<PAGE> 1
As filed with the Securities and Exchange Commission on July 15, 1999
Registration No. 33-__________________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
ALPHA MICROSYSTEMS
(Exact name of issuer as specified in its charter)
California 95-3108178
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2722 SOUTH FAIRVIEW STREET
SANTA ANA, CALIFORNIA 92704
(Address of Principal Executive Offices) (Zip Code)
ALPHA MICROSYSTEMS
1998 STOCK OPTION AND AWARD PLAN
(Full title of the plan)
DOUGLAS J. TULLIO, PRESIDENT AND CHIEF EXECUTIVE OFFICER
ALPHA MICROSYSTEMS
2722 SOUTH FAIRVIEW STREET
SANTA ANA, CALIFORNIA 92704
(Name and address of agent for service)
(714) 957-8500
(Telephone number, including area code, of agent for service)
Copy to:
DEBRA DISON HALL, ESQ.
ALLEN, MATKINS, LECK, GAMBLE & MALLORY LLP
515 SOUTH FIGUEROA STREET, 7TH FLOOR
LOS ANGELES, CALIFORNIA 90071-3398
(213) 622-5555
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
========================================================================================================================
Proposed
Proposed maximum
Title of Securities Amount to be maximum offering aggregate offering Amount of
to be registered registered price per unit(*) price(*) registration fee
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock (No par value) 2,500,000 shares $6.188 $1,547,000 $430
========================================================================================================================
</TABLE>
(*) Estimated in accordance with Rule 457(c) under the Securities Act of 1933,
as amended, solely for the purpose of calculating the registration fee based
upon on the market price of Common Stock on July 14, 1999.
The Exhibit Index to this Registration Statement is located on page 6 of this
filing.
================================================================================
<PAGE> 2
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents which have been filed by Alpha Microsystems, a
California corporation (the "Corporation" or the "Registrant"), with the
Securities and Exchange Commission (the "Commission") are incorporated herein by
this reference and made a part hereof:
1. Transition Report on Form 10-K for the transition period period from
February 23, 1998 to December 31, 1998.
2. Quarterly Report on Form 10-Q for the quarterly period ended March
31, 1999.
3. Description of the Corporation's Common Stock, contained in its
Registration Statement on Form 8-A, dated June 24, 1982, filed under
Section 12(b) of the Securities Exchange Act of 1934, as amended
("Exchange Act"), including any amendment or report filed for the
purpose of updating such description.
All documents filed by the Corporation with the Commission pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
Registration Statement and prior to the filing of a post-effective amendment
which indicates that all securities offered have been sold or which deregisters
all securities then remaining unsold, shall be deemed to be incorporated by
reference in this Registration Statement and to be a part hereof from the date
of filing of such documents.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Legal matters in connection with the shares of Common Stock of the
Corporation subject to issuance pursuant to the Corporation's 1998 Stock Option
and Award Plan, have been passed upon by Allen, Matkins, Leck, Gamble & Mallory
LLP, 18400 Von Karman, Fourth Floor Irvine, California 92612.
Marvin E. Garrett, a partner in the law firm of Allen, Matkins, Leck,
Gamble & Mallory LLP, beneficially owns 32,000 shares of the Corporation's
Common Stock
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Registrant is a California corporation. Section 317 of the General
Corporation law of the State of California authorizes indemnification of
directors, officers, employees and other agents of California corporations.
Pursuant to the Corporation's Articles of Incorporation, Bylaws and
indemnification agreements with various officers and directors, under certain
circumstances, the Corporation (i) will indemnify directors and officers (the
"Indemnitees") to the full extent authorized by the General Corporation Law of
the State of California, (ii) will advance expenses to the Indemnitees for
defending certain proceedings, and (iii) is authorized to maintain certain
policies of insurance to protect itself and any of its directors, officers or
employees. The Corporation currently maintains policies of insurance under which
the directors and officers of the Corporation are insured, within the limits and
subject to the limitations of the policies, against certain expenses in
connection with the defense of actions, suits or proceedings, and certain
liabilities which might be imposed as a result of such actions, suits or
proceedings, to which they are parties by reason of being or having been such
directors or officers.
