circumstances under
which they were made, not misleading, insofar as such losses, claims, damages
or liabilities are caused by any untrue statement or alleged untrue statement
or omission or alleged omission was based upon information furnished in writing
to the Company by and about such Seller or Underwriter expressly for use
therein.
(iv) The Company will, or will use its best
efforts to (i) prepare and file with the Commission a Registration Statement or
notification with respect to the Registrable
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<PAGE> 10
Securities to be registered or qualified and cause such Registration Statement
or notification to become and remain effective; provided, that the Company will
not be required to keep the Registration Statement or notification effective,
or to prepare and file any amendments or supplements, later than nine months
after the date on which the Registration Statement or notification becomes
effective under the Securities Act.
(v) The Company shall, in case of a registration
or notification, furnish to the Holders of the Registrable Securities for whom
such Registrable Securities are registered or are to be registered or are filed
for notification, at the time such Registration Statement becomes effective, an
opinion of counsel, dated such date, for the Company reasonably acceptable to
the Holders to the effect that a Registration Statement or notification
covering the Registrable Securities has been filed with the commission under
the Securities Act and has become effective, that a prospectus or offering
circular complying in form with the requirements of the Securities Act is
available for delivery, that to the best of such counsel's knowledge, no stop
order has been issued by the Commission suspending the effectiveness of the
Registration Statement or suspending the availability of the offering exemption
and that, to the best of the counsel's knowledge, no proceedings for the
issuance of a stop order are threatened or contemplated, and that the
Registrable Securities have been registered or qualified under the securities
or Blue Sky Laws of each state in which the Company is required, pursuant to
subsection (c)(i) of this Section 9.110 register or qualify the Registrable
Securities and in which such registration or qualification cannot be effected
without undue effort or expense.
(vi) It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Section 9.1 with
respect to the Registrable Securities of any selling Holder that such Holder
shall furnish to the Company such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of such
securities as shall be reasonably required to effect the Registration of such
Holder's Registrable Securities.
9.2 Adjustment of Expiration Date. Notwithstanding any provision
contained herein to the contrary, in the event that a timely request is made
hereunder by the Holder of this Warrant or a Related Warrant to sell such
Registrable Securities in a registered public offering or pursuant to a
notification, and the holders thereof use reasonable efforts to cause such sale
to be made in a prompt manner, the Expiration Date shall be extended to a date
90 days following the effective date of registration of the Registrable
Securities included in such registration or notification, if the Expiration
Date would otherwise occur within such 90 day period.
9.3 Exchange Listing. In connection with the issuance of any
Units upon the exercise of this Warrant, the Company shall secure the listing
of the underlying shares of Common Stock and the Underlying Warrants upon any
securities exchange upon which shares of the Company's Common Stock and
Warrants are listed.
9.4 No Obligation to Sell. Neither the giving of any notice nor
the making of any request hereunder shall impose any obligation on the selling
Holder to sell any Registrable Securities Warrant or Units.
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<PAGE> 11
9.5 Registration Rights Survive Exercise. The Company's
obligations under this Section 9 shall continue in effect, regardless of the
exercise or surrender of this Warrant. The Company's obligations under this
Section 9 shall expire, however, with respect to a Warrant, Related Warrant,
Unit or Related Unit or shares or Underlying Warrants which has been sold by a
broker or dealer or in a public offering registered under the Securities Act or
a public offering exempt from such registration.
Section 10. TRANSFER RESTRICTION
10.1 General. Anything contained herein to the contrary
notwithstanding, this Warrant may not be assigned, transferred, hypothecated or
sold during the initial twelve-month period of this Warrant, except that it (a)
may be transferred at any time by will or pursuant to the laws of descent and
distribution, or (b) may be assigned at any time in whole or in part to (i)
shareholders, directors, officers or partners (or shareholders of a corporate
partner) of the Underwriter(s) or family members who would take pursuant to a
will or the laws of descent and distribution (or trusts for their benefit) (i)
such persons, (ii) successors to the Underwriter(s) of the public offering in a
merger or consolidation or (iii) a purchaser of substantially all of the assets
of any Underwriter of the public offering. All of the foregoing shall be
deemed to be "Permitted Transfers". After the initial twelve-month period this
Warrant may be assigned, transferred, hypothecated or sold, provided, however,
that upon such transfer to a party other than a party included within the
definition of Permitted Transfers, above, (hereafter a Non-Related-Party
Transfer) the transferee must immediately (or as immediately as is
practicable), exercise their Warrant pursuant to Section 2 hereof. Any such
assignment or transfer shall be made by surrender of this Warrant to the
Company or at the office of its transfer agent, if any, with the Form of
Assignment annexed hereto duly executed and funds sufficient to pay any
transfer tax, whereupon the company shall, without charge, execute and deliver
a new Warrant in the name of the assignee and this Warrant shall promptly be
cancelled.
10.2 Securities Law Compliance. Except as provided in Section 10.1
above and except pursuant to the requirements of Rule 144 of the Securities
Act, this Warrant and the Units may not be sold, transferred, assigned or
otherwise disposed of except as follows:
(a) to a person who, in the opinion of counsel reasonably
satisfactory to the Company, is a person to whom this Warrant or the Units may
legally be transferred without registration and without the delivery of a
current prospectus or offering circular with respect thereto; or
(b) to any person upon delivery of a prospectus or
offering circular then meeting the requirements of the Securities Act relating
to such securities (as to which a Registration Statement or notification under
the Securities Act shall then be in effect) and the offering thereof for such
sale or disposition.
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<PAGE> 12
Section 11. MISCELLANEOUS
11.1 Successors and Assigns. All the covenants and provisions of
this Warrant which are by or for the benefit of the Company or the Holders
shall bind and inure to the benefit of their respective successors and assigns
hereunder.
11.2 Notice. Notice or demand pursuant to this Warrant to be
given) or made by the Holder to or on the Company shall be sufficiently given
or made if sent by registered mail, postage prepaid, receipt requested,
addressed, until another address is designated in writing by the Company, as
follows:
Alpha Microsystems
2722 South Fairview Street
Santa Ana, CA 92704
Any notice or demand authorized by this Warrant to be given or made by
the Company to or on the Holder shall be given to the Holder by registered
mail, postage prepaid, receipt requested, addressed at his last known address
as it shall appear on the books of the Company, until another address is
designated in writing, with a copy to Robert G. Palmeiro, 125 Hamilton Drive,
East Greenwich, Rhode Island, 02818, by like mail.
11.3 Applicable Law. The validity, interpretation and performance
of this Warrant shall be governed by the laws of the State of Rhode Island.
11.4 Headings. The Article headings herein are for convenience
only and are not part of this Warrant and shall not affect the interpretation
thereof.
Dated: April 30, 1996 ALPHA MICROSYSTEMS
By: s/Douglas J. Tullio
----------------------------------
Douglas J. Tullio, President
Attest: s/John Glade
--------------------------
John Glade, Secretary
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<PAGE> 13
EXERCISE FORM
(To be Executed by the Warrant Holder if He, or She
Desires to Exercise the Warrant in Whole or in Part)
To: Alpha Microsystems
The undersigned (_____________________________________________________________)
Please insert name and Social Security or number E.I.N. of Holder
hereby irrevocably elects to exercise the rights of purchase represented by the
within Warrant for, and to purchase thereunder, ___________ Units provided for
therein and tenders payment herewith to the order of Alpha Microsystems in the
amount of $________.
The undersigned requests that certificates for such Units be issued as follows:
Name:__________________________________________________________________________
Address:_______________________________________________________________________
Deliver to:____________________________________________________________________
Address:_______________________________________________________________________
and, if said number of Units shall not be all the Units purchasable hereunder,
that a new Warrant for the balance remaining of the Units purchasable under the
within Warrant be registered in the name of, and delivered to, the undersigned
at the address stated below.
Address:_______________________________________________________________________
Dated:________________,19_____
Signature:________________________________
Note: Signature must correspond with the
name as written upon the face of this
Warrant in every particular, without
alteration or enlargement or any change
whatsoever.
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<PAGE> 14
FORM OF ASSIGNMENT
(To be Signed Only Upon Assignment)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
_______________ the right to purchase _______ Units evidenced by the within
Warrant, and appoints ____________________ to transfer the same on the books of
Alpha Microsystems with the full power of substitution in the premises.
Dated:________________,19_____
Signature:_________________________________
Note: Signature must correspond with the
name as written upon the face of this
Warrant in every particular, without
alteration or enlargement or any change
whatsoever.
Signature Guaranteed:
____________________________________
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<PAGE> 15
SCHEDULE OF WARRANT HOLDERS
Name ________________________________ Amount
Note: The Schedule is for use as a convenience at the closing of the
offering to which this Warrant relates so that only one Warrant need
be executed at the closing, it being understood that following the
closing, individual Warrants registered in the above names and amounts
will be issued promptly upon surrender of this Warrant.
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<PAGE> 1
EXHIBIT 4.11
THE TRANSFER OF THIS WARRANT IS RESTRICTED
AS PROVIDED IN SECTION 10.
________________________________________________________________________________
No. W-5 WARRANT TO PURCHASE
GRANT DATE: December 7, 1993 14,379 UNITS
ALPHA MICROSYSTEMS
UNDERWRITER'S WARRANT
In consideration of other value received, Alpha Microsystems,
a California corporation (the "Company"), grants to G.L. Cabot Henderson or
permitted transferees or assigns (the "Holder") the right, subject to the terms
of this Warrant, to purchase at any time and from time to time during the
period commencing November 1, 1994, and ending on November 1, 1998, unless
extended or terminated as provided herein (the "Expiration Date"), up to 14,379
Units of the Company (each Unit to consist of one share of Common Stock and one
warrant to purchase one share of Common Stock) at $1.95 per Unit (the "Basic
Exercise Price") as more fully described in the Company's Prospectus dated
November 1, 1993 for the public offering of equivalent units ("Company's
Prospectus"). The Basic Exercise Price and the number of Units that may be
purchased are subject to adjustment under the terms of this Warrant.
Section 1. DEFINITIONS.
As used in this Warrant, unless the context otherwise
requires:
1.1 "Basic Exercise Price" means the price at which each
Unit may be purchased upon exercise of this Warrant as stated in the first
sentence of this Warrant.
1.2 "Blue Sky Application" means an application or other
document filed pursuant to a Blue Sky law to register, qualify or obtain an
exemption for any offer or sale by or for the account of the Holder of all or
part of this Warrant or any of the Units.
1.3 "Blue Sky law" means the laws and regulations of any
state or other jurisdiction applicable to any sale by or for the account of the
Holder of all or part of this Warrant or any of the Units.
1.4 "Common Stock" means the Common Stock (no par value)
of the Company existing on the Grant Date and for purposes of Sections 7.1(a)
through (e) also has the meaning set forth in Section 7.1(g).
1.5 "Exercise Date" means any date when this Warrant is
exercised, in whole or in part, in the manner indicated in Sections 2.1 and
2.2.
<PAGE> 2
1.6 "Exercise Price" means the Basic Exercise Price;
provided, however, that if an adjustment is required under Section 7 of this
Warrant, then the "Exercise Price" means, after each such adjustment, the price
at which each Unit may be purchased upon exercise of this Warrant immediately
after the last such adjustment.
1.7 "Expiration Date" means the Expiration Date indicated
on the first page of this Warrant as such date may be extended as provided in
Section 9.2(a) or the date indicated in Section 9.2(h) if the Warrant shall
have been sold in a public offering as provided therein.
1.8 "Grant Date" means the date this Warrant was first
granted as stated at the beginning of this Warrant.
1.9 "Prospectus" means a preliminary prospectus or final
prospectus (including any supplement) or any offering circular or similar
offering document, included in a Registration Statement.
1.10 "Registrable Securities" means the Warrants, the
Related Warrants, the Units, the Related Units, or shares of Common Stock or
Underlying Warrants issued pursuant to exercise of the Warrant.
1.11 "Registration Statement means a Registration or
Offering Statement, a pre-effective or post-effective amendment to a
Registration Statement or other document proposed for filing or filed by the
Company under the Securities Act which is or would be available under
applicable laws, rules and regulations to register for a public offering or
sale this Warrant, any Related Warrant, any Units or any Related Units. The
term "Registration Statement" shall not apply to any registration statement
relating to the sale of securities to participants in a Company stock or option
plan or a registration on any form which doesn't include substantially the same
information as would be required to be included in a registration statement
covering the sale of Registrable Securities (as defined in Section 1.10 below).
1.12 "Related Warrant" means any other Warrant executed
and delivered by the Company on terms identical with the terms of this Warrant
(except as to the identity of the Holder, number of Units or execution date)
granted in connection with the transaction pursuant to which this Warrant was
granted.
1.13 "Related Units" means any Units or other securities
issued or issuable upon exercise of' any Related Warrant.
1.14 "Securities Act" means the Securities Act of' 1933,
as amended from time to time, and all rules and regulations promulgated
thereunder, or any act, rules or regulations which replace the Securities Act
or any such rules and regulations.
1.15 "Underwriter" means any party who is an "underwriter"
within the meaning of the Securities act with respect to any sale by or for the
account of the Holder of' any of the Warrants or Unit.
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<PAGE> 3
1.16 "Unit" means any Units, consisting of' one share of
Common Stock of the Company and one warrant to purchase one share of Common
Stock, or other securities issued or subject to issuance upon exercise of this
Warrant or upon exchange of a Unit or Units of different denominations.
1.17 "Underlying Warrant" means the common stock purchase
warrant to purchase shares of Common Stock of the Company which, together with
the Unit Share, comprises the Unit. The Underlying Warrant is identical in all
respects to the redeemable common stock purchase warrants issued pursuant to
the Warrant Agreement, as more fully described in the Company's Prospectus,
except that (i) the initial exercise date thereof shall be the date of exercise
of the Underwriters' Warrant, (ii) the initial exercise price thereof shall be
$2.50 and shall be thereafter determined as set forth herein, (iii) the Company
may not redeem the Underlying Warrants, (iv) no terms of the Underlying
Warrants may be modified without the consent of the Holders of a majority of
the Warrants, (v) the Underlying Warrants shall be exercisable until the
Expiration Date; and (vi) the Common Stock subject to the Underlying Warrants
shall initially be as set forth in the Warrant Agreement and thereafter
determined as set forth herein without regard to the terms of the Warrant
Agreement.
1.18 "Warrant" means -this Underwriter's Warrant and each
previously executed and cancelled Underwriter's Warrant, if any, for which this
Warrant has been exchanged.
1.19 "Warrant Agreement" means the Warrant Agreement
associated with offering contemplated by the Registration Statement between
Mellon Securities Trust and the Company.
Section 2. DURATION AND EXERCISE OF WARRANT
2.1 Exercise Period. Subject to the provisions of
Sections 5 and 10 hereof, the Warrants may be exercised at any time after one
year from the Grant Date and on or before the Expiration Date. After the
Expiration Date this Warrant shall become void, and all rights to purchase
Units hereunder shall thereupon cease.
2.2 Method of Exercise. This Warrant may be exercised by
the Holder, in whole or in part, by (i) surrendering this Warrant to the
Company, (ii) tendering to the Company payment of the Exercise Price for the
Units for which exercise is made and (iii) executing and delivering to the
Company the attached Exercise Form. Upon proper exercise, the Holder shall be
deemed to be the holder of record of the Units for which exercise is made, even
though the transfer or register books of the Company may then be closed or
certificates representing such Units may not then be actually delivered to the
Holder.
2.3 Certificates. Within a reasonable time but no more
than 20 days after exercise, certificates for the shares of Common Stock and
the Underlying Warrants comprising such Units shall be delivered to the Holder
and, unless this Warrant has expired, a Related Warrant representing the number
of Units, if any, with respect to which this Warrant shall not have been
exercised shall be issued to the Holder.
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<PAGE> 4
2.4 Taxes. The Company covenants and agrees that it will
pay when due and payable any and all taxes which may be payable in connection
with the issuance of this Warrant, or the issuance of any Units upon the
exercise of this Warrant. The Company shall not, however, be required to pay
any tax which may be payable in respect of any subsequent transfer of this
Warrant or of the Units.
Section 3. VALIDITY AND RESERVATION OF UNITS
The Company covenants that this Warrant and all Units, shares
of Common Stock or Underlying Warrants issued upon exercise of this Warrant
will be validly issued, fully paid, nonassessable and free of preemptive
rights. The Company agrees that so long as this Warrant may be exercised, the
Company will have authorized and reserved for issuance upon exercise of this
Warrant a sufficient number of Units to provide for exercise in full.
Section 4. FRACTIONAL UNITS
No fractional Unit shall be issued upon the exercise of this
Warrant. With respect to any fraction of a Unit otherwise issuable upon any
such exercise, the Company shall pay to the Holder an amount in cash equal to
such fraction multiplied by the Exercise Price.
Section 5. LIMITED RIGHTS OF THE WARRANT HOLDER
The Holder shall not, solely by virtue of being the Holder of
this Warrant, have any of the rights of a holder of Common Stock of the
Company, either at law or equity, until such Warrant shall have been exercised
and the Holder shall be deemed to be the holder of record of Units as provided
in this Warrant.
Section 6. EXCHANGE, TRANSFER OR LOSS OF WARRANT
6.1 Exchange. This Warrant is exchangeable, without
expense to the Holder and upon surrender hereof to the Company, for Warrants of
different denominations entitling the Holder to purchase Units equal in total
number and identical in type to the Units covered by this Warrant.
6.2 Transfer. Subject to the provisions of Section 10,
upon surrender of this Warrant to the Company with the attached Assignment Form
duly executed and the tender of funds sufficient to pay any transfer tax, the
Company shall, without charge, execute and deliver a new Warrant to the
assignee named in such Assignment Form, and this Warrant shall be cancelled
concurrent with such issuance.
6.3 Loss, Theft, Destruction or Mutilation. Upon receipt
by the Company of satisfactory evidence of the loss, theft, destruction or
mutilation of this Warrant and either (in the case of loss, theft or
destruction) reasonable indemnification or (in the case of mutilation) the
surrender of this Warrant for cancellation, the Company will execute and
deliver to the Holder, without charge, a new Warrant of like denomination. Any
such new Warrant executed and delivered shall constitute an additional
obligation of the Company, whether or not this Warrant, reportedly lost,
stolen, destroyed or mutilated, shall be at any time enforceable by anyone.
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<PAGE> 5
Section 7. ANTI-DILUTION ADJUSTMENT OP NUMBER OP UNITS AND EXERCISE PRICE
7.1 Adjustment of Exercise Price. If any of the
following events shall occur at any time or from time to time prior to the
exercise in full or expiration of this Warrant, the following adjustments shall
be made in the Exercise Price, with the exception hereinafter provided:
(a) Recapitalization. In case the Company effects a
subdivision, combination, reclassification or other Recapitalization of its
outstanding shares of Common Stock into a greater or lesser number of shares of
Common Stock, the Exercise Price in effect immediately after such subdivision,
combination, reclassification or other recapitalization shall be
proportionately decreased or increased, as the case may be.
(b) Dividend Other Than in Cash. If the Company shall
declare a dividend on its Common Stock payable in stock or other securities of
the Company or of any other corporation, or in property or otherwise than in
cash, or the functional equivalent thereof, to the holders of its Common Stock,
the Holder shall, without additional cost, be entitled to receive upon the
exercise of this Warrant, in addition to the Units to which such Holder is
otherwise entitled upon such exercise, the number of shares of stock or other
securities or property which such Holder would have been entitled to receive if
such Holder had been a holder, on the record date for such dividend, of the
number of shares of Common Stock so purchased under this Warrant (but not
including the number of shares of Common Stock acquirable upon subsequent
exercise of the Underlying Warrants).
(c) Merger or Consolidation - No Change in Control. In
case of any merger, consolidation or reorganization of the Company with or into
one or more corporations which results in holders of the Company's Common Stock
immediately prior to such event owning a majority of the voting securities of
the surviving corporation immediately following such event, and as a result of
which holders of the Company's Common Stock receive other stock, securities or
property in lieu of or in addition to, but on account of, their Common Stock,
the Holder, upon the exercise of this Warrant after the record date for
determination of shareholders entitled thereto, shall receive, in lieu of or in
addition to the Units, the proportionate shares of all stock, or other
securities (appropriately adjusted for any subsequent events of the issuer of
such stock or securities which are of the kind which would cause adjustment of
the Exercise Price hereunder) or other property issued, paid or delivered for
or on all of the Common Stock of the Company as would have been allowable to
the Units so purchased under this Warrant had this Warrant been exercised
immediately prior to said record date.
(d) Merger or Consolidation - Change in Control. In case
of any merger, consolidation or reorganization of the Company with or into one
or more other corporations, which results in the holders of the Company's
Common Stock immediately prior to such event owning less than a majority
interest of the voting securities of the surviving corporation immediately
following such event, or in the case of any sale, lease, transfer or conveyance
to another corporation of all or substantially all the assets of the Company or
proposed liquidation of the Company, then in either such event the Holder shall
be given notice of such proposed action
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<PAGE> 6
at approximately the same time and in substantially the same manner as the
holders of the Company's Common Stock. The Holder may attend the meeting of
the Company's shareholders at which such action is considered and voted upon.
If the proposed action is approved according to applicable law by the
shareholders of all corporations or other entities which are parties to the
proposed action, the Holder shall be so notified in writing by the Company by
registered or certified mail, and thereupon, notwithstanding the period of
exercisability stated on the face of this Warrant, this Warrant shall
automatically become immediately exercisable and become forever null and void
to the extent not exercised on or before 5:00 P.M., California time, on the
tenth Business Day following the delivery of such notice.
(e) Minimum Adjustment Not Required. Anything in this
Section 7.1 to the contrary notwithstanding, the Company shall not be required,
except as hereinafter provided, to make any adjustment of the Exercise Price in
any case in which the amount by which such Exercise Price would be increased or
reduced, in accordance with the foregoing provisions, would be less than $.05,
but in such a case, such adjustment shall be carried forward and when such
adjustment, together with any and all such other adjustments so carried
forward, shall amount to not less than $.10 the Exercise Price shall be
adjusted; provided, however, that adjustments of less than $.05 in the Exercise
Price shall be required and made in accordance with the provisions of this
Section 7.1 (other than this subparagraph) not later than such time as may be
required in order to preserve the tax free nature of any distribution (within
the meaning of Section 305 of the United States Internal Revenue Code of 1986,
as amended) to the Holder or the holders of Common Stock. In the event of any
subdivision, combination, reclassification or other recapitalization of shares
of Common Stock, said amount (as theretofore decreased or increased) shall be
proportionately decreased or increased.
(f) Other Adjustments. The Company, by action of its
Board of Directors, shall make such other equitable adjustments to the Exercise
Price as may be necessary to protect the Holder against dilution of this
Warrant, with or without a request of a Holder, where such an adjustment is
appropriate in light of the occurrence of an event or the existence of
circumstances similar to those otherwise contemplated by this Section 7.1.
(g) Term "Common Stock." Whenever reference is made in
Sections 7.1(a) through (e) above to Common Stock, the term "Common Stock"
shall include any stock of any class of the Company, other than preferred stock
with a fixed limit on dividends, with no rights of conversion into "Common
Stock" and with a fixed amount payable in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Company.
7.2 Number of Units Adjusted. After any adjustment of the
Exercise Price pursuant to Section 7.1, the number of Units issuable at the new
Exercise Price shall be adjusted to the number obtained by (i) multiplying the
number of Units issuable upon exercise of this Warrant immediately before such
adjustment by the Exercise Price in effect immediately before such adjustment
and (ii) dividing the product so obtained by the new Exercise Price.
7.3 Notice of Adjustment. Whenever events occur requiring the
Exercise Price to be adjusted, the Company shall promptly file with its
Secretary or an Assistant Secretary at its principal office and with its stock
transfer agent, if any, a certificate of its chief financial officer
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<PAGE> 7
showing the adjusted Exercise Price, setting forth in reasonable detail the
facts requiring such adjustment, and stating such other facts as shall be
necessary to show the manner and figures used to compute such adjustment. Such
chief financial officer's certificate shall be made available at all reasonable
times for inspection by the Holder. Promptly after each such adjustment, the
Company shall mail a copy of such certificate by certified mail to the Holder
together with information relating to the adjustment under Section 7.2. The
Company shall endorse on any Related Warrant executed and delivered by the
Company a description of each adjustment, if any, under this Section as the
result of events occurring before the execution and delivery of the Related
Warrant, and the Related Warrant so issued shall reflect the number of Units
issuable on exercise, as adjusted to reflect such changes.
If, within 45 days of the mailing of such certificate, Holders holding
in the aggregate not less than 25% of. the Warrants notify the Company in
writing of their disagreement with the adjusted Exercise Price contained in the
Company certificate, then the Company will promptly obtain a certificate of a
firm of independent certified public accountants of recognized standing
selected by the Company's Board of Directors (who shall not be the regular
auditors of the Company) certifying the same items required by the Company
certificate or making such adjustments as are appropriate. The Company will
promptly mail a copy of the firm of independent public accountants' certificate
to the Holder of this Warrant. Under the circumstances described in this
paragraph, the Holders of the Warrants giving notice shall be obligated to
reimburse the Company for half of the charges imposed by the independent
certified accountants if their certificate confirms the Company's prior
calculations.
Section 8. NOTICE TO HOLDER
So long as this Warrant is outstanding, whenever the Company shall
expect to (i) pay any dividend or distribution upon Common Stock, (ii) offer to
the holders of Common Stock any right to subscribe for or to purchase any other
securities of the Company, (iii) effect any recapitalization, merger,
consolidation, reorganization, transfer, sale, lease or conveyance as referred
to in Section 7, or (iv) be involved in any voluntary or involuntary
dissolution, liquidation or winding up of the Company, at least twenty-one days
before the proposed action or any applicable record date, the Company, by
certified mail, shall give the Holder written notice describing the proposed
action and stating the date on which (x) a record date is to be fixed for the
purposes of such dividend, distribution or right or (y) such recapitalization,
merger, consolidation, reorganization, transfer, sale, lease, conveyance,
dissolution, liquidation or winding up is to take place and when, if any date
is to be fixed, the record holders of Common Stock shall be entitled to
exchange the shares of Common Stock for securities or other property
deliverable upon such recapitalization, merger, consolidation, reorganization,
transfer, sale, lease, conveyance, dissolution, liquidation or winding up.
Section 9. REGISTRATION OF THE WARRANT OR UNITS
9.1 Registration Rights
(a) Piggy-back Registration. The Company shall advise
each Holder of Registrable Securities by written notice at least four weeks
prior to the filing of any Registration
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<PAGE> 8
Statement pertaining to securities to be offered to the public solely for cash
which is filed after twelve months but within six years after the Grant Date,
and will, upon the request of any such Holders, and without any charge to them,
include in any such Registration Statement such information as may be required
to permit a public offering of their Registrable Securities. If any such
Registration Statement or notification is being filed by the Company in
connection with an underwritten public offering of securities of the Company,
the Company shall have the right to require such Holders (provided that Rule
415 applies to the sale of the Registrable Securities) to postpone the offering
of their securities for a period of 90 days following the effective date of
such Registration Statement or notification. If any such Registration
Statement or notification is being filed by the Company solely for the benefit
of selling security holders, the Company will permit such Holders of the
Registrable Securities to include for sale with such shareholders in such
Registration Statement or notification at least a pro rata portion (based upon
the ratio of the number of shares of Common Stock which such selling security
holders desire to sell to the number of Registrable Securities which such
Holders of the Registrable Securities desire to sell) of the total Units being
registered, and the offering of the balance of the Registrable Securities owned
by holders of the Registrable Securities may then be postponed by the Company
for a period of 90 days following effectiveness of the Registration Statement
or notification.
(b) Demand Registration. If the Company shall be given
notice from persons holding more than 50% of the Registrable Securities any
time after twelve months but prior to six years from the Grant Date, to the
effect that such holders contemplate (i) the transfer of all or any part of
their Registrable Securities, or (ii) the exercise of all or any part of their
Warrants or Related Units, under such circumstances that a public offering
(within the meaning of the Securities Act) of such securities will be involved,
then the Company shall, (i) at its expense and as promptly as practicable after
receipt of such notice, if such securities may not then be sold in a public
offering under the Securities Act, file a Registration Statement or
notification pursuant to the Securities Act, and applicable Blue Sky laws, to
the end that such securities may be sold under the Securities Act and such Blue
Sky laws as promptly as practicable from the date of receipt of such notice by
the Company and (ii) immediately notify all Holders of its intention so to file
a Registration Statement and include any additional Registrable Securities in
said Registration Statement as Holders may thereafter request in writing prior
to the effective date of said Registration Statement; provided that no more
than one such demand may made upon the Company; provided that the Company shall
not be obligated to take any action to effect any such Registration pursuant to
this Section 9.1(b);
(i) During the period starting with the date
sixty (60) days prior to the Company's estimated date of filing of, and ending
on the date one hundred twenty (120) days immediately following the effective
date of, any Registration Statement pertaining to securities of the Company,
provided the Company is actively employing in good faith all reasonable efforts
to cause such Registration Statement to become effective; or
(ii) After the Company has effected one such
Registration pursuant to this Section 9.1(b).
(c) General Provisions. The following provisions shall
also be applicable to any such Registration:
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<PAGE> 9
(i) The Holders whose Registrable Securities are
to be included therein (the "Sellers") shall furnish the Company with such
appropriate information (relating to the intentions of such Holders) in
connection therewith as the Company shall reasonably request in writing.
Following the effective date of `such Registration Statement or notification,
the Company shall, upon the request of any Seller, forthwith supply such number
of Prospectuses or offering circulars meeting the requirements of the
Securities Act as shall be reasonably requested by such Seller to permit such
Seller to make a public offering of all such securities of such Seller included
therein. The Company shall file such Blue Sky Applications and use its best
efforts to qualify such securities included therein for sale in such states as
the Sellers shall reasonable designate.
(ii) The Company shall bear the cost and expense
directly relating to any registration of securities pursuant to this Section
9.1, provided, however, that the Company shall not be required to pay for any
expenses of any registration proceeding begun pursuant to this Section 9.1 if
the Registration request is subsequently withdrawn at the request of the
Holders of a majority of the Registrable Securities to be registered (in which
case all Holders requesting such Registration shall bear such expenses). The
Company shall not be required to pay all selling commissions, but shall pay all
applicable listing fees.
(iii) The Company shall indemnify and hold harmless
each Seller and each Underwriter who may purchase from or sell for any Seller
any Registrable Securities Iron, and against any and all losses, claims,
damages and liabilities caused by any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or any
Prospectus included therein, required to be filed or furnished by reason of
this Section 9.1, or caused by any omission or alleged omission to stale
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, except insofar as
such losses, claims, damages or liabilities are caused by any such untrue
statement or omission or alleged omission was based upon information furnished
or required to be furnished in writing to the Company by and about such Seller
or Underwriter expressly for use therein, which indemnification shall include
each person, if any, who controls any such Seller or Underwriter within the
meaning of the Securities Act; provided, however, that the Company shall not be
obliged so to indemnify any such Seller or Underwriter or controlling person
unless such Seller and Underwriter shall at the same time indemnify the
Company, its directors, each officer signing a Registration Statement or
notification and each person, if any, who controls the Company within the
meaning of the Securities Act from and against any and all losses, claims,
damages and liabilities caused by any untrue statement or alleged untrue
statement of a material face contained in any Registration Statement or
notification or any Prospect us or offering circular required to be filed or
furnished by reason of this Section 9.1, or caused by any omission or alleged
omission to slate therein a material fact required to be stated therein or
necessary to make the statement therein, in light of the circumstances under
which they were made, not misleading, insofar as such losses, claims, damages
or liabilities are caused by any untrue statement or alleged untrue statement
or omission or alleged omission was based upon information furnished in writing
to the Company by and about such Seller or Underwriter expressly for use
therein.
(iv) The Company will, or will use its best
efforts to (i) prepare and file with the Commission a Registration Statement or
notification with respect to the Registrable
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<PAGE> 10
Securities to be registered or qualified and cause such Registration Statement
or notification to become and remain effective; provided, that the Company will
not be required to keep the Registration Statement or notification effective,
or to prepare and file any amendments or supplements, later than nine months
after the date on which the Registration Statement or notification becomes
effective under the Securities Act.