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<PAGE> 3
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
The Exhibit Index immediately preceding the exhibits is incorporated
herein by this reference.
ITEM 9. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933, as amended (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of securities offered
would not exceed that which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than 20 percent
change in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) in this Item 9 do
not apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed with or
furnished to the Securities and Exchange Commission by the Registrant pursuant
to Section 13 or Section 15(d) of the Exchange Act that are incorporated by
reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act that is incorporated by reference in the Registration Statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
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<PAGE> 4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Santa Ana, State of California, on this 15th day of
July, 1999.
Alpha Microsystems
(a California corporation)
By: /s/ DOUGLAS J. TULLIO
---------------------------------
Douglas J. Tullio
President and Chief Executive Officer
POWER OF ATTORNEY
Each individual whose signature appears below constitutes and appoints
Clark E. Reynolds, Douglas J. Tullio and Jeffrey J Dunnigan, and each of them,
such person's true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution, for such person and in such person's name,
place, and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same with all exhibits thereto, and all documents in connection
therewith, with the Commission, granting unto said attorneys-in-fact and agents,
and each of them, full power and authority to do and perform each and every act
and thing requisite and necessary to be done in and about the premises, as fully
to all intents and purposes as such person might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or their substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
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<PAGE> 5
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ DOUGLAS J. TULLIO Chairman of the Board, July 15, 1999
- ------------------------------- Chief Executive Officer
Douglas J. Tullio and Director
/s/ CARLOS D. DE MATTOS Director July 15, 1999
- -------------------------------
Carlos D. De Mattos
/s/ BENJAMIN P. GIESS Director July 15, 1999
- --------------------------------
Benjamin P. Giess
/s/ ROCKELL N. HANKIN Director July 15, 1999
- --------------------------------
Rockell N. Hankin
/s/ RICHARD E. MAHMARIAN Director July 15, 1999
- --------------------------------
Richard E. Mahmarian
/s/ CLARKE E. REYNOLDS Director July 15, 1999
- --------------------------------
Clarke E. Reynolds
/s/ SAM YAU Director July 15, 1999
- ---------------------------------
Sam Yau
/s/ JEFFREY J. DUNNIGAN Chief Financial Officer July 15, 1999
- --------------------------------- and Secretary
Jeffrey J. Dunnigan
</TABLE>
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<PAGE> 6
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
------- -----------
4.1 Articles of Incorporation, as amended, of Registrant
(incorporated herein by reference to Exhibit 3.1 to the
Registration Statement on Form S-1 (Registration No. 2-72222) of
Registrant, filed May 11, 1981)
4.2 Certificate of Amendment of Articles of Incorporation of
Registrant dated as of September 12, 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)
4.3 Certificate of Amendment of Articles of Incorporation of
Registrant dated as of September 29, 1988 (incorporated herein
by reference to Exhibit 3.2 to the Annual Report on Form 10-K of
Registrant for the Year Ended February 23, 1997)
4.4 Certificate of Amendment of the Articles of Incorporation of
Registrant dated June 25, 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)
4.5 Certificate of Amendment of the Articles of Incorporation of
Registrant dated October 16, 1998 (incorporated herein by
reference to Exhibit 3.6 to the Quarterly Report on Form 10-Q of
Registrant for the Quarter ended November 22, 1998)
4.8 Certificate of Determination of Rights and Preferences of Class