(v) The Company shall, in case of a registration
or notification, furnish to the Holders of the Registrable Securities for whom
such Registrable Securities are registered or are to be registered or are filed
for notification, at the time such Registration Statement becomes effective, an
opinion of counsel, dated such date, for the Company reasonably acceptable to
the Holders to the effect that a Registration Statement or notification
covering the Registrable Securities has been filed with the commission under
the Securities Act and has become effective, that a prospectus or offering
circular complying in form with the requirements of the Securities Act is
available for delivery, that to the best of such counsel's knowledge, no stop
order has been issued by the Commission suspending t lie effectiveness of the
Registration Statement or suspending the availability of the offering exemption
and that, to the best of the counsel's knowledge, no proceedings for the
issuance of a stop order are threatened or contemplated, and that the
Registrable Securities have been registered or qualified under the securities
or Blue Sky Laws of each state in which the Company is required, pursuant to
subsection (c)(i) of this Section 9.110 register or qualify the Registrable
Securities and in which such registration or qualification cannot be effected
without undue effort or expense.
(vi) It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Section 9.1 with
respect to the Registrable Securities of any selling Holder that such Holder
shall furnish to the Company such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of such
securities as shall be reasonably required to effect the Registration of such
Holder's Registrable Securities.
9.2 Adjustment of Expiration Date. Notwithstanding any provision
contained herein to the contrary, in the event that a timely request is made
hereunder by the Holder of this Warrant or a Related Warrant to sell such
Registrable Securities in a registered public offering or pursuant to a
notification, and the holders thereof use reasonable efforts to cause such sale
to be made in a prompt manner, the Expiration Date shall be extended to a date
90 days following the effective date of registration of the Registrable
Securities included in such registration or notification, if the Expiration
Date would otherwise occur within such 90 day period.
9.3 Exchange Listing. In connection with the issuance of any
Units upon the exercise of this Warrant, the Company shall secure the listing
of the underlying shares of Common Stock and the Underlying Warrants upon any
securities exchange upon which shares of the Company's Common Stock and
Warrants are listed.
9.4 No Obligation to Sell. Neither the giving of any notice nor
the making of any request hereunder shall impose any obligation on the selling
Holder to sell any Registrable Securities Warrant or Units.
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<PAGE> 11
9.5 Registration Rights Survive Exercise. The Company's
obligations under this Section 9 shall continue in effect, regardless of the
exercise or surrender of this Warrant. The Company's obligations under this
Section 9 shall expire, however, with respect to a Warrant, Related Warrant,
Unit or Related Unit or shares or Underlying Warrants which has been sold by a
broker or dealer or in a public offering registered under the Securities Act or
a public offering exempt from such registration.
Section 10. TRANSFER RESTRICTION
10.1 General. Anything contained herein to the contrary
notwithstanding, this Warrant may not be assigned, transferred, hypothecated or
sold during the initial twelve-month period of this Warrant, except that it (a)
may be transferred at any time by will or pursuant to the laws of descent and
distribution, or (b) may be assigned at any time in whole or in part to (i)
shareholders, directors, officers or partners (or shareholders of a corporate
partner) of the Underwriter(s) or family members who would take pursuant to a
will or the laws of descent and distribution (or trusts for their benefit) (i)
such persons, (ii) successors to the Underwriter(s) of the public offering in a
merger or consolidation or (iii) a purchaser of substantially all of the assets
of any Underwriter of the public offering. All of the foregoing shall be
deemed to be "Permitted Transfers". After the initial twelve-month period this
Warrant may be assigned, transferred, hypothecated or sold, provided, however,
that upon such transfer to a party other than a party included within the
definition of Permitted Transfers, above, (hereafter a Non-Related-Party
Transfer) the transferee must immediately (or as immediately as is
practicable), exercise their Warrant pursuant to Section 2 hereof. Any such
assignment or transfer shall be made by surrender of this Warrant to the
Company or at the office of its transfer agent, if any, with the Form of
Assignment annexed hereto duly executed and funds sufficient to pay any
transfer tax, whereupon the company shall, without charge, execute and deliver
a new Warrant in the name of the assignee and this Warrant shall promptly be
cancelled.
10.2 Securities Law Compliance. Except as provided in Section 10.1
above and except pursuant to the requirements of Rule 144 of the Securities
Act, this Warrant and the Units may not be sold, transferred, assigned or
otherwise disposed of except as follows:
(a) to a person who, in the opinion of counsel reasonably
satisfactory to the Company, is a person to whom this Warrant or the Units may
legally be transferred without registration and without the delivery of a
current prospectus or offering circular with respect thereto; or
(b) to any person upon delivery of a prospectus or
offering circular then meeting the requirements of the Securities Act relating
to such securities (as to which a Registration Statement or notification under
the Securities Act shall then be in effect) and the offering thereof for such
sale or disposition.
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<PAGE> 12
Section 11. MISCELLANEOUS
11.1 Successors and Assigns. All the covenants and provisions of
this Warrant which are by or for the benefit of the Company or the Holders
shall bind and inure to the benefit of their respective successors and assigns
hereunder.
11.2 Notice. Notice or demand pursuant to this Warrant to be
given) or made by the Holder to or on the Company shall be sufficiently given
or made if sent by registered mail, postage prepaid, receipt requested,
addressed, until another address is designated in writing by the Company, as
follows:
Alpha Microsystems
2722 South Fairview Street
Santa Ana, CA 92704
Any notice or demand authorized by this Warrant to be given or made by
the Company to or on the Holder shall be given to the Holder by registered
mail, postage prepaid, receipt requested, addressed at his last known address
as it shall appear on the books of the Company, until another address is
designated in writing, with a copy to G.L. Cabot Henderson, c/o Axiam
Incorporated, 58 Blackburn Center, Cloucester, Massachussets, 01930, by like
mail.
11.3 Applicable Law. The validity, interpretation and performance
of this Warrant shall be governed by the laws of the State of Rhode Island.
11.4 Headings. The Article headings herein are for convenience
only and are not part of this Warrant and shall not affect the interpretation
thereof.
Dated: April 30, 1996 ALPHA MICROSYSTEMS
By: /s/ DOUGLAS J. TULLIO
--------------------------------
Douglas J. Tullio, President
Attest: /s/ JOHN GLADE
----------------------------
John Glade, Secretary
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<PAGE> 13
EXERCISE FORM
(To be Executed by the Warrant Holder if He, or She
Desires to Exercise the Warrant in Whole or in Part)
To: Alpha Microsystems
The undersigned (____________________________________________________________)
Please insert name and Social Security or number E.I.N. of Holder
hereby irrevocably elects to exercise the rights of purchase represented by the
within Warrant for, and to purchase thereunder, ___________ Units provided for
therein and tenders payment herewith to the order of Alpha Microsystems in the
amount of $________.
The undersigned requests that certificates for such Units be issued as follows:
Name:___________________________________________________________________________
Address:________________________________________________________________________
Deliver to:_____________________________________________________________________
Address:________________________________________________________________________
and, if said number of Units shall not be all the Units purchasable hereunder,
that a new Warrant for the balance remaining of the Units purchasable under the
within Warrant be registered in the name of, and delivered to, the undersigned
at the address stated below.
Address:________________________________________________________________________
Dated:________________,19_____
Signature:______________________________
Note: Signature must correspond with
the name as written upon the face of
this Warrant in every particular,
without alteration or enlargement or
any change whatsoever.
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<PAGE> 14
FORM OF ASSIGNMENT
(To be Signed Only Upon Assignment)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
_______________ the right to purchase _______ Units evidenced by the within
Warrant, and appoints ____________________ to transfer the same on the books of
Alpha Microsystems with the full power of substitution in the premises.
Dated:________________,19_____
Signature:______________________________
Note: Signature must correspond with
the name as written upon the face of
this Warrant in every particular,
without alteration or enlargement or
any change whatsoever, and the signature
must be guaranteed in the usual manner.
Signature Guaranteed:
______________________________
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<PAGE> 15
SCHEDULE OF WARRANT HOLDERS
Name ________________________________ Amount
Note: The Schedule is for use as a convenience at the closing of the
offering to which this Warrant relates so that only one Warrant need
be executed at the closing, it being understood that following the
closing, individual Warrants registered in the above names and amounts
will be issued promptly upon surrender of this Warrant.
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<PAGE> 1
EXHIBIT 4.12
THE TRANSFER OF THIS WARRANT IS RESTRICTED
AS PROVIDED IN SECTION 10.
________________________________________________________________________________
No. W-4 WARRANT TO PURCHASE
GRANT DATE: December 7, 1993 10,000 UNITS
ALPHA MICROSYSTEMS
UNDERWRITER'S WARRANT
In consideration of other value received, Alpha Microsystems,
a California corporation (the "Company"), grants to Edward R. Henderson or
permitted transferees or assigns (the "Holder") the right, subject to the terms
of this Warrant, to purchase at any time and from time to time during the
period commencing November 1, 1994, and ending on November 1, 1998, unless
extended or terminated as provided herein (the "Expiration Date"), up to 10,000
Units of the Company (each Unit to consist of one share of Common Stock and one
warrant to purchase one share of Common Stock) at $1.95 per Unit (the "Basic
Exercise Price") as more fully described in the Company's Prospectus dated
November 1, 1993 for the public offering of equivalent units ("Company's
Prospectus"). The Basic Exercise Price and the number of Units that may be
purchased are subject to adjustment under the terms of this Warrant.
Section 1. DEFINITIONS.
As used in this Warrant, unless the context otherwise
requires:
1.1 "Basic Exercise Price" means the price at which each
Unit may be purchased upon exercise of this Warrant as stated in the first
sentence of this Warrant.
1.2 "Blue Sky Application" means an application or other
document filed pursuant to a Blue Sky law to register, qualify or obtain an
exemption for any offer or sale by or for the account of the Holder of all or
part of this Warrant or any of the Units.
1.3 "Blue Sky law" means the laws and regulations of any
state or other jurisdiction applicable to any sale by or for the account of the
Holder of all or part of this Warrant or any of the Units.
1.4 "Common Stock" means the Common Stock (no par value)
of the Company existing on the Grant Date and for purposes of Sections 7.1(a)
through (e) also has the meaning set forth in Section 7.1(g).
1.5 "Exercise Date" means any date when this Warrant is
exercised, in whole or in part, in the manner indicated in Sections 2.1 and
2.2.
<PAGE> 2
1.6 "Exercise Price" means the Basic Exercise Price;
provided, however, that if an adjustment is required under Section 7 of this
Warrant, then the "Exercise Price" means, after each such adjustment, the price
at which each Unit may be purchased upon exercise of this Warrant immediately
after the last such adjustment.
1.7 "Expiration Date" means the Expiration Date indicated
on the first page of this Warrant as such date may be extended as provided in
Section 9.2(a) or the date indicated in Section 9.2(h) if the Warrant shall
have been sold in a public offering as provided therein.
1.8 "Grant Date" means the date this Warrant was first
granted as stated at the beginning of this Warrant.
1.9 "Prospectus" means a preliminary prospectus or final
prospectus (including any supplement) or any offering circular or similar
offering document, included in a Registration Statement.
1.10 "Registrable Securities" means the Warrants, the
Related Warrants, the Units, the Related Units, or shares of Common Stock or
Underlying Warrants issued pursuant to exercise of the Warrant.
1.11 "Registration Statement means a Registration or
Offering Statement, a pre-effective or post-effective amendment to a
Registration Statement or other document proposed for filing or filed by the
Company under the Securities Act which is or would be available under
applicable laws, rules and regulations to register for a public offering or
sale this Warrant, any Related Warrant, any Units or any Related Units. The
term "Registration Statement" shall not apply to any registration statement
relating to the sale of securities to participants in a Company stock or option
plan or a registration on any form which doesn't include substantially the same
information as would be required to be included in a registration statement
covering the sale of Registrable Securities (as defined in Section 1.10 below).
1.12 "Related Warrant" means any other Warrant executed
and delivered by the Company on terms identical with the terms of this Warrant
(except as to the identity of the Holder, number of Units or execution date)
granted in connection with the transaction pursuant to which this Warrant was
granted.
1.13 "Related Units" means any Units or other securities
issued or issuable upon exercise of' any Related Warrant.
1.14 "Securities Act" means the Securities Act of' 1933,
as amended from time to time, and all rules and regulations promulgated
thereunder, or any act, rules or regulations which replace the Securities Act
or any such rules and regulations.
1.15 "Underwriter" means any party who is an "underwriter"
within the meaning of the Securities act with respect to any sale by or for the
account of the Holder of' any of the Warrants or Unit.
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<PAGE> 3
1.16 "Unit" means any Units, consisting of' one share of
Common Stock of the Company and one warrant to purchase one share of Common
Stock, or other securities issued or subject to issuance upon exercise of this
Warrant or upon exchange of a Unit or Units of different denominations.
1.17 "Underlying Warrant" means the common stock purchase
warrant to purchase shares of Common Stock of the Company which, together with
the Unit Share, comprises the Unit. The Underlying Warrant is identical in all
respects to the redeemable common stock purchase warrants issued pursuant to
the Warrant Agreement, as more fully described in the Company's Prospectus,
except that (i) the initial exercise date thereof shall be the date of exercise
of the Underwriters' Warrant, (ii) the initial exercise price thereof shall be
$2.50 and shall be thereafter determined as set forth herein, (iii) the Company
may not redeem the Underlying Warrants, (iv) no terms of the Underlying
Warrants may be modified without the consent of the Holders of a majority of
the Warrants, (v) the Underlying Warrants shall be exercisable until the
Expiration Date; and (vi) the Common Stock subject to the Underlying Warrants
shall initially be as set forth in the Warrant Agreement and thereafter
determined as set forth herein without regard to the terms of the Warrant
Agreement.
1.18 "Warrant" means -this Underwriter's Warrant and each
previously executed and cancelled Underwriter's Warrant, if any, for which this
Warrant has been exchanged.
1.19 "Warrant Agreement" means the Warrant Agreement
associated with offering contemplated by the Registration Statement between
Mellon Securities Trust and the Company.
Section 2. DURATION AND EXERCISE OF WARRANT
2.1 Exercise Period. Subject to the provisions of
Sections 5 and 10 hereof, the Warrants may be exercised at any time after one
year from the Grant Date and on or before the Expiration Date. After the
Expiration Date this Warrant shall become void, and all rights to purchase
Units hereunder shall thereupon cease.
2.2 Method of Exercise. This Warrant may be exercised by
the Holder, in whole or in part, by (i) surrendering this Warrant to the
Company, (ii) tendering to the Company payment of the Exercise Price for the
Units for which exercise is made and (iii) executing and delivering to the
Company the attached Exercise Form. Upon proper exercise, the Holder shall be
deemed to be the holder of record of the Units for which exercise is made, even
though the transfer or register books of the Company may then be closed or
certificates representing such Units may not then be actually delivered to the
Holder.
2.3 Certificates. Within a reasonable time but no more
than 20 days after exercise, certificates for the shares of Common Stock and
the Underlying Warrants comprising such Units shall be delivered to the Holder
and, unless this Warrant has expired, a Related Warrant representing the number
of Units, if any, with respect to which this Warrant shall not have been
exercised shall be issued to the Holder.
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<PAGE> 4
2.4 Taxes. The Company covenants and agrees that it will
pay when due and payable any and all taxes which may be payable in connection
with the issuance of this Warrant, or the issuance of any Units upon the
exercise of this Warrant. The Company shall not, however, be required to pay
any tax which may be payable in respect of any subsequent transfer of this
Warrant or of the Units.
Section 3. VALIDITY AND RESERVATION OF UNITS
The Company covenants that this Warrant and all Units, shares
of Common Stock or Underlying Warrants issued upon exercise of this Warrant
will be validly issued, fully paid, nonassessable and free of preemptive
rights. The Company agrees that so long as this Warrant may be exercised, the
Company will have authorized and reserved for issuance upon exercise of this
Warrant a sufficient number of Units to provide for exercise in full.
Section 4. FRACTIONAL UNITS
No fractional Unit shall be issued upon the exercise of this
Warrant. With respect to any fraction of a Unit otherwise issuable upon any
such exercise, the Company shall pay to the Holder an amount in cash equal to
such fraction multiplied by the Exercise Price.
Section 5. LIMITED RIGHTS OF THE WARRANT HOLDER
The Holder shall not, solely by virtue of being the Holder of
this Warrant, have any of the rights of a holder of Common Stock of the
Company, either at law or equity, until such Warrant shall have been exercised
and the Holder shall be deemed to be the holder of record of Units as provided
in this Warrant.
Section 6. EXCHANGE, TRANSFER OR LOSS OF WARRANT
6.1 Exchange. This Warrant is exchangeable, without
expense to the Holder and upon surrender hereof to the Company, for Warrants of
different denominations entitling the Holder to purchase Units equal in total
number and identical in type to the Units covered by this Warrant.
6.2 Transfer. Subject to the provisions of Section 10,
upon surrender of this Warrant to the Company with the attached Assignment Form
duly executed and the tender of funds sufficient to pay any transfer tax, the
Company shall, without charge, execute and deliver a new Warrant to the
assignee named in such Assignment Form, and this Warrant shall be cancelled
concurrent with such issuance.
6.3 Loss, Theft, Destruction or Mutilation. Upon receipt
by the Company of satisfactory evidence of the loss, theft, destruction or
mutilation of this Warrant and either (in the case of loss, theft or
destruction) reasonable indemnification or (in the case of mutilation) the
surrender of this Warrant for cancellation, the Company will execute and
deliver to the Holder, without charge, a new Warrant of like denomination. Any
such new Warrant executed and delivered shall constitute an additional
obligation of the Company, whether or not this Warrant, reportedly lost,
stolen, destroyed or mutilated, shall be at any time enforceable by anyone.
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Section 7. ANTI-DILUTION ADJUSTMENT OP NUMBER OP UNITS AND EXERCISE PRICE
7.1 Adjustment of Exercise Price. If any of the
following events shall occur at any time or from time to time prior to the
exercise in full or expiration of this Warrant, the following adjustments shall
be made in the Exercise Price, with the exception hereinafter provided:
(a) Recapitalization. In case the Company effects a
subdivision, combination, reclassification or other Recapitalization of its
outstanding shares of Common Stock into a greater or lesser number of shares of
Common Stock, the Exercise Price in effect immediately after such subdivision,
combination, reclassification or other recapitalization shall be
proportionately decreased or increased, as the case may be.
(b) Dividend Other Than in Cash. If the Company shall
declare a dividend on its Common Stock payable in stock or other securities of
the Company or of any other corporation, or in property or otherwise than in
cash, or the functional equivalent thereof, to the holders of its Common Stock,
the Holder shall, without additional cost, be entitled to receive upon the
exercise of this Warrant, in addition to the Units to which such Holder is
otherwise entitled upon such exercise, the number of shares of stock or other
securities or property which such Holder would have been entitled to receive if
such Holder had been a holder, on the record date for such dividend, of the
number of shares of Common Stock so purchased under this Warrant (but not
including the number of shares of Common Stock acquirable upon subsequent
exercise of the Underlying Warrants).
(c) Merger or Consolidation - No Change in Control. In
case of any merger, consolidation or reorganization of the Company with or into
one or more corporations which results in holders of the Company's Common Stock
immediately prior to such event owning a majority of the voting securities of
the surviving corporation immediately following such event, and as a result of
which holders of the Company's Common Stock receive other stock, securities or
property in lieu of or in addition to, but on account of, their Common Stock,
the Holder, upon the exercise of this Warrant after the record date for
determination of shareholders entitled thereto, shall receive, in lieu of or in
addition to the Units, the proportionate shares of all stock, or other
securities (appropriately adjusted for any subsequent events of the issuer of
such stock or securities which are of the kind which would cause adjustment of
the Exercise Price hereunder) or other property issued, paid or delivered for
or on all of the Common Stock of the Company as would have been allowable to
the Units so purchased under this Warrant had this Warrant been exercised
immediately prior to said record date.
(d) Merger or Consolidation - Change in Control. In case
of any merger, consolidation or reorganization of the Company with or into one
or more other corporations, which results in the holders of the Company's
Common Stock immediately prior to such event owning less than a majority
interest of the voting securities of the surviving corporation immediately
following such event, or in the case of any sale, lease, transfer or conveyance
to another corporation of all or substantially all the assets of the Company or
proposed liquidation of the Company, then in either such event the Holder shall
be given notice of such proposed action
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<PAGE> 6
at approximately the same time and in substantially the same manner as the
holders of the Company's Common Stock. The Holder may attend the meeting of
the Company's shareholders at which such action is considered and voted upon.
If the proposed action is approved according to applicable law by the
shareholders of all corporations or other entities which are parties to the
proposed action, the Holder shall be so notified in writing by the Company by
registered or certified mail, and thereupon, notwithstanding the period of
exercisability stated on the face of this Warrant, this Warrant shall
automatically become immediately exercisable and become forever null and void
to the extent not exercised on or before 5:00 P.M., California time, on the
tenth Business Day following the delivery of such notice.
(e) Minimum Adjustment Not Required. Anything in this
Section 7.1 to the contrary notwithstanding, the Company shall not be required,
except as hereinafter provided, to make any adjustment of the Exercise Price in
any case in which the amount by which such Exercise Price would be increased or
reduced, in accordance with the foregoing provisions, would be less than $.05,
but in such a case, such adjustment shall be carried forward and when such
adjustment, together with any and all such other adjustments so carried
forward, shall amount to not less than $.10 the Exercise Price shall be
adjusted; provided, however, that adjustments of less than $.05 in the Exercise
Price shall be required and made in accordance with the provisions of this
Section 7.1 (other than this subparagraph) not later than such time as may be
required in order to preserve the tax free nature of any distribution (within
the meaning of Section 305 of the United States Internal Revenue Code of 1986,
as amended) to the Holder or the holders of Common Stock. In the event of any
subdivision, combination, reclassification or other recapitalization of shares
of Common Stock, said amount (as theretofore decreased or increased) shall be
proportionately decreased or increased.
(f) Other Adjustments. The Company, by action of its
Board of Directors, shall make such other equitable adjustments to the Exercise
Price as may be necessary to protect the Holder against dilution of this
Warrant, with or without a request of a Holder, where such an adjustment is
appropriate in light of the occurrence of an event or the existence of
circumstances similar to those otherwise contemplated by this Section 7.1.
(g) Term "Common Stock." Whenever reference is made in
Sections 7.1(a) through (e) above to Common Stock, the term "Common Stock"
shall include any stock of any class of the Company, other than preferred stock
with a fixed limit on dividends, with no rights of conversion into "Common
Stock" and with a fixed amount payable in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Company.
7.2 Number of Units Adjusted. After any adjustment of the
Exercise Price pursuant to Section 7.1, the number of Units issuable at the new
Exercise Price shall be adjusted to the number obtained by (i) multiplying the
number of Units issuable upon exercise of this Warrant immediately before such
adjustment by the Exercise Price in effect immediately before such adjustment
and (ii) dividing the product so obtained by the new Exercise Price.
7.3 Notice of Adjustment. Whenever events occur requiring the
Exercise Price to be adjusted, the Company shall promptly file with its
Secretary or an Assistant Secretary at its principal office and with its stock
transfer agent, if any, a certificate of its chief financial officer
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<PAGE> 7
showing the adjusted Exercise Price, setting forth in reasonable detail the
facts requiring such adjustment, and stating such other facts as shall be
necessary to show the manner and figures used to compute such adjustment. Such
chief financial officer's certificate shall be made available at all reasonable
times for inspection by the Holder. Promptly after each such adjustment, the
Company shall mail a copy of such certificate by certified mail to the Holder
together with information relating to the adjustment under Section 7.2. The
Company shall endorse on any Related Warrant executed and delivered by the
Company a description of each adjustment, if any, under this Section as the
result of events occurring before the execution and delivery of the Related
Warrant, and the Related Warrant so issued shall reflect the number of Units
issuable on exercise, as adjusted to reflect such changes.
If, within 45 days of the mailing of such certificate, Holders holding
in the aggregate not less than 25% of. the Warrants notify the Company in
writing of their disagreement with the adjusted Exercise Price contained in the
Company certificate, then the Company will promptly obtain a certificate of a
firm of independent certified public accountants of recognized standing
selected by the Company's Board of Directors (who shall not be the regular
auditors of the Company) certifying the same items required by the Company
certificate or making such adjustments as are appropriate. The Company will
promptly mail a copy of the firm of independent public accountants' certificate
to the Holder of this Warrant. Under the circumstances described in this
paragraph, the Holders of the Warrants giving notice shall be obligated to
reimburse the Company for half of the charges imposed by the independent
certified accountants if their certificate confirms the Company's prior
calculations.
Section 8. NOTICE TO HOLDER
So long as this Warrant is outstanding, whenever the Company shall
expect to (i) pay any dividend or distribution upon Common Stock, (ii) offer to
the holders of Common Stock any right to subscribe for or to purchase any other
securities of the Company, (iii) effect any recapitalization, merger,
consolidation, reorganization, transfer, sale, lease or conveyance as referred
to in Section 7, or (iv) be involved in any voluntary or involuntary
dissolution, liquidation or winding up of the Company, at least twenty-one days
before the proposed action or any applicable record date, the Company, by
certified mail, shall give the Holder written notice describing the proposed
action and stating the date on which (x) a record date is to be fixed for the
purposes of such dividend, distribution or right or (y) such recapitalization,
merger, consolidation, reorganization, transfer, sale, lease, conveyance,
dissolution, liquidation or winding up is to take place and when, if any date
is to be fixed, the record holders of Common Stock shall be entitled to
exchange the shares of Common Stock for securities or other property
deliverable upon such recapitalization, merger, consolidation, reorganization,
transfer, sale, lease, conveyance, dissolution, liquidation or winding up.
Section 9. REGISTRATION OF THE WARRANT OR UNITS
9.1 Registration Rights
(a) Piggy-back Registration. The Company shall advise
each Holder of Registrable Securities by written notice at least four weeks
prior to the filing of any Registration
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<PAGE> 8
Statement pertaining to securities to be offered to the public solely for cash
which is filed after twelve months but within six years after the Grant Date,
and will, upon the request of any such Holders, and without any charge to them,
include in any such Registration Statement such information as may be required
to permit a public offering of their Registrable Securities. If any such
Registration Statement or notification is being filed by the Company in
connection with an underwritten public offering of securities of the Company,
the Company shall have the right to require such Holders (provided that Rule
415 applies to the sale of the Registrable Securities) to postpone the offering
of their securities for a period of 90 days following the effective date of
such Registration Statement or notification. If any such Registration
Statement or notification is being filed by the Company solely for the benefit
of selling security holders, the Company will permit such Holders of the
Registrable Securities to include for sale with such shareholders in such
Registration Statement or notification at least a pro rata portion (based upon
the ratio of the number of shares of Common Stock which such selling security
holders desire to sell to the number of Registrable Securities which such
Holders of the Registrable Securities desire to sell) of the total Units being
registered, and the offering of the balance of the Registrable Securities owned
by holders of the Registrable Securities may then be postponed by the Company
for a period of 90 days following effectiveness of the Registration Statement
or notification.
(b) Demand Registration. If the Company shall be given
notice from persons holding more than 50% of the Registrable Securities any
time after twelve months but prior to six years from the Grant Date, to the
effect that such holders contemplate (i) the transfer of all or any part of
their Registrable Securities, or (ii) the exercise of all or any part of their
Warrants or Related Units, under such circumstances that a public offering
(within the meaning of the Securities Act) of such securities will be involved,
then the Company shall, (i) at its expense and as promptly as practicable after
receipt of such notice, if such securities may not then be sold in a public
offering under the Securities Act, file a Registration Statement or
notification pursuant to the Securities Act, and applicable Blue Sky laws, to
the end that such securities may be sold under the Securities Act and such Blue
Sky laws as promptly as practicable from the date of receipt of such notice by
the Company and (ii) immediately notify all Holders of its intention so to file
a Registration Statement and include any additional Registrable Securities in
said Registration Statement as Holders may thereafter request in writing prior
to the effective date of said Registration Statement; provided that no more
than one such demand may made upon the Company; provided that the Company shall
not be obligated to take any action to effect any such Registration pursuant to
this Section 9.1(b);
(i) During the period starting with the date
sixty (60) days prior to the Company's estimated date of filing of, and ending
on the date one hundred twenty (120) days immediately following the effective
date of, any Registration Statement pertaining to securities of the Company,
provided the Company is actively employing in good faith all reasonable efforts
to cause such Registration Statement to become effective; or
(ii) After the Company has effected one such
Registration pursuant to this Section 9.1(b).
(c) General Provisions. The following provisions shall
also be applicable to any such Registration:
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<PAGE> 9
(i) The Holders whose Registrable Securities are
to be included therein (the "Sellers") shall furnish the Company with such
appropriate information (relating to the intentions of such Holders) in
connection therewith as the Company shall reasonably request in writing.
Following the effective date of `such Registration Statement or notification,
the Company shall, upon the request of any Seller, forthwith supply such number
of Prospectuses or offering circulars meeting the requirements of the
Securities Act as shall be reasonably requested by such Seller to permit such
Seller to make a public offering of all such securities of such Seller included
therein. The Company shall file such Blue Sky Applications and use its best
efforts to qualify such securities included therein for sale in such states as
the Sellers shall reasonable designate.
(ii) The Company shall bear the cost and expense
directly relating to any registration of securities pursuant to this Section
9.1, provided, however, that the Company shall not be required to pay for any
expenses of any registration proceeding begun pursuant to this Section 9.1 if
the Registration request is subsequently withdrawn at the request of the
Holders of a majority of the Registrable Securities to be registered (in which
case all Holders requesting such Registration shall bear such expenses). The
Company shall not be required to pay all selling commissions, but shall pay all
applicable listing fees.
(iii) The Company shall indemnify and hold harmless
each Seller and each Underwriter who may purchase from or sell for any Seller
any Registrable Securities Iron, and against any and all losses, claims,
damages and liabilities caused by any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or any
Prospectus included therein, required to be filed or furnished by reason of
this Section 9.1, or caused by any omission or alleged omission to stale
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, except insofar as
such losses, claims, damages or liabilities are caused by any such untrue
statement or omission or alleged omission was based upon information furnished
or required to be furnished in writing to the Company by and about such Seller
or Underwriter expressly for use therein, which indemnification shall include
each person, if any, who controls any such Seller or Underwriter within the
meaning of the Securities Act; provided, however, that the Company shall not be
obliged so to indemnify any such Seller or Underwriter or controlling person
unless such Seller and Underwriter shall at the same time indemnify the
Company, its directors, each officer signing a Registration Statement or
notification and each person, if any, who controls the Company within the
meaning of the Securities Act from and against any and all losses, claims,
damages and liabilities caused by any untrue statement or alleged untrue
statement of a material face contained in any Registration Statement or
notification or any Prospect us or offering circular required to be filed or
furnished by reason of this Section 9.1, or caused by any omission or alleged
omission to slate therein a material fact required to be stated therein or
necessary to make the statement therein, in light of the circumstances under
which they were made, not misleading, insofar as such losses, claims, damages
or liabilities are caused by any untrue statement or alleged untrue statement
or omission or alleged omission was based upon information furnished in writing
to the Company by and about such Seller or Underwriter expressly for use
therein.
(iv) The Company will, or will use its best
efforts to (i) prepare and file with the Commission a Registration Statement or
notification with respect to the Registrable
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<PAGE> 10
Securities to be registered or qualified and cause such Registration Statement
or notification to become and remain effective; provided, that the Company will
not be required to keep the Registration Statement or notification effective,
or to prepare and file any amendments or supplements, later than nine months
after the date on which the Registration Statement or notification becomes
effective under the Securities Act.
(v) The Company shall, in case of a registration
or notification, furnish to the Holders of the Registrable Securities for whom
such Registrable Securities are registered or are to be registered or are filed
for notification, at the time such Registration Statement becomes effective, an
opinion of counsel, dated such date, for the Company reasonably acceptable to
the Holders to the effect that a Registration Statement or notification
covering the Registrable Securities has been filed with the commission under
the Securities Act and has become effective, that a prospectus or offering
circular complying in form with the requirements of the Securities Act is
available for delivery, that to the best of such counsel's knowledge, no stop
order has been issued by the Commission suspending t lie effectiveness of the
Registration Statement or suspending the availability of the offering exemption
and that, to the best of the counsel's knowledge, no proceedings for the
issuance of a stop order are threatened or contemplated, and that the
Registrable Securities have been registered or qualified under the securities
or Blue Sky Laws of each state in which the Company is required, pursuant to
subsection (c)(i) of this Section 9.110 register or qualify the Registrable
Securities and in which such registration or qualification cannot be effected
without undue effort or expense.