A Cumulative, Redeemable and Exchangeable Preferred Stock, Class
B Cumulative, Redeemable and Exchangeable Preferred Stock, Class
C Cumulative, Redeemable and Exchangeable Preferred Stock and
Voting Preferred Stock (incorporated herein by reference to
Exhibit 4 to the Form 8-K of Registrant dated August 7, 1998)
4.9 Certificate of Determination of Rights and Preferences of Class
A1 Cumulative, Redeemable and Exchangeable Preferred Stock,
Class A2 Cumulative, Redeemable and Exchangeable Preferred
Stock, Class B1 Cumulative, Redeemable and Exchangeable
Preferred Stock, Class C1 Cumulative, Redeemable and
Exchangeable Preferred Stock and Class D Cumulative, Redeemable
and Exchangeable Preferred Stock (incorporated herein by
reference to Exhibit 4.9 to the Form 10-K of Registrant for the
transition period from February 23, 1998 to December 31, 1998)
4.10 Restated Bylaws of Registrant (incorporated herein by reference
to Exhibit 3.1 to the Form S-8 (Registration No. 333-20771)
filed January 31, 1997)
4.11 Amendment to Article III, Section 2, Section 3 and Section 4 and
Article IV, Section 1 to the Restated Bylaws of Registrant
(incorporated herein by reference to Exhibit 3.5 to the Form
10-Q of Registrant for the Quarter ended November 22, 1998)
5 Opinion of Allen, Matkins, Leck, Gamble & Mallory LLP
10.1 Alpha Microsystems 1998 Stock Option and Award Plan
23.1 Consent of Allen, Matkins, Leck, Gamble & Mallory LLP (included
as part of Exhibit 5 hereto)
23.2 Consent of Ernst & Young LLP
24 Power of Attorney (included at page 4 of the Registration
Statement)
<PAGE> 1
EXHIBIT 5
[LETTERHEAD]
July 15, 1999
Board of Directors
Alpha Microsystems
2722 South Fairview Street
Santa Ana, California 92704
Re: Registration Statement on Form S-8 of Alpha Microsystems
With Respect to 1998 Stock Option and Award Plan
Gentlemen:
We have acted as counsel in connection with the registration on Form
S-8 under the Securities Act of 1933, as amended, of an aggregate of 2,500,000
shares of Common Stock, no par value (the "Shares"), of Alpha Microsystems, a
California corporation (the "Company") which are issuable upon the exercise of
nonstatutory stock options and incentive stock options granted under the
Company's 1998 Stock Option and Award Plan, as amended (the "Stock Option
Plan").
We have examined originals or copies certified or otherwise identified
to our satisfaction as being true copies of such corporate records of the
Company and other documents as we have deemed necessary for the purpose of this
opinion.
On the basis of the foregoing, and in reliance thereon and based on our
consideration of such other matters of fact and questions of law as we have
deemed relevant in the circumstances, we are of the opinion that, subject to
compliance with applicable state securities and "Blue Sky" laws, the Shares will
be, when issued in accordance with the terms and conditions of the respective
Plan, validly issued, fully paid and non-assessable.
We consent to the use of this opinion as an exhibit to the Company's
Registration Statement on Form S-8 covering the Shares.
Very truly yours,
/s/ ALLEN, MATKINS, LECK, GAMBLE & MALLORY LLP
<PAGE> 1
EXHIBIT 10.1
ALPHA MICROSYSTEMS
1998 STOCK OPTION and AWARD PLAN
SECTION 1. GENERAL PURPOSE OF PLAN; DEFINITIONS.
(a) This plan is intended to implement and govern the 1998 Stock
Option and Award Plan (the "Plan") of Alpha Microsystems, a California
corporation (the "Company"). The Plan was adopted by the Board of Directors of
the Company (the "Board") as of August 11, 1998, subject to the approval of the
Company's stockholders. The purpose of the Plan is (i) to enable the Company and
its Subsidiaries to obtain and retain competent personnel who will contribute to
the Company's success by their ability, ingenuity and industry and to provide
incentives to the directors, officers and other key employees, and agents and
consultants that are linked directly to increases in stockholder value and will
therefore inure to the benefit of all stockholders of the Company, and (ii) to
align Nonemployee Directors' personal interests more closely with those of
stockholders of the company by providing Nonemployee Directors with stock
options in lieu of cash compensation for service on the Board of Directors.
(b) Definitions.
For purposes of the Plan, the following terms shall be defined as set
forth below:
(1) "Administrator" means the Board, or if the Board does not
administer the Plan, the Committee in accordance with Section 2.
(2) "Act" means the Securities Exchange Act of 1934, as amended
(the "Act").
(3) "Board" means the Board of Directors of the Company.
(4) "Code" means the Internal Revenue Code of 1986, as amended
from time to time, or any successor thereto.
(5) "Commission" means the Securities and Exchange Commission.
(6) "Committee" means the committee appointed to administer the
Plan by the Board consisting of not less than two members of the Board. If at
any time the Board shall not administer the Plan, then the functions of the
Board specified in the Plan shall be exercised by the Committee.
(7) "Company" means Alpha Microsystems, a corporation organized
under the laws of the State of California (or any successor corporation).
(8) "Deferred Stock" means an award granted pursuant to Section 7
of the right to receive Stock at the end of a specified deferral period.
(9) "Director" means a member of the Board.
<PAGE> 2
(10) "Disability" means permanent and total disability as
determined within the meaning of Section 22(e)(3) of the Code.
(11) "Effective Date" shall mean the date provided pursuant to
Section 15.
(12) "Eligible Employee" means an employee of the Company or any
Subsidiary eligible to participate in the Plan pursuant to Section 4.
(13) "Employee" means any officer or other regular full-time
employee (as defined in accordance with Section 3401(c) of the Code) of the
Company, or of any corporation which is a Subsidiary.
(14) "Exchange Act" means the Securities Exchange Act of 1934, as
amended. References to any provision of the Exchange Act include the rules and
regulations thereunder and successor provisions and rules and regulations
thereto.
(15) "Fair Market Value" means, as of any given date, with
respect to any award granted hereunder, (A) the closing sale price of the Stock
on such date as reported in the Western Edition of the Wall Street Journal, or
(B) if the Stock is not publicly traded, the fair market value of the Stock as
otherwise determined by the Administrator in the good faith exercise of its
discretion.
(16) "Incentive Stock Option" means any Stock Option intended to
be designated as an "incentive stock option" within the meaning of Section 422
of the Code.
(17) "Limited Stock Appreciation Right" means a Stock
Appreciation Right that can be exercised only in the event of a "Change of
Control" (as defined in Section 10 below).
(18) "Nonemployee Director" means any member of the Board who is
not an Employee of the Company or a Subsidiary.
(19) "Non-Qualified Stock Option" means any Stock Option that is
not an Incentive Stock Option, including any Stock Option that provides (as of
the time such option is granted) that it will not be treated as an Incentive
Stock Option.
(20) "Participant" means any Eligible Employee of the Company or
any Subsidiary or any director, consultant or advisor of the Company or any
subsidiary selected by the Committee, pursuant to the Administrator's authority
in Section 2, to receive grants of Stock Options, Stock Appreciation Rights,
Limited Stock Appreciation Rights, Restricted Stock awards, Deferred Stock
awards, Performance Shares or any combination of the foregoing and any
Nonemployee Director or who elects to participate in the Plan in accordance with
the terms of the Plan.
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<PAGE> 3
(21) "Performance Share" means an award of shares of Stock
granted pursuant to Section 7 that is subject to restrictions based upon the
attainment of specified performance objectives.
(22) "Plan" means this 1998 Stock and Award Plan.
(23) "Restricted Period" means the period set by the
Administrator as it pertains to Deferred Stock or Restricted Stock awards
pursuant to Section 7.
(24) "Restricted Stock" means an award granted pursuant to
Section 7 of shares of Stock subject to restrictions that will lapse with the
passage of time.