(vi) It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Section 9.1 with
respect to the Registrable Securities of any selling Holder that such Holder
shall furnish to the Company such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of such
securities as shall be reasonably required to effect the Registration of such
Holder's Registrable Securities.
9.2 Adjustment of Expiration Date. Notwithstanding any provision
contained herein to the contrary, in the event that a timely request is made
hereunder by the Holder of this Warrant or a Related Warrant to sell such
Registrable Securities in a registered public offering or pursuant to a
notification, and the holders thereof use reasonable efforts to cause such sale
to be made in a prompt manner, the Expiration Date shall be extended to a date
90 days following the effective date of registration of the Registrable
Securities included in such registration or notification, if the Expiration
Date would otherwise occur within such 90 day period.
9.3 Exchange Listing. In connection with the issuance of any
Units upon the exercise of this Warrant, the Company shall secure the listing
of the underlying shares of Common Stock and the Underlying Warrants upon any
securities exchange upon which shares of the Company's Common Stock and
Warrants are listed.
9.4 No Obligation to Sell. Neither the giving of any notice nor
the making of any request hereunder shall impose any obligation on the selling
Holder to sell any Registrable Securities Warrant or Units.
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9.5 Registration Rights Survive Exercise. The Company's
obligations under this Section 9 shall continue in effect, regardless of the
exercise or surrender of this Warrant. The Company's obligations under this
Section 9 shall expire, however, with respect to a Warrant, Related Warrant,
Unit or Related Unit or shares or Underlying Warrants which has been sold by a
broker or dealer or in a public offering registered under the Securities Act or
a public offering exempt from such registration.
Section 10. TRANSFER RESTRICTION
10.1 General. Anything contained herein to the contrary
notwithstanding, this Warrant may not be assigned, transferred, hypothecated or
sold during the initial twelve-month period of this Warrant, except that it (a)
may be transferred at any time by will or pursuant to the laws of descent and
distribution, or (b) may be assigned at any time in whole or in part to (i)
shareholders, directors, officers or partners (or shareholders of a corporate
partner) of the Underwriter(s) or family members who would take pursuant to a
will or the laws of descent and distribution (or trusts for their benefit) (i)
such persons, (ii) successors to the Underwriter(s) of the public offering in a
merger or consolidation or (iii) a purchaser of substantially all of the assets
of any Underwriter of the public offering. All of the foregoing shall be
deemed to be "Permitted Transfers". After the initial twelve-month period this
Warrant may be assigned, transferred, hypothecated or sold, provided, however,
that upon such transfer to a party other than a party included within the
definition of Permitted Transfers, above, (hereafter a Non-Related-Party
Transfer) the transferee must immediately (or as immediately as is
practicable), exercise their Warrant pursuant to Section 2 hereof. Any such
assignment or transfer shall be made by surrender of this Warrant to the
Company or at the office of its transfer agent, if any, with the Form of
Assignment annexed hereto duly executed and funds sufficient to pay any
transfer tax, whereupon the company shall, without charge, execute and deliver
a new Warrant in the name of the assignee and this Warrant shall promptly be
cancelled.
10.2 Securities Law Compliance. Except as provided in Section 10.1
above and except pursuant to the requirements of Rule 144 of the Securities
Act, this Warrant and the Units may not be sold, transferred, assigned or
otherwise disposed of except as follows:
(a) to a person who, in the opinion of counsel reasonably
satisfactory to the Company, is a person to whom this Warrant or the Units may
legally be transferred without registration and without the delivery of a
current prospectus or offering circular with respect thereto; or
(b) to any person upon delivery of a prospectus or
offering circular then meeting the requirements of the Securities Act relating
to such securities (as to which a Registration Statement or notification under
the Securities Act shall then be in effect) and the offering thereof for such
sale or disposition.
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Section 11. MISCELLANEOUS
11.1 Successors and Assigns. All the covenants and provisions of
this Warrant which are by or for the benefit of the Company or the Holders
shall bind and inure to the benefit of their respective successors and assigns
hereunder.
11.2 Notice. Notice or demand pursuant to this Warrant to be
given) or made by the Holder to or on the Company shall be sufficiently given
or made if sent by registered mail, postage prepaid, receipt requested,
addressed, until another address is designated in writing by the Company, as
follows:
Alpha Microsystems
2722 South Fairview Street
Santa Ana, CA 92704
Any notice or demand authorized by this Warrant to be given or made by
the Company to or on the Holder shall be given to the Holder by registered
mail, postage prepaid, receipt requested, addressed at his last known address
as it shall appear on the books of the Company, until another address is
designated in writing, with a copy to Edward R. Henderson, 70 Kelley Avenue,
Rumford, Rhode Island, 02916, by like mail.
11.3 Applicable Law. The validity, interpretation and performance
of this Warrant shall be governed by the laws of the State of Rhode Island.
11.4 Headings. The Article headings herein are for convenience
only and are not part of this Warrant and shall not affect the interpretation
thereof.
Dated: April 30, 1996 ALPHA MICROSYSTEMS
By: s/Douglas J. Tullio
-------------------------------
Douglas J. Tullio, President
Attest: s/John Glade
----------------------------
John Glade, Secretary
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EXERCISE FORM
(To be Executed by the Warrant Holder if He, or She
Desires to Exercise the Warrant in Whole or in Part)
To: Alpha Microsystems
The undersigned (___________________________________________________________)
Please insert name and Social Security or number E.I.N. of Holder
hereby irrevocably elects to exercise the rights of purchase represented by the
within Warrant for, and to purchase thereunder, ___________ Units provided for
therein and tenders payment herewith to the order of Alpha Microsystems in the
amount of $________. The undersigned requests that certificates for such Units
be issued as follows:
Name:___________________________________________________________________________
Address:________________________________________________________________________
Deliver to:_____________________________________________________________________
Address:________________________________________________________________________
and, if said number of Units shall not be all the Units purchasable hereunder,
that a new Warrant for the balance remaining of the Units purchasable under the
within Warrant be registered in the name of, and delivered to, the undersigned
at the address stated below.
Address:________________________________________________________________________
Dated:________________,19_____
Signature:______________________________
Note: Signature must correspond with
the name as written upon the face of
this Warrant in every particular,
without alteration or enlargement or
any change whatsoever.
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<PAGE> 14
FORM OF ASSIGNMENT
(To be Signed Only Upon Assignment)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
_______________ the right to purchase _______ Units evidenced by the within
Warrant, and appoints ____________________ to transfer the same on the books of
Alpha Microsystems with the full power of substitution in the premises.
Dated:________________,19_____
Signature:______________________________
Note: Signature must correspond with
the name as written upon the face of
this Warrant in every particular,
without alteration or enlargement or
any change whatsoever, and the
signature must be guaranteed in the
usual manner.
Signature Guaranteed:
_______________________________
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<PAGE> 15
SCHEDULE OF WARRANT HOLDERS
Name ________________________________ Amount
Note: The Schedule is for use as a convenience at the closing of the
offering to which this Warrant relates so that only one Warrant need
be executed at the closing, it being understood that following the
closing, individual Warrants registered in the above names and amounts
will be issued promptly upon surrender of this Warrant.
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<PAGE> 1
EXHIBIT 4.13
THE TRANSFER OF THIS WARRANT IS RESTRICTED
AS PROVIDED IN SECTION 10.
________________________________________________________________________________
No. W-7 WARRANT TO PURCHASE
GRANT DATE: December 7, 1993 56,758 UNITS
ALPHA MICROSYSTEMS
UNDERWRITER'S WARRANT
In consideration of other value received, Alpha Microsystems,
a California corporation (the "Company"), grants to James F. Twaddell
or permitted transferees or assigns (the "Holder") the right, subject to the
terms of this Warrant, to purchase at any time and from time to time during the
period commencing November 1, 1994, and ending on November 1, 1998, unless
extended or terminated as provided herein (the "Expiration Date"), up to 56,758
Units of the Company (each Unit to consist of one share of Common Stock and one
warrant to purchase one share of Common Stock) at $1.95 per Unit (the "Basic
Exercise Price") as more fully described in the Company's Prospectus dated
November 1, 1993 for the public offering of equivalent units ("Company's
Prospectus"). The Basic Exercise Price and the number of Units that may be
purchased are subject to adjustment under the terms of this Warrant.
Section 1. DEFINITIONS.
As used in this Warrant, unless the context otherwise
requires:
1.1 "Basic Exercise Price" means the price at which each
Unit may be purchased upon exercise of this Warrant as stated in the first
sentence of this Warrant.
1.2 "Blue Sky Application" means an application or other
document filed pursuant to a Blue Sky law to register, qualify or obtain an
exemption for any offer or sale by or for the account of the Holder of all or
part of this Warrant or any of the Units.
1.3 "Blue Sky law" means the laws and regulations of any
state or other jurisdiction applicable to any sale by or for the account of the
Holder of all or part of this Warrant or any of the Units.
1.4 "Common Stock" means the Common Stock (no par value)
of the Company existing on the Grant Date and for purposes of Sections 7.1(a)
through (e) also has the meaning set forth in Section 7.1(g).
1.5 "Exercise Date" means any date when this Warrant is
exercised, in whole or in part, in the manner indicated in Sections 2.1 and
2.2.
<PAGE> 2
1.6 "Exercise Price" means the Basic Exercise Price;
provided, however, that if an adjustment is required under Section 7 of this
Warrant, then the "Exercise Price" means, after each such adjustment, the price
at which each Unit may be purchased upon exercise of this Warrant immediately
after the last such adjustment.
1.7 "Expiration Date" means the Expiration Date indicated
on the first page of this Warrant as such date may be extended as provided in
Section 9.2(a) or the date indicated in Section 9.2(h) if the Warrant shall
have been sold in a public offering as provided therein.
1.8 "Grant Date" means the date this Warrant was first
granted as stated at the beginning of this Warrant.
1.9 "Prospectus" means a preliminary prospectus or final
prospectus (including any supplement) or any offering circular or similar
offering document, included in a Registration Statement.
1.10 "Registrable Securities" means the Warrants, the
Related Warrants, the Units, the Related Units, or shares of Common Stock or
Underlying Warrants issued pursuant to exercise of the Warrant.
1.11 "Registration Statement means a Registration or
Offering Statement, a pre-effective or post-effective amendment to a
Registration Statement or other document proposed for filing or filed by the
Company under the Securities Act which is or would be available under
applicable laws, rules and regulations to register for a public offering or
sale this Warrant, any Related Warrant, any Units or any Related Units. The
term "Registration Statement" shall not apply to any registration statement
relating to the sale of securities to participants in a Company stock or option
plan or a registration on any form which doesn't include substantially the same
information as would be required to be included in a registration statement
covering the sale of Registrable Securities (as defined in Section 1.10 below).
1.12 "Related Warrant" means any other Warrant executed
and delivered by the Company on terms identical with the terms of this Warrant
(except as to the identity of the Holder, number of Units or execution date)
granted in connection with the transaction pursuant to which this Warrant was
granted.
1.13 "Related Units" means any Units or other securities
issued or issuable upon exercise of' any Related Warrant.
1.14 "Securities Act" means the Securities Act of' 1933,
as amended from time to time, and all rules and regulations promulgated
thereunder, or any act, rules or regulations which replace the Securities Act
or any such rules and regulations.
1.15 "Underwriter" means any party who is an "underwriter"
within the meaning of the Securities act with respect to any sale by or for the
account of the Holder of' any of the Warrants or Unit.
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<PAGE> 3
1.16 "Unit" means any Units, consisting of' one share of
Common Stock of the Company and one warrant to purchase one share of Common
Stock, or other securities issued or subject to issuance upon exercise of this
Warrant or upon exchange of a Unit or Units of different denominations.
1.17 "Underlying Warrant" means the common stock purchase
warrant to purchase shares of Common Stock of the Company which, together with
the Unit Share, comprises the Unit. The Underlying Warrant is identical in all
respects to the redeemable common stock purchase warrants issued pursuant to
the Warrant Agreement, as more fully described in the Company's Prospectus,
except that (i) the initial exercise date thereof shall be the date of exercise
of the Underwriters' Warrant, (ii) the initial exercise price thereof shall be
$2.50 and shall be thereafter determined as set forth herein, (iii) the Company
may not redeem the Underlying Warrants, (iv) no terms of the Underlying
Warrants may be modified without the consent of the Holders of a majority of
the Warrants, (v) the Underlying Warrants shall be exercisable until the
Expiration Date; and (vi) the Common Stock subject to the Underlying Warrants
shall initially be as set forth in the Warrant Agreement and thereafter
determined as set forth herein without regard to the terms of the Warrant
Agreement.
1.18 "Warrant" means -this Underwriter's Warrant and each
previously executed and cancelled Underwriter's Warrant, if any, for which this
Warrant has been exchanged.
1.19 "Warrant Agreement" means the Warrant Agreement
associated with offering contemplated by the Registration Statement between
Mellon Securities Trust and the Company.
Section 2. DURATION AND EXERCISE OF WARRANT
2.1 Exercise Period. Subject to the provisions of
Sections 5 and 10 hereof, the Warrants may be exercised at any time after one
year from the Grant Date and on or before the Expiration Date. After the
Expiration Date this Warrant shall become void, and all rights to purchase
Units hereunder shall thereupon cease.
2.2 Method of Exercise. This Warrant may be exercised by
the Holder, in whole or in part, by (i) surrendering this Warrant to the
Company, (ii) tendering to the Company payment of the Exercise Price for the
Units for which exercise is made and (iii) executing and delivering to the
Company the attached Exercise Form. Upon proper exercise, the Holder shall be
deemed to be the holder of record of the Units for which exercise is made, even
though the transfer or register books of the Company may then be closed or
certificates representing such Units may not then be actually delivered to the
Holder.
2.3 Certificates. Within a reasonable time but no more
than 20 days after exercise, certificates for the shares of Common Stock and
the Underlying Warrants comprising such Units shall be delivered to the Holder
and, unless this Warrant has expired, a Related Warrant representing the number
of Units, if any, with respect to which this Warrant shall not have been
exercised shall be issued to the Holder.
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<PAGE> 4
2.4 Taxes. The Company covenants and agrees that it will
pay when due and payable any and all taxes which may be payable in connection
with the issuance of this Warrant, or the issuance of any Units upon the
exercise of this Warrant. The Company shall not, however, be required to pay
any tax which may be payable in respect of any subsequent transfer of this
Warrant or of the Units.
Section 3. VALIDITY AND RESERVATION OF UNITS
The Company covenants that this Warrant and all Units, shares
of Common Stock or Underlying Warrants issued upon exercise of this Warrant
will be validly issued, fully paid, nonassessable and free of preemptive
rights. The Company agrees that so long as this Warrant may be exercised, the
Company will have authorized and reserved for issuance upon exercise of this
Warrant a sufficient number of Units to provide for exercise in full.
Section 4. FRACTIONAL UNITS
No fractional Unit shall be issued upon the exercise of this
Warrant. With respect to any fraction of a Unit otherwise issuable upon any
such exercise, the Company shall pay to the Holder an amount in cash equal to
such fraction multiplied by the Exercise Price.
Section 5. LIMITED RIGHTS OF THE WARRANT HOLDER
The Holder shall not, solely by virtue of being the Holder of
this Warrant, have any of the rights of a holder of Common Stock of the
Company, either at law or equity, until such Warrant shall have been exercised
and the Holder shall be deemed to be the holder of record of Units as provided
in this Warrant.
Section 6. EXCHANGE, TRANSFER OR LOSS OF WARRANT
6.1 Exchange. This Warrant is exchangeable, without
expense to the Holder and upon surrender hereof to the Company, for Warrants of
different denominations entitling the Holder to purchase Units equal in total
number and identical in type to the Units covered by this Warrant.
6.2 Transfer. Subject to the provisions of Section 10,
upon surrender of this Warrant to the Company with the attached Assignment Form
duly executed and the tender of funds sufficient to pay any transfer tax, the
Company shall, without charge, execute and deliver a new Warrant to the
assignee named in such Assignment Form, and this Warrant shall be cancelled
concurrent with such issuance.