(25) "Rule 16b-3" means Rule 16b-3 promulgated under the Exchange
Act, as such Rule may be amended or superseded from time to time, or any
successor definition adopted by the Commission.
(26) "Stock" means the common stock of the Company.
(27) "Stock Appreciation Right" means the right pursuant to an
award granted under Section 6 to receive an amount equal to the difference
between (A) the Fair Market Value, as of the date such Stock Appreciation Right
or portion thereof is surrendered, of the shares of Stock covered by such right
or such portion thereof, and (B) the aggregate exercise price of such right or
such portion thereof.
(28) "Stock Option" means an option to purchase shares of Stock
granted pursuant to Section 5.
(29) "Subsidiary" means any corporation (other than the Company)
in an unbroken chain of corporations beginning with the Company, if each of the
corporations (other than the last corporation) in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in the chain.
(30) "Termination of Board Service" means the time when a
Director ceases to be a member of the Board for any reason, including, but not
by way of limitation, a termination by resignation, expiration of term, removal
(with or without cause), retirement or death.
SECTION 2. ADMINISTRATION.
(a) The Plan shall be administered by the Board or by a Committee
appointed by the Board, which shall serve at the pleasure of the Board.
(b) The Administrator shall have the power and authority to grant to
Eligible Employees, directors, and consultants and advisors (who render bona
fide services other than in connection with the offer and sale of securities in
capital-raising transactions for the Company), of the Company or any Subsidiary,
pursuant to the terms of the Plan: (A) Stock Options,
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<PAGE> 4
(B) Stock Appreciation Rights or Limited Stock Appreciation Rights, (C)
Restricted Stock, (D) Deferred Stock, (E) Performance Shares or (F) any
combination of the foregoing.
In particular, the Administrator shall have the authority:
(1) except as set forth in paragraph (c) of this Section 2, to
select those employees of the Company or any Subsidiary who shall be Eligible
Employees;
(2) to determine whether and to what extent Stock Options, Stock
Appreciation Rights, Limited Stock Appreciation Rights, Restricted Stock,
Deferred Stock, Performance Shares or a combination of the foregoing, are to be
granted to Eligible Employees or any director, consultant or adviser of the
Company or any Subsidiary hereunder;
(3) to determine the number of shares to be covered by each such
award granted hereunder;
(4) to determine the terms and conditions, not inconsistent with
the terms of the Plan, of any award granted hereunder including, but not limited
to, (x) the restricted period applicable to Restricted or Deferred Stock awards
and the date or dates on which restrictions applicable to such Restricted or
Deferred Stock shall lapse during such period, and (y) the performance goals and
periods applicable to the award of Performance Shares; and
(5) to determine the terms and conditions, not inconsistent with
the terms of the Plan, which shall govern all written instruments evidencing the
Stock Options, Stock Appreciation Rights, Limited Stock Appreciation Rights,
Restricted Stock, Deferred Stock, Performance Shares or any combination of the
foregoing.
(c) The Administrator shall have the authority, in its discretion, to
adopt, alter and repeal such administrative rules, guidelines and practices
governing the Plan as it shall from time to time deem advisable; to interpret
the terms and provisions of the Plan and any award issued under the Plan (and
any agreements relating thereto); and to otherwise supervise the administration
of the Plan; provided, however, in no event shall the Committee have the power
to determine the amount, price, or timing of Stock to be issued under the Plan
to Nonemployee Directors pursuant to Section 8 below, all such determinations
being automatic pursuant to Plan provisions
(d) All decisions made by the Administrator pursuant to the provisions
of the Plan shall be final and binding on all persons, including the Company,
any Subsidiaries and the Participants.
(e) In the case where the Administrator is the Committee, a majority of
the Committee shall constitute a quorum, and the acts of a majority of the
members of the Committee present at any meeting at which a quorum is present, or
acts approved in writing by a majority of the members of the Committee, shall be
deemed the acts of the Committee
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<PAGE> 5
SECTION 3. STOCK SUBJECT TO PLAN.
(a) The total number of shares of Stock reserved and available for
issuance under the Plan shall be Two Million shares. Such shares may be
authorized but unissued shares, or shares acquired in the market for the account
of the Participant, or a combination thereof. At all times, the number of shares
reserved and available for issuance hereunder as so determined from time to time
shall be decreased by virtue of awards granted and outstanding or exercised
hereunder.
(b) To the extent that (i) a Stock Option or expires or is otherwise
terminated without being exercised, or (ii) any shares of Stock subject to any
Restricted Stock, Deferred Stock or Performance Share award granted hereunder
are forfeited, such shares shall again be available for issuance in connection
with future awards under the Plan. If any shares of Stock have been pledged as
collateral for indebtedness incurred by a Participant in connection with the
exercise of a Stock Option and such shares are returned to the Company in
satisfaction of such indebtedness, such shares shall again be available for
issuance in connection with future awards under the Plan.
(c) In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend, spin-off, combination, repurchase, exchange of
shares or other securities of the Company, stock split or reverse split, stock
dividend, liquidation, dissolution, or other similar corporate transaction or
event affecting the Stock such that an adjustment is appropriate in order to
prevent dilution or enlargement of each Participant's rights under the Plan, a
substitution or adjustment may be made in (i) the aggregate number of shares
reserved for issuance under the Plan, and (ii) the kind, number and option price
of shares in a manner that is proportionate to the change to the Stock and
otherwise equitable subject to outstanding Stock Options granted under the Plan,
provided that the number of shares subject to any award shall always be a whole
number. With respect to Incentive Stock Options, such adjustment shall be made
in accordance with Section 424 of the Code. An adjusted option price shall also
be used to determine the amount payable by the Company upon the exercise of any
Stock Appreciation Right or Limited Stock Appreciation Right associated with any
Stock Option.
SECTION 4. ELIGIBILITY.
(a) Officers and other key employees of the Company or any Subsidiaries
who are responsible for or contribute to the management, growth and/or
profitability of the business of the Company or its Subsidiaries and directors
of the Company and any Subsidiary and consultants and advisers of the Company
and its Subsidiaries (who render bona fide services other than in connection
with the offer and sale of securities in capital-raising transactions for the
Company) shall be eligible to be granted Non-Qualified Stock Options, Stock
Appreciation Rights, Limited Stock Appreciation Rights, Restricted Stock awards,
Deferred Stock awards and Performance Shares hereunder. Officers and other key
employees of the Company and its Subsidiaries shall also be eligible to be
granted Incentive Stock Options hereunder. The Participants under the Plan shall
be selected from time to time by the Administrator, in its sole discretion, from
among the Eligible Employees and consultants and advisers recommended by the
senior management of the Company, and the Administrator shall determine, in its
sole discretion, the number of shares covered by each award.
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<PAGE> 6
(b) Each director of the company who is not an employee of the company,
will be eligible to be granted (and shall be granted) stock options under
section 8. A nonemployee director's eligibility under the plan automatically
terminates on the date of termination of board service.
SECTION 5. STOCK OPTIONS.
(a) Stock Options may be granted alone or in addition to other awards
granted under the Plan. Any Stock Option granted under the Plan shall be in such
form as the Administrator may from time to time approve, and the provisions of
Stock Option awards need not be the same with respect to each optionee.
Recipients of Stock Options shall enter into a stock option agreement with the
Company, in such form as the Administrator shall determine consistent with the
terms of the Plan, which agreement shall set forth, among other things, the
exercise price of the option, the term of the option and provisions regarding
exercisability of the option granted thereunder.
The Stock Options granted under the Plan may be of two types: (i)
Incentive Stock Options and (ii) Non-Qualified Stock Options.