6.3 Loss, Theft, Destruction or Mutilation. Upon receipt
by the Company of satisfactory evidence of the loss, theft, destruction or
mutilation of this Warrant and either (in the case of loss, theft or
destruction) reasonable indemnification or (in the case of mutilation) the
surrender of this Warrant for cancellation, the Company will execute and
deliver to the Holder, without charge, a new Warrant of like denomination. Any
such new Warrant executed and delivered shall constitute an additional
obligation of the Company, whether or not this Warrant, reportedly lost,
stolen, destroyed or mutilated, shall be at any time enforceable by anyone.
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<PAGE> 5
Section 7. ANTI-DILUTION ADJUSTMENT OP NUMBER OP UNITS AND EXERCISE PRICE
7.1 Adjustment of Exercise Price. If any of the
following events shall occur at any time or from time to time prior to the
exercise in full or expiration of this Warrant, the following adjustments shall
be made in the Exercise Price, with the exception hereinafter provided:
(a) Recapitalization. In case the Company effects a
subdivision, combination, reclassification or other Recapitalization of its
outstanding shares of Common Stock into a greater or lesser number of shares of
Common Stock, the Exercise Price in effect immediately after such subdivision,
combination, reclassification or other recapitalization shall be
proportionately decreased or increased, as the case may be.
(b) Dividend Other Than in Cash. If the Company shall
declare a dividend on its Common Stock payable in stock or other securities of
the Company or of any other corporation, or in property or otherwise than in
cash, or the functional equivalent thereof, to the holders of its Common Stock,
the Holder shall, without additional cost, be entitled to receive upon the
exercise of this Warrant, in addition to the Units to which such Holder is
otherwise entitled upon such exercise, the number of shares of stock or other
securities or property which such Holder would have been entitled to receive if
such Holder had been a holder, on the record date for such dividend, of the
number of shares of Common Stock so purchased under this Warrant (but not
including the number of shares of Common Stock acquirable upon subsequent
exercise of the Underlying Warrants).
(c) Merger or Consolidation - No Change in Control. In
case of any merger, consolidation or reorganization of the Company with or into
one or more corporations which results in holders of the Company's Common Stock
immediately prior to such event owning a majority of the voting securities of
the surviving corporation immediately following such event, and as a result of
which holders of the Company's Common Stock receive other stock, securities or
property in lieu of or in addition to, but on account of, their Common Stock,
the Holder, upon the exercise of this Warrant after the record date for
determination of shareholders entitled thereto, shall receive, in lieu of or in
addition to the Units, the proportionate shares of all stock, or other
securities (appropriately adjusted for any subsequent events of the issuer of
such stock or securities which are of the kind which would cause adjustment of
the Exercise Price hereunder) or other property issued, paid or delivered for
or on all of the Common Stock of the Company as would have been allowable to
the Units so purchased under this Warrant had this Warrant been exercised
immediately prior to said record date.
(d) Merger or Consolidation - Change in Control. In case
of any merger, consolidation or reorganization of the Company with or into one
or more other corporations, which results in the holders of the Company's
Common Stock immediately prior to such event owning less than a majority
interest of the voting securities of the surviving corporation immediately
following such event, or in the case of any sale, lease, transfer or conveyance
to another corporation of all or substantially all the assets of the Company or
proposed liquidation of the Company, then in either such event the Holder shall
be given notice of such proposed action
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<PAGE> 6
at approximately the same time and in substantially the same manner as the
holders of the Company's Common Stock. The Holder may attend the meeting of
the Company's shareholders at which such action is considered and voted upon.
If the proposed action is approved according to applicable law by the
shareholders of all corporations or other entities which are parties to the
proposed action, the Holder shall be so notified in writing by the Company by
registered or certified mail, and thereupon, notwithstanding the period of
exercisability stated on the face of this Warrant, this Warrant shall
automatically become immediately exercisable and become forever null and void
to the extent not exercised on or before 5:00 P.M., California time, on the
tenth Business Day following the delivery of such notice.
(e) Minimum Adjustment Not Required. Anything in this
Section 7.1 to the contrary notwithstanding, the Company shall not be required,
except as hereinafter provided, to make any adjustment of the Exercise Price in
any case in which the amount by which such Exercise Price would be increased or
reduced, in accordance with the foregoing provisions, would be less than $.05,
but in such a case, such adjustment shall be carried forward and when such
adjustment, together with any and all such other adjustments so carried
forward, shall amount to not less than $.10 the Exercise Price shall be
adjusted; provided, however, that adjustments of less than $.05 in the Exercise
Price shall be required and made in accordance with the provisions of this
Section 7.1 (other than this subparagraph) not later than such time as may be
required in order to preserve the tax free nature of any distribution (within
the meaning of Section 305 of the United States Internal Revenue Code of 1986,
as amended) to the Holder or the holders of Common Stock. In the event of any
subdivision, combination, reclassification or other recapitalization of shares
of Common Stock, said amount (as theretofore decreased or increased) shall be
proportionately decreased or increased.
(f) Other Adjustments. The Company, by action of its
Board of Directors, shall make such other equitable adjustments to the Exercise
Price as may be necessary to protect the Holder against dilution of this
Warrant, with or without a request of a Holder, where such an adjustment is
appropriate in light of the occurrence of an event or the existence of
circumstances similar to those otherwise contemplated by this Section 7.1.
(g) Term "Common Stock." Whenever reference is made in
Sections 7.1(a) through (e) above to Common Stock, the term "Common Stock"
shall include any stock of any class of the Company, other than preferred stock
with a fixed limit on dividends, with no rights of conversion into "Common
Stock" and with a fixed amount payable in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Company.
7.2 Number of Units Adjusted. After any adjustment of the
Exercise Price pursuant to Section 7.1, the number of Units issuable at the new
Exercise Price shall be adjusted to the number obtained by (i) multiplying the
number of Units issuable upon exercise of this Warrant immediately before such
adjustment by the Exercise Price in effect immediately before such adjustment
and (ii) dividing the product so obtained by the new Exercise Price.
7.3 Notice of Adjustment. Whenever events occur requiring the
Exercise Price to be adjusted, the Company shall promptly file with its
Secretary or an Assistant Secretary at its principal office and with its stock
transfer agent, if any, a certificate of its chief financial officer
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<PAGE> 7
showing the adjusted Exercise Price, setting forth in reasonable detail the
facts requiring such adjustment, and stating such other facts as shall be
necessary to show the manner and figures used to compute such adjustment. Such
chief financial officer's certificate shall be made available at all reasonable
times for inspection by the Holder. Promptly after each such adjustment, the
Company shall mail a copy of such certificate by certified mail to the Holder
together with information relating to the adjustment under Section 7.2. The
Company shall endorse on any Related Warrant executed and delivered by the
Company a description of each adjustment, if any, under this Section as the
result of events occurring before the execution and delivery of the Related
Warrant, and the Related Warrant so issued shall reflect the number of Units
issuable on exercise, as adjusted to reflect such changes.
If, within 45 days of the mailing of such certificate, Holders holding
in the aggregate not less than 25% of. the Warrants notify the Company in
writing of their disagreement with the adjusted Exercise Price contained in the
Company certificate, then the Company will promptly obtain a certificate of a
firm of independent certified public accountants of recognized standing
selected by the Company's Board of Directors (who shall not be the regular
auditors of the Company) certifying the same items required by the Company
certificate or making such adjustments as are appropriate. The Company will
promptly mail a copy of the firm of independent public accountants' certificate
to the Holder of this Warrant. Under the circumstances described in this
paragraph, the Holders of the Warrants giving notice shall be obligated to
reimburse the Company for half of the charges imposed by the independent
certified accountants if their certificate confirms the Company's prior
calculations.
Section 8. NOTICE TO HOLDER
So long as this Warrant is outstanding, whenever the Company shall
expect to (i) pay any dividend or distribution upon Common Stock, (ii) offer to
the holders of Common Stock any right to subscribe for or to purchase any other
securities of the Company, (iii) effect any recapitalization, merger,
consolidation, reorganization, transfer, sale, lease or conveyance as referred
to in Section 7, or (iv) be involved in any voluntary or involuntary
dissolution, liquidation or winding up of the Company, at least twenty-one days
before the proposed action or any applicable record date, the Company, by
certified mail, shall give the Holder written notice describing the proposed
action and stating the date on which (x) a record date is to be fixed for the
purposes of such dividend, distribution or right or (y) such recapitalization,
merger, consolidation, reorganization, transfer, sale, lease, conveyance,
dissolution, liquidation or winding up is to take place and when, if any date
is to be fixed, the record holders of Common Stock shall be entitled to
exchange the shares of Common Stock for securities or other property
deliverable upon such recapitalization, merger, consolidation, reorganization,
transfer, sale, lease, conveyance, dissolution, liquidation or winding up.
Section 9. REGISTRATION OF THE WARRANT OR UNITS
9.1 Registration Rights
(a) Piggy-back Registration. The Company shall advise
each Holder of Registrable Securities by written notice at least four weeks
prior to the filing of any Registration
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<PAGE> 8
Statement pertaining to securities to be offered to the public solely for cash
which is filed after twelve months but within six years after the Grant Date,
and will, upon the request of any such Holders, and without any charge to them,
include in any such Registration Statement such information as may be required
to permit a public offering of their Registrable Securities. If any such
Registration Statement or notification is being filed by the Company in
connection with an underwritten public offering of securities of the Company,
the Company shall have the right to require such Holders (provided that Rule
415 applies to the sale of the Registrable Securities) to postpone the offering
of their securities for a period of 90 days following the effective date of
such Registration Statement or notification. If any such Registration
Statement or notification is being filed by the Company solely for the benefit
of selling security holders, the Company will permit such Holders of the
Registrable Securities to include for sale with such shareholders in such
Registration Statement or notification at least a pro rata portion (based upon
the ratio of the number of shares of Common Stock which such selling security
holders desire to sell to the number of Registrable Securities which such
Holders of the Registrable Securities desire to sell) of the total Units being
registered, and the offering of the balance of the Registrable Securities owned
by holders of the Registrable Securities may then be postponed by the Company
for a period of 90 days following effectiveness of the Registration Statement
or notification.
(b) Demand Registration. If the Company shall be given
notice from persons holding more than 50% of the Registrable Securities any
time after twelve months but prior to six years from the Grant Date, to the
effect that such holders contemplate (i) the transfer of all or any part of
their Registrable Securities, or (ii) the exercise of all or any part of their
Warrants or Related Units, under such circumstances that a public offering
(within the meaning of the Securities Act) of such securities will be involved,
then the Company shall, (i) at its expense and as promptly as practicable after
receipt of such notice, if such securities may not then be sold in a public
offering under the Securities Act, file a Registration Statement or
notification pursuant to the Securities Act, and applicable Blue Sky laws, to
the end that such securities may be sold under the Securities Act and such Blue
Sky laws as promptly as practicable from the date of receipt of such notice by
the Company and (ii) immediately notify all Holders of its intention so to file
a Registration Statement and include any additional Registrable Securities in
said Registration Statement as Holders may thereafter request in writing prior
to the effective date of said Registration Statement; provided that no more
than one such demand may made upon the Company; provided that the Company shall
not be obligated to take any action to effect any such Registration pursuant to
this Section 9.1(b);
(i) During the period starting with the date
sixty (60) days prior to the Company's estimated date of filing of, and ending
on the date one hundred twenty (120) days immediately following the effective
date of, any Registration Statement pertaining to securities of the Company,
provided the Company is actively employing in good faith all reasonable efforts
to cause such Registration Statement to become effective; or
(ii) After the Company has effected one such
Registration pursuant to this Section 9.1(b).
(c) General Provisions. The following provisions shall
also be applicable to any such Registration:
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<PAGE> 9
(i) The Holders whose Registrable Securities are
to be included therein (the "Sellers") shall furnish the Company with such
appropriate information (relating to the intentions of such Holders) in
connection therewith as the Company shall reasonably request in writing.
Following the effective date of such Registration Statement or notification,
the Company shall, upon the request of any Seller, forthwith supply such number
of Prospectuses or offering circulars meeting the requirements of the
Securities Act as shall be reasonably requested by such Seller to permit such
Seller to make a public offering of all such securities of such Seller included
therein. The Company shall file such Blue Sky Applications and use its best
efforts to qualify such securities included therein for sale in such states as
the Sellers shall reasonable designate.
(ii) The Company shall bear the cost and expense
directly relating to any registration of securities pursuant to this Section
9.1, provided, however, that the Company shall not be required to pay for any
expenses of any registration proceeding begun pursuant to this Section 9.1 if
the Registration request is subsequently withdrawn at the request of the
Holders of a majority of the Registrable Securities to be registered (in which
case all Holders requesting such Registration shall bear such expenses). The
Company shall not be required to pay all selling commissions, but shall pay all
applicable listing fees.
(iii) The Company shall indemnify and hold harmless
each Seller and each Underwriter who may purchase from or sell for any Seller
any Registrable Securities from, and against any and all losses, claims,
damages and liabilities caused by any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or any
Prospectus included therein, required to be filed or furnished by reason of
this Section 9.1, or caused by any omission or alleged omission to state
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, except insofar as
such losses, claims, damages or liabilities are caused by any such untrue
statement or omission or alleged omission was based upon information furnished
or required to be furnished in writing to the Company by and about such Seller
or Underwriter expressly for use therein, which indemnification shall include
each person, if any, who controls any such Seller or Underwriter within the
meaning of the Securities Act; provided, however, that the Company shall not be
obliged so to indemnify any such Seller or Underwriter or controlling person
unless such Seller and Underwriter shall at the same time indemnify the
Company, its directors, each officer signing a Registration Statement or
notification and each person, if any, who controls the Company within the
meaning of the Securities Act from and against any and all losses, claims,
damages and liabilities caused by any untrue statement or alleged untrue
statement of a material face contained in any Registration Statement or
notification or any Prospectus or offering circular required to be filed or
furnished by reason of this Section 9.1, or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statement therein, in light of the circumstances under
which they were made, not misleading, insofar as such losses, claims, damages
or liabilities are caused by any untrue statement or alleged untrue statement
or omission or alleged omission was based upon information furnished in writing
to the Company by and about such Seller or Underwriter expressly for use
therein.
(iv) The Company will, or will use its best
efforts to (i) prepare and file with the Commission a Registration Statement or
notification with respect to the Registrable
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<PAGE> 10
Securities to be registered or qualified and cause such Registration Statement
or notification to become and remain effective; provided, that the Company will
not be required to keep the Registration Statement or notification effective,
or to prepare and file any amendments or supplements, later than nine months
after the date on which the Registration Statement or notification becomes
effective under the Securities Act.
(v) The Company shall, in case of a registration
or notification, furnish to the Holders of the Registrable Securities for whom
such Registrable Securities are registered or are to be registered or are filed
for notification, at the time such Registration Statement becomes effective, an
opinion of counsel, dated such date, for the Company reasonably acceptable to
the Holders to the effect that a Registration Statement or notification
covering the Registrable Securities has been filed with the commission under
the Securities Act and has become effective, that a prospectus or offering
circular complying in form with the requirements of the Securities Act is
available for delivery, that to the best of such counsel's knowledge, no stop
order has been issued by the Commission suspending the effectiveness of the
Registration Statement or suspending the availability of the offering exemption
and that, to the best of the counsel's knowledge, no proceedings for the
issuance of a stop order are threatened or contemplated, and that the
Registrable Securities have been registered or qualified under the securities
or Blue Sky Laws of each state in which the Company is required, pursuant to
subsection (c)(i) of this Section 9.110 register or qualify the Registrable
Securities and in which such registration or qualification cannot be effected
without undue effort or expense.
(vi) It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Section 9.1 with
respect to the Registrable Securities of any selling Holder that such Holder
shall furnish to the Company such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of such
securities as shall be reasonably required to effect the Registration of such
Holder's Registrable Securities.
9.2 Adjustment of Expiration Date. Notwithstanding any provision
contained herein to the contrary, in the event that a timely request is made
hereunder by the Holder of this Warrant or a Related Warrant to sell such
Registrable Securities in a registered public offering or pursuant to a
notification, and the holders thereof use reasonable efforts to cause such sale
to be made in a prompt manner, the Expiration Date shall be extended to a date
90 days following the effective date of registration of the Registrable
Securities included in such registration or notification, if the Expiration
Date would otherwise occur within such 90 day period.