(b) The Administrator shall have the authority under this Section 5 to
grant any optionee Incentive Stock Options, Non-Qualified Stock Options, or both
types of Stock Options (in each case with or without Stock Appreciation Rights
or Limited Stock Appreciation Rights), provided, however, that Incentive Stock
Options may not be granted to any individual who is not an employee of the
Company or its Subsidiaries. To the extent that any Stock Option does not
qualify as an Incentive Stock Option, it shall constitute a separate
Non-Qualified Stock Option. More than one option may be granted to the same
optionee and be outstanding concurrently hereunder.
(c) Stock Options granted under the Plan (other than Stock Options
granted pursuant to Section 8 which shall be on the terms and conditions set
forth in Section 8) shall be subject to the following terms and conditions and
shall contain such additional terms and conditions, not inconsistent with the
terms of the Plan, as the Administrator shall deem desirable:
(i) Option Price. The option price per share of Stock purchasable
under a Stock Option shall be determined by the Administrator in its sole
discretion at the time of grant but shall not, in the case of Incentive Stock
Options, be less than 100% of the Fair Market Value of the Stock on such date,
and shall not, in any event, be less than the par value of the Stock. The option
price per share of Stock purchasable under a Non-Qualified Stock Option may be
less than 100% of such Fair Market Value. If an employee owns or is deemed to
own (by reason of the attribution rules applicable under Section 424(d) of the
Code) more than 10% of the combined voting power of all classes of stock of the
Company or any Parent Corporation or Subsidiary and an Incentive Stock Option is
granted to such employee, the option price of such Incentive Stock Option (to
the extent required by the Code at the time of grant) shall be no less than 110%
of the Fair Market Value of the Stock on the date such Incentive Stock Option is
granted.
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(ii) Option Term. The term of each Stock Option shall be fixed by
the Administrator, but no Stock Option shall be exercisable more than ten years
after the date such Stock Option is granted; provided, however, that if an
employee owns or is deemed to own (by reason of the attribution rules of Section
424(d) of the Code) more than 10% of the combined voting power of all classes of
stock of the Company or a Parent Corporation or Subsidiary and an Incentive
Stock Option is granted to such employee, the term of such Incentive Stock
Option (to the extent required by the Code at the time of grant) shall be no
more than five years from the date of grant.
(iii) Exercisability. Stock Options shall be exercisable at such
time or times and subject to such terms and conditions as shall be determined by
the Administrator at or after grant; provided, however, that, except as provided
herein or unless otherwise determined by the Administrator at or after grant,
Stock Options shall be exercisable one year following the date of grant of the
option. The Administrator may provide, in its discretion, that any Stock Option
shall be exercisable only in installments, and the Administrator may waive such
installment exercise provisions at any time in whole or in part based on such
factors as the Administrator may determine, in its sole discretion. To the
extent not exercised, installments shall accumulate and be exercisable in whole
or in part at any time after becoming exercisable but not later than the date
the Stock Option expires.
(iv) Method of Exercise. Subject to Section 5(c)(iii), Stock Options
may be exercised in whole or in part at any time during the option period, by
giving written notice of exercise to the Company specifying the number of shares
to be purchased, accompanied by payment in full of the purchase price in cash or
its equivalent as determined by the Administrator. As determined by the
Administrator, in its sole discretion, payment in whole or in part may also be
made (i) by cancellation of any indebtedness owed by the Company to the
optionee, (ii) by a promissory note executed by the optionee, (iii) in the form
of unrestricted Stock already owned by the optionee, or, in the case of the
exercise of a Non-Qualified Stock Option, Restricted Stock or Performance Shares
subject to an award hereunder (based, in each case, on the Fair Market Value of
the Stock on the date the option is exercised); provided, however, that in the
case of an Incentive Stock Option, the right to make payment in the form of
already owned shares may be authorized only at the time of grant, (iv) by having
shares withheld to pay the exercise price, or (v) by any combination of the
foregoing. Any payment in the form of stock already owned by the optionee may be
effected by use of an attestation form approved by the Administrator. If payment
of the option exercise price of a Non-Qualified Stock Option is made in whole or
in part in the form of Restricted Stock or Performance Shares, the shares
received upon the exercise of such Stock Option (to the extent of the number of
shares of Restricted Stock or Performance Shares surrendered upon exercise of
such Stock Option) shall be restricted in accordance with the original terms of
the Restricted Stock or Performance Share award in question, except that the
Administrator may direct that such restrictions shall apply only to that number
of shares equal to the number of shares surrendered upon the exercise of such
option. An optionee shall generally have the rights to dividends and other
rights of a stockholder
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with respect to shares subject to the option only after the optionee has given
written notice of exercise, has paid in full for such shares, and, if requested,
has given the representation described in paragraph (a) of Section 11.
(d) Voluntary Surrender. The Administrator may require the voluntary
surrender of all or a portion of any Stock Option granted under the Plan as a
condition precedent to a grant of a new Stock Option. Subject to the provisions
of the Plan, such new Stock Option shall be exercisable at the price, during
such period and on such other terms and conditions as are specified by the
Administrator at the time the new Stock Option is granted; provided, however,
that should the Administrator so require, the number of shares subject to such
new Stock Option shall not be greater than the number of shares subject to the
surrendered Stock Option. Upon their surrender, Stock Options shall be canceled
and the shares previously subject to such canceled Stock Options shall again be
available for grants of Stock Options and other awards hereunder.
(e) Loans. The Company may make loans available to Stock Option holders
in connection with the exercise of outstanding options granted under the Plan,
as the Administrator, in its discretion, may determine. Such loans shall (i) be
evidenced by promissory notes entered into by the Stock Option holders in favor
of the Company, (ii) be subject to the terms and conditions set forth in this
Section 5(e) and such other terms and conditions, not inconsistent with the
Plan, as the Administrator shall determine, (iii) bear interest, if any, at such
rate as the Administrator shall determine and (iv) be subject to Board approval.
In no event may the principal amount of any such loan exceed the sum of (x) the
exercise price of the shares of Stock covered by the option, or portion thereof,
exercised by the holder, and (y) any federal, state, and local income tax
attributable to such exercise. The initial term of the loan, the schedule of
payments of principal and interest under the loan, the extent to which the loan
is to be with or without recourse against the holder with respect to principal
or interest and the conditions upon which the loan will become payable in the
event of the holder's termination of employment shall be determined by the
Administrator; provided, however, that the term of the loan, including
extensions, shall not exceed seven years. Unless the Administrator determines
otherwise, when a loan is made, shares of Stock having a Fair Market Value at
least equal to the principal amount of the loan shall be pledged by the holder
to the Company as security for payment of the unpaid balance of the loan, and
such pledge shall be evidenced by a pledge agreement, the terms of which shall
be determined by the Administrator, in its discretion; provided, however, that
each loan shall comply with all applicable laws, regulations and rules of the
Board of Governors of the Federal Reserve System and any other governmental
agency having jurisdiction.
(f) Limits on Transferability of Options.
(i) Subject to Section 5(f)(ii), no Stock Option shall be
transferable by the optionee otherwise than by will or by the laws of descent
and distribution or, with respect to Non-Qualified Stock Options, pursuant to a
"qualified domestic relations order," as such term is defined in the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"). Incentive Stock
Options shall be exercisable, during the optionee's lifetime, only by the
optionee or, with respect to Non-Qualified Stock Options, in accordance with the
terms of a qualified domestic relations order.
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(ii) The Administrator may, in its discretion, authorize all or a
portion of the options (other than Incentive Stock Options) to be granted to an
optionee to be on terms which permit transfer by such optionee to (A) the
spouse, qualified domestic partner, children or grandchildren of the optionee
and any other persons related to the optionee as may be approved by the
Administrator ("Immediate Family Members"), (