9.3 Exchange Listing. In connection with the issuance of any
Units upon the exercise of this Warrant, the Company shall secure the listing
of the underlying shares of Common Stock and the Underlying Warrants upon any
securities exchange upon which shares of the Company's Common Stock and
Warrants are listed.
9.4 No Obligation to Sell. Neither the giving of any notice nor
the making of any request hereunder shall impose any obligation on the selling
Holder to sell any Registrable Securities Warrant or Units.
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9.5 Registration Rights Survive Exercise. The Company's
obligations under this Section 9 shall continue in effect, regardless of the
exercise or surrender of this Warrant. The Company's obligations under this
Section 9 shall expire, however, with respect to a Warrant, Related Warrant,
Unit or Related Unit or shares or Underlying Warrants which has been sold by a
broker or dealer or in a public offering registered under the Securities Act or
a public offering exempt from such registration.
Section 10. TRANSFER RESTRICTION
10.1 General. Anything contained herein to the contrary
notwithstanding, this Warrant may not be assigned, transferred, hypothecated or
sold during the initial twelve-month period of this Warrant, except that it (a)
may be transferred at any time by will or pursuant to the laws of descent and
distribution, or (b) may be assigned at any time in whole or in part to (i)
shareholders, directors, officers or partners (or shareholders of a corporate
partner) of the Underwriter(s) or family members who would take pursuant to a
will or the laws of descent and distribution (or trusts for their benefit) (i)
such persons, (ii) successors to the Underwriter(s) of the public offering in a
merger or consolidation or (iii) a purchaser of substantially all of the assets
of any Underwriter of the public offering. All of the foregoing shall be
deemed to be "Permitted Transfers". After the initial twelve-month period this
Warrant may be assigned, transferred, hypothecated or sold, provided, however,
that upon such transfer to a party other than a party included within the
definition of Permitted Transfers, above, (hereafter a Non-Related-Party
Transfer) the transferee must immediately (or as immediately as is
practicable), exercise their Warrant pursuant to Section 2 hereof. Any such
assignment or transfer shall be made by surrender of this Warrant to the
Company or at the office of its transfer agent, if any, with the Form of
Assignment annexed hereto duly executed and funds sufficient to pay any
transfer tax, whereupon the company shall, without charge, execute and deliver
a new Warrant in the name of the assignee and this Warrant shall promptly be
cancelled.
10.2 Securities Law Compliance. Except as provided in Section 10.1
above and except pursuant to the requirements of Rule 144 of the Securities
Act, this Warrant and the Units may not be sold, transferred, assigned or
otherwise disposed of except as follows:
(a) to a person who, in the opinion of counsel reasonably
satisfactory to the Company, is a person to whom this Warrant or the Units may
legally be transferred without registration and without the delivery of a
current prospectus or offering circular with respect thereto; or
(b) to any person upon delivery of a prospectus or
offering circular then meeting the requirements of the Securities Act relating
to such securities (as to which a Registration Statement or notification under
the Securities Act shall then be in effect) and the offering thereof for such
sale or disposition.
-11-
<PAGE> 12
Section 11. MISCELLANEOUS
11.1 Successors and Assigns. All the covenants and provisions of
this Warrant which are by or for the benefit of the Company or the Holders
shall bind and inure to the benefit of their respective successors and assigns
hereunder.
11.2 Notice. Notice or demand pursuant to this Warrant to be
given or made by the Holder to or on the Company shall be sufficiently given
or made if sent by registered mail, postage prepaid, receipt requested,
addressed, until another address is designated in writing by the Company, as
follows:
Alpha Microsystems
2722 South Fairview Street
Santa Ana, CA 92704
Any notice or demand authorized by this Warrant to be given or made by
the Company to or on the Holder shall be given to the Holder by registered mail,
postage prepaid, receipt requested, addressed at his last known address as it
shall appear on the books of the Company, until another address is designated in
writing, with a copy to James F. Twaddell, 101 Congdon Street, Providence, Rhode
Island, 02903, by like mail.
11.3 Applicable Law. The validity, interpretation and performance
of this Warrant shall be governed by the laws of the State of Rhode Island.
11.4 Headings. The Article headings herein are for convenience
only and are not part of this Warrant and shall not affect the interpretation
thereof.
Dated: April 30, 1996 ALPHA MICROSYSTEMS
By: s/Douglas J. Tullio
------------------------------
Douglas J. Tullio, President
Attest: s/John Glade
---------------------------
John Glade, Secretary
-12-
<PAGE> 13
EXERCISE FORM
(To be Executed by the Warrant Holder if He, or She
Desires to Exercise the Warrant in Whole or in Part)
To: Alpha Microsystems
The undersigned (____________________________________________________________)
Please insert name and Social Security or number E.I.N. of Holder
hereby irrevocably elects to exercise the rights of purchase represented by the
within Warrant for, and to purchase thereunder, ___________ Units provided for
therein and tenders payment herewith to the order of Alpha Microsystems in the
amount of $________.
The undersigned requests that certificates for such Units
be issued as follows:
Name:___________________________________________________________________________
Address:________________________________________________________________________
Deliver to:_____________________________________________________________________
Address:________________________________________________________________________
and, if said number of Units shall not be all the Units purchasable hereunder,
that a new Warrant for the balance remaining of the Units purchasable under the
within Warrant be registered in the name of, and delivered to, the undersigned
at the address stated below.
Address:________________________________________________________________________
Dated:________________,19_____
Signature:______________________________
Note: Signature must correspond with
the name as written upon the face of this
Warrant in every particular, without
alteration or enlargement or any
change whatsoever.
-13-
<PAGE> 14
FORM OF ASSIGNMENT
(To be Signed Only Upon Assignment)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
_______________ the right to purchase _______ Units evidenced by the within
Warrant, and appoints ____________________ to transfer the same on the books of
Alpha Microsystems with the full power of substitution in the premises.
Dated:________________,19_____
Signature:______________________________
Note: Signature must correspond with
the name as written upon the face of
this Warrant in every particular,
without alteration or enlargement or any
change whatsoever, and the signature
must be guaranteed in the usual manner.
Signature Guaranteed:
________________________________
-14-
<PAGE> 15
SCHEDULE OF WARRANT HOLDERS
Name ________________________________ Amount
Note: The Schedule is for use as a convenience at the closing of the
offering to which this Warrant relates so that only one Warrant need
be executed at the closing, it being understood that following the
closing, individual Warrants registered in the above names and amounts
will be issued promptly upon surrender of this Warrant.
-15-
<PAGE> 1
EXHIBIT 4.14
FORM OF
FIRST AMENDMENT TO
UNDERWRITER'S WARRANT
This First Amendment ("Amendment") to that certain UNDERWRITER'S
WARRANT dated ______________ ("Agreement"), by and among ______________________
("Holder"), and Alpha Microsystems, a California corporation ("Company"), is
entered into effective as of ____________. Except where otherwise defined
herein, the capitalized terms used in this Amendment shall have the respective
meanings assigned to such terms in the Agreement. This Amendment is made with
reference to the following facts:
R E C I T A L S
A. Holder is the owner of a certain warrant represented by the
Agreement (the "Underwriter's Warrant"), which gives Holder the right, upon
exercise, to purchase certain units from the Company (individually, a "Unit"
and collectively, the "Units"), with each Unit consisting of one share of the
Company's common stock, no par value ("Common Stock"), and one warrant to
purchase an additional share of Common Stock (the "Underlying Warrant").
B. The parties hereto desire to amend the Agreement, as set forth
below, in order to clarify that the Holder's right to purchase Units from the
Company now represents the right to purchase one share of Common Stock and one
Underlying Warrant, as separate securities and not as a Unit.
A G R E E M E N T
NOW, THEREFORE, in consideration of the foregoing Recitals and the
mutual covenants contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto hereby agree to amend the Agreement as follows:
1. Separation of Units. The Holder hereby acknowledges that the
Units separated on the date that was 60 days after the date of the Prospectus
with respect to the Company's 1993 public offering of Units into a share of
Common Stock and one Underlying Warrant for each Unit. Consequently, the
Holder hereby acknowledges and agrees that the Holder no longer has a right to
purchase Units upon exercise of the Underwriter's Warrant and all references in
the Agreement to the term "Unit" shall refer to a share of Common Stock and an
Underlying Warrant and all references in the Agreement to the term "Units"
shall refer to the aggregate number of shares of Common Stock and Underlying
Warrants the Holder is entitled to purchase upon exercise of the Underwriter's
Warrant.
<PAGE> 2
2. Miscellaneous.
(a) Except as expressly modified hereby, all other terms
and provisions of the Agreement shall remain in full force and effect, are
incorporated herein by this reference, and shall govern the conduct of the
parties hereto; provided, however, to the extent of any inconsistency between
the provisions of the Agreement and the provisions of this Amendment, the
provisions of this Amendment shall control.
(b) This Amendment may be executed in multiple
counterparts, each of which shall be deemed an original Amendment, but all of
which, taken together, shall constitute one and the same Amendment, binding on
the parties hereto. The signature of any party hereto to any counterpart
hereof shall be deemed a signature to, and may be appended to, any other
counterpart hereof.
(c) This Amendment and the Agreement (as hereby amended)
together contain and constitute the entire agreement between the parties hereto
with respect to the subject matter hereof, and this Amendment and the
Agreement, as hereby amended, may not be modified, amended, or otherwise
changed in any manner, except as provided in the Agreement (as hereby amended).
IN WITNESS WHEREOF, the parties hereto have executed this Amendment to
be effective as of the day and year first set forth above.
"Holder" _______________________________________
By:____________________________________
Name:_______________________________
Title:______________________________
"Company" ALPHA MICROSYSTEMS, a California
corporation
By:____________________________________
Name:_______________________________
Title:______________________________
-2-
<PAGE> 1
EXHIBIT 10.70
SILICON VALLEY BANK
AMENDMENT TO LOAN AGREEMENT
Borrower: Alpha Microsystems
Address: 2722 South Fairview Street
Santa Ana, California 92704
Date: February 7, 1996
THIS AMENDMENT TO LOAN AGREEMENT is entered into between SILICON VALLEY
BANK ("Silicon") and the borrower named above (the "Borrower").
The Parties agree to amend the Loan and Security Agreement between them
(the "Loan Agreement") dated July 28, 1995, as amended, effective as of the date
hereof. (Capitalized terms used but not defined in this Amendment, shall have
the meanings set forth in the Loan Agreement.)
1. Modification to Advance Percentage. The section of the
Schedule to the Loan Agreement entitled "Credit Limit (Section 1.1)" is hereby
amended by replacing the percentage figure of "70%" in clause (ii) of the first
paragraph of such section with the percentage figure of "50%".
2. Modification to Interest Rate. The section of Schedule to
the Loan Agreement entitled "Interest Rate (Section 1.2)" is hereby deleted in
its entirety and replace with the following:
"Interest Rate (Section 1.2): A rate equal to the "Prime Rate"
in effect from time to time,
plus 2.50% per annum. Interest
shall be calculated on the basis
of a 360-day year for the actual
number of days elapsed. "Prime
Rate" means the rate announced
from time to time by Silicon as
its "prime rate;" it is a base
rate upon which other rates
charged by Silicon are based,
and it is not necessarily the
best rate available at Silicon.
The interest rate applicable to
the Obligations shall change on
1
<PAGE> 2
each date there is a change in
the Prime Rate."
3. Modification to Financial Covenants. The section of the
Schedule to the Loan Agreement entitled "Financial Covenants (Section 4.1)" is
hereby deleted in its entirety and replaced with the following:
"Financial Covenants
(Section 4.1): Borrower shall comply with all of the
following covenants. Compliance shall be
determined as of the end of each month,
except as otherwise specifically provided
below:
Quick Asset Ratio: Borrower shall maintain a ratio of
"Quick Assets" to current liabilities
of not less than 1.00 to 1.
Tangible Net Worth: Borrower shall maintain a tangible net
worth of not less than $4,700,000.
Debt to Tangible Net
Worth Ratio: Borrower shall maintain a ratio of total
liabilities to tangible net worth of
not more than 1.25 to 1.
Profitability: Borrower shall not incur a loss (after
taxes) for the fiscal year ending
February 29, 1996 in excess of
$1,600,000. Thereafter, Borrower
shall not incur any losses (after
taxes) in any fiscal quarter, other
than for losses (after taxes) in two
fiscal quarters during any fiscal year
if the aggregate amount of such losses
for such two fiscal quarters does not
exceed $250,000.
Definitions: "Current assets," and "current
liabilities" shall have the meanings
ascribed to them in accordance with
generally accepted accounting
principles.
"Tangible net worth" means the
excess of total assets over total
liabilities, determined in
accordance with generally accepted
accounting
2
<PAGE> 3
principles, excluding
however all assets which would be
classified as intangible assets
under generally accepted accounting
principles, including without
limitation goodwill, licenses,
patents, trademarks, trade names,
copyrights, capitalized software and
organizational costs, licences and
franchises.
"Quick Assets" means cash on hand or
on deposit in banks, readily
marketable securities issued by the
United States, readily marketable
commercial paper rated "A-1" by
Standard & Poor's Corporation (or a
similar rating by a similar rating
organization), certificates of
deposit and baker's acceptances, and
accounts receivable (net of
allowance for doubtful accounts).
Deferred Revenues: For purposes of the above quick asset
ratio, deferred revenues shall not be
counted as current liabilities. For
purposes of the above debt to tangible
net worth ratio, deferred revenues
shall not be counted in determining
total liabilities but shall be counted
in determining tangible net worth for
purposes of such ratio. For all other
purposes deferred revenues shall be
counted as liabilities in accordance
with generally accepted accounting
principles.
Subordinated Debt: "Liabilities" for purposes of
foregoing covenants do not include
indebtedness which is subordinated to
the indebtedness to Silicon under a
subordination agreement in form
specified by Silicon or by language in
the instrument evidencing the
indebtedness which is acceptable to
Silicon."
4. Limited Waiver of Certain Financial Covenants. Silicon and Borrower
agree that the Borrower's compliance with the Quick Ratio and Tangible Net Worth
financial covenants set
3
<PAGE> 4
forth in Section 4.1 of the Schedule to Loan Agreement for the months ending
December 31, 1995 and January 31, 1996 is hereby waived. It is understood by the
parties hereto, however, that such waiver does not constitute a waiver of any
other provision or term of the Loan Agreement or any related document, nor an
agreement to waive in the future these covenants or any other provision or term
of the Loan Agreement or any related document.
5. Fee. Borrower shall pay to Silicon a fee in the amount of
$5,000, which shall be in addition to interest and all other amounts due
Silicon and shall not be refundable.
6. Representations True. Borrower represents and warrants to
Silicon that all representations and warranties set forth in the Loan
Agreement, as amended hereby, are true and correct.
7. General Provisions. This Amendment, the Loan Agreement any
prior written amendments to the Loan Agreement signed by Silicon and the
Borrower, and the other written documents and agreements between Silicon and the
Borrower set forth in full all of the representations and agreements of the
parties with respect to the subject matter hereof and supersede all prior
discussions, representations, agreements and understandings between the parties
with respect to the subject hereof. Except as herein expressly amended, all of
the terms and provisions of the Loan Agreement, and all other documents and
agreements between Silicon and the Borrower shall continue in full force and
effect and the same are hereby ratified and confirmed.
Borrower: Silicon:
ALPHA MICROSYSTEMS SILICON VALLEY BANK
By /s/ MICHAEL J. LOWELL By /s/ TERRY BESS
---------------------------- ------------------------
President or Vice President Assistant Vice President
By /s/ JOHN GLADE
----------------------------
Secretary or Ass't Secretary
Guarantor's Consent
The undersigned guarantor acknowledges that its consent to the
foregoing Amendment is not required, but the undersigned nevertheless does
hereby consent to the foregoing Amendment and to the documents and agreements
referred to therein and to all future modifications and amendments thereto, and
to any and all
4
<PAGE> 5
other present and future documents and agreements between or among the foregoing
parties. Nothing herein shall in any way limit any of the terms or provisions of
the Continuing Guaranty executed by the undersigned in favor of Silicon, which
is hereby ratified and affirmed and shall continue to full force and effect.
ALPHAHEATHCARE, INC.
By: /s/ MICHAEL J. LOWELL
------------------------------------------
Chief Financial Officer and Vice President
5
<PAGE> 1
Exhibit 10.71
SILICON VALLEY BANK
AMENDMENT TO LOAN AGREEMENT
Borrower: Alpha Microsystems
Address: 2722 South Fairview Street
Santa Ana, California 92704
Dated: March 7, 1996
THIS AMENDMENT TO LOAN AGREEMENT is entered into between SILICON VALLEY
BANK ("Silicon") and the borrower named above (the "Borrower").
The Parties agree to amend the Loan and Security Agreement between them
(the "Loan Agreement") dated July 10, 1995, as amended, effective as of the
date hereof. (Capitalized terms used but not defined in this Amendment, shall
have the meanings set forth in the Loan Agreement.)
1. Modification to Financial Covenants. The section of the Schedule
to the Loan Agreement entitled "Financial Covenants (Section 4.1)" is hereby
deleted in its entirety and replaced with the following:
"Financial Covenants
(Section 4.1): Borrower shall comply with all of the following
covenants. Compliance shall be determined as of the end
of each month, except as otherwise specifically provided
below:
Quick Asset Ratio: Borrower shall maintain a ratio of "Quick Assets" to
current liabilities of not less than 1.00 to 1.
Tangible Net Worth: Borrower shall maintain a tangible net worth of not less
than $4,700,000.
Debt to Tangible
Net Worth Ratio: Borrower shall maintain a ratio of total liabilities to
tangible net worth of not more than 1.25 to 1.
Profitability Borrower shall not incur a loss (after taxes) for the
fiscal year ending February 29, 1996 in excess of
$3,600,000, of which amount $2,000,000 will be
attributable to the write down of Borrower's intangible
<PAGE> 2
assets. Thereafter, Borrower shall not incur any losses
(after taxes) in any fiscal quarter, other than for
losses (after taxes) in two fiscal quarters during any
fiscal year if the aggregate amount of such losses
for such two fiscal quarters does not exceed $250,000.
Definitions: "Current asset," and "current liabilities" shall have
the meanings ascribed to them in accordance with
generally accepted accounting principles.
"Tangible net worth" means the excess of total assets
over total liabilities, determined in accordance with
generally accepted accounting principles, excluding
however all assets which would be classified as
intangible assets under generally accepted accounting
principles, including without limitation goodwill,
licenses, patents, trademarks, trade names, copyrights,
capitalized software and organizational costs, licences
and franchises.
"Quick Assets" means cash on hand or on deposit in
banks, readily marketable securities issued by the
United States, readily marketable commercial paper rated
"A-1" by Standard & Poor's Corporation (or a similar
rating by a similar rating organization), certificates
of deposit and banker's acceptances, and accounts
receivable (net of allowance for doubtful accounts).
Deferred Revenues: For purposes of the above quick asset ratio, deferred
revenues shall not be counted as current liabilities.
For purposes of the above debt to tangible net worth
ratio, deferred revenues shall not be counted in
determining total liabilities but shall be counted in
determining tangible net worth for purposes of such
ratio. For all other purposes deferred revenues shall be
counted as liabilities in accordance with generally
accepted accounting principles.
<PAGE> 3
Subordinated Debt: "Liabilities" for purposes of the foregoing covenants do
not include indebtedness which is subordinated to the
indebtedness to Silicon under a subordination agreement
in form specified by Silicon or by language in the
instrument evidencing the indebtedness which is
acceptable to Silicon."
2. Fee. Borrower shall pay to Silicon a fee in the amount of $500,
which shall be in addition to interest and all other amounts due Silicon and
shall not be refundable.
3. Representations True. Borrower represents and warrants to Silicon
that all representations and warranties set forth in the Loan Agreement, as
amended hereby, are true and correct.
4. General Provisions. This Amendment, the Loan Agreement, any prior
written amendments to the Loan Agreement signed by Silicon and the Borrower,
and the other written documents and agreements between Silicon and the Borrower
set forth in full all of the representations and agreements of the parties with
respect to the subject matter hereof and supersede all prior discussions,
representations, agreements and understandings between the parties with respect
to the subject hereof. Except as herein expressly amended, all of the terms and
provisions of the Loan Agreement, and all other documents and agreements
between Silicon and the Borrower shall continue in full force and effect and
the same are hereby ratified and confirmed.
Borrower: Silicon:
ALPHA MICROSYSTEMS SILICON VALLEY BANK
By /s/ MICHAEL J. LOWELL By /s/ TERRY BESS
---------------------------- -----------------------------
President or Vice President Vice President
By /s/ JOHN GLADE
----------------------------
Secretary or Ass't Secretary
Guarantor's Consent
The undersigned guarantor acknowledges that its consent to the
foregoing Amendment is not required, but the undersigned nevertheless does
hereby consent to the foregoing Amendment and to the documents and agreements
referred to therein and to all
<PAGE> 4
future modifications and amendments thereto, and to any and all other present
and future documents and agreements between or among the foregoing parties.
Nothing herein shall in any way limit any of the terms or provisions of the
Continuing Guaranty executed by the undersigned in favor of Silicon, which is
hereby ratified and affirmed and shall continue to full force and effect.
ALPHAHEATHCARE, INC.
By: /s/ MICHAEL J. LOWELL
----------------------------------
Title: CFO and Vice President
-------------------------------
<PAGE> 1
EXHIBIT 10.72
[SUTRO & CO. LETTERHEAD]
May 2, 1996
CONFIDENTIAL
Alpha Microsystems
2722 S. Fairview Street
Santa Ana, CA 92704
Attention: Douglas J. Tullio
President and Chief Executive Officer
Gentlemen:
Pursuant to recent conversations between us, this letter confirms that Sutro &
Co. Incorporated ("Sutro") will act as exclusive financial advisor on behalf of
Alpha Microsystems (the "Company") in connection with the Company's redemption
of its outstanding common stock purchase warrants. In addition, at the
Company's request, Sutro will act as financial advisor with respect to certain
other financial matters. Such redemption of the Company's outstanding common
stock purchase warrants is hereafter referred to as the "Offering".
As discussed, we propose to undertake certain services on your behalf,
including to the extent appropriate: 1) assisting you in preparing materials to
be provided to warrant owners; 2) identifying and contacting potential
strategic partners; and 3) assisting in the negotiation of the financial
aspects of any proposed relationships with such partners.
Pursuant to the terms of this letter, we will act as financial advisor for a
period of six (6) months from the date hereof, subject to the following
conditions:
1. You will furnish or cause to be furnished to us such current and
historical financial and other information regarding the business
of the Company as may be necessary in connection with this
engagement. You represent the accuracy and completeness of all such
information furnished to us at the time it is so furnished. You also
undertake to keep us advised of all developments materially
affecting the Company and its financial position and future
prospects. In connection with our activities hereunder, you
authorize us to make appropriate use of such information, including
discussing it with any third parties as to whom we may mutually
agree. We will not, however, do so at any time without your prior
consent. We further agree to treat all material provided to us by
you in a confidential manner.
2. You agree to retain us as your financial advisor for a period of
six (6) months from the date hereof to provide the aforementioned
services. By signing this letter, we hereby accept our appointment
as your financial advisor under the terms hereof.
3. As compensation for our services hereunder, you hereby agree to pay
us a non-refundable retainer fee of $50,000; $25,000 payable upon
the signing of this letter and $25,000 payable June 15, 1996. A
success fee of $50,000 will be payable to Sutro upon the completion
of the Offering. In the event that Sutro advises the Company with
respect to a sale or merger of the Company to another company, an
acquisition by the Company or the formation of a joint venture,
partnership or strategic relationship with one or more
[John Hancock Logo]
Page 1 of 3
<PAGE> 2
potential strategic parties, the Company agrees to pay or cause to be paid
to Sutro a fee to be mutually agreed upon by the Company and Sutro.
Finally, as part of Sutro's relationship with the Company, Sutro has been
granted by the Company an option to purchase from the Company for 2.50
per share all of the shares of common stock that otherwise would have
been delivered upon exercise of warrants that were not exercised and were
redeemed.
4. Our engagement hereunder may be terminated by you at any time with or
without cause effective thirty (30) days after the receipt of written
notice to that effect. However, should you terminate our engagement after
the initiation of contact with any potential strategic parties, we will be
entitled to the fees specified in paragraph 3 above if such acquisition,
joint venture, partnership or strategic relationship is formed.
5. No fee payable to any other financial advisor, by you or any other party,
in connection with the subject matter of this engagement, shall reduce or
otherwise affect any fee payable hereunder.
6. The provisions hereof shall inure to the benefit of and be binding upon
the successors and assigns of the Company and our firm.
The Offering:
i. Registration Statement, Financial Statements and Accountants - The Company
will complete, file and as appropriate, amend from time to time, a
registration statement to be filed with the SEC on form S-3 covering the
Offering. Sutro will be given the opportunity to make such review and
investigation of the Company and its affiliates in connection with the
registration statement as it reasonably deems necessary and required. The
registration statement will incorporate by reference the Company's audited
annual results for the appropriate fiscal years.
ii. Issuer's Expenses - The Company will be responsible for paying all costs
typically borne by the issuer. These include, but are not limited to, the
costs of preparing the registration statement, all printing costs, filing
and related expenses, the costs of its attorneys and accountants, and all
Blue Sky and related cost. In addition, the Company will reimburse Sutro
for its out-of-pocket expenses as discussed in item (iv) below.
iii. "Blue Sky" Law Qualifications - The cost of registration and reasonable
fees and expenses of counsel in completing the applications and in
clearing the Offering through the various state "Blue Sky" commissions
will be paid by the Company.
iv. Obligations Hereunder - The Company will reimburse Sutro for all of its
documented out-of-pocket expenses, including, but not limited to, such
costs as telephone, fax, courier service, copying, accommodations, travel,
direct computer expenses and secretarial overtime. The Company will be
responsible for all of the expenses and fees to be paid and borne by the
Company as provided above and under any circumstance. The Company's
obligations under this paragraph shall survive the termination of this
Agreement.
v. Governing Law - This Agreement shall be governed by the laws of the State
of California without regard to any conflict of law provisions thereof,
and may not be amended or modified except in a writing signed by both
parties.
vi. Assignment - This Agreement and all rights and obligations thereunder
shall be binding upon and inure to the benefit of each party's successors,
but may not be assigned without the consent of the other party, which
consent shall not be unreasonably withheld or delayed.
Page 2 of 3
<PAGE> 3
If the foregoing correctly sets forth the understanding between us, please so
indicate on the enclosed signed copy of this letter in the space provided
therefor and return it to us, whereupon this letter shall constitute a binding
agreement between us.
Very truly yours,
SUTRO & CO. INCORPORATED
By: /s/ M.D. BROWN
--------------------
Michael D. Brown
Managing Director
AGREED TO AND ACCEPTED
as of the date first above written:
ALPHA MICROSYSTEMS
By: /s/ DOUGLAS J. TULLIO
-----------------------
Douglas J. Tullio
President and
Chief Executive Officer
<PAGE> 4
May 2, 1996
CONFIDENTIAL
Sutro & Co. Incorporated
11150 Santa Monica Boulevard
Suite 1500
Los Angeles, CA 90025
Gentlemen:
In consideration of Sutro's agreement to act on behalf of Alpha Microsystems
(the "Company"), in connection with the financial advisory assignment, pursuant
to the engagement letter of even date herewith, we hereby agree to indemnify
and hold harmless Sutro, its affiliates, the respective partners, directors,
officers, agents and employees of Sutro and its affiliates and each person, if
any, controlling Sutro or any of its affiliates within the meaning of either
Section 15 of the Securities Act of 1933 or Section 20 of the Securities
Exchange Act of 1934, (Sutro and each such other person are hereinafter
referred to as an "Indemnified Person"), from and against any such losses,
claims, damages, expenses and liabilities (or actions in respect thereof), joint
or several, as they may be incurred (including all legal fees and other
expenses incurred in connection with investigating, preparing, defending,
paying, settling or compromising any claim, action, suit, proceeding, loss,
damage, expense or liability, whether or not in connection with an action in
which any Indemnified Person is a named party) to which any of them may become
subject (including in settlement of any action, suit or proceeding, if such
settlement is effected with the Company's consent, which consent shall not be
unreasonably withheld), and which are related to or arise out of Sutro's
engagement, the transaction contemplated by such engagement or any Indemnified
Person's role in connection therewith, including, but not limited to, any
losses, claims, damages, expenses and liabilities (or actions in respect
thereof) arising out of, based upon or caused by any untrue statement or
alleged untrue statement of a material fact contained in the offering
memorandum, or any amendment or supplement thereto, or in any other document of
the Company, or arising out of, based upon or caused by any omission or alleged
omission to state in any of them a material fact required to be stated therein
or necessary to make the statements in any of them not misleading. The Company
will not, however, be responsible under the foregoing provisions with respect
to any loss, claim, damage, expense or liability to the extent that a court
having jurisdiction shall have determined by a final judgment (not subject to
further appeal) that such loss, claim, damage, expense or liability resulted
form actions taken or omitted to be taken by Sutro or any Indemnified Person
due to its gross negligence or willful misconduct.
If the indemnity referred to above should be, for any reason whatsoever,
unenforceable, unavailable to or otherwise insufficient to hold harmless Sutro
and each Indemnified Person in connection with the transaction, each
Indemnified Person shall be entitled to receive from the Company, and the
Company shall pay, contributions for such losses, claims, damages, liabilities
and expenses (or actions in respect thereof) so that each Indemnified Person
ultimately bears only a portion of such losses, claims, damages, liabilities,
expenses and actions as is appropriate (i) to reflect the relative benefits
received by Sutro on the one hand and the Company on the other hand in
connection with the transaction or (ii) if the allocation on that basis is not
permitted by applicable law, to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of Sutro and the Company in
connection with the actions or omissions to act which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations; provided, however, that in no event shall the
aggregate contribution of all Indemnified Persons to all losses, claims,
damages, liabilities expenses and actions exceed the amount of the fee actually
received by Sutro pursuant to the engagement letter. The respective relative
benefits received by Sutro and the Company in connection with the transaction
shall be deemed to be in the same proportion as the aggregate fee paid to Sutro
in connection with the transaction bears to the total consideration of the
transaction. The relative fault of Sutro and the Company shall be determined by
reference to, among other
page 1 of 2
<PAGE> 5
things, whether the actions or omissions to act were by Sutro or the Company
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such action or omission to act.
The indemnity, contribution and expense payment obligations of the Company
referred to above shall be in addition to any liability which the Company may
otherwise have and shall be binding upon and inure to the benefit of any
successors, assigns, heirs and personal representatives of any Indemnified
Person and the Company. The Company also agrees that the Indemnified Persons
shall have no liability to the Company or any person asserting claims on behalf
of or in right of the Company for or in connection with any matter referred to
in this letter except to the extent that any such liability results from the
gross negligence or willful misconduct of Sutro or any Indemnified Person in
performing the services that are the subject of this letter and in no event
shall such liability exceed the amount of fees actually received by the Sutro
hereunder.
Very truly yours,
ALPHA MICROSYSTEMS
By: /s/ Douglas J. Tullio
-------------------------------------
Douglas J. Tullio
President and Chief Executive Officer
Accepted and Agreed to
as of the date written above:
SUTRO & CO. INCORPORATED
By: /s/ Michael D. Brown
-------------------------------------
Michael D. Brown
Managing Director
page 2 of 2
<PAGE> 1
Exhibit 21
SUBSIDIARIES
Alpha Microsystems Great Britain Limited
Sabre Business Systems, Ireland
Sabre Business (NI) Ireland
Alpha HealthCare
<PAGE> 1
Exhibit 23
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 2-9252) pertaining to the Third Amended and Restated Incentive Stock
Option Plan, the Non-Qualified Stock Option Plan and the Stock Incentive Award
Plan, and in the Registration Statement (Form S-8 No. 33-62411) pertaining to
the 1993 Employee Stock Option Plan and 1993 Directors' Stock Option Plan of
Alpha Microsystems of our report dated April 29, 1996, with respect to the
consolidated financial statements and schedule of Alpha Microsystems included
in the Annual Report (Form 10-K) for the year ended February 25, 1996.
ERNST & YOUNG LLP
Orange County, California
April 29, 1996
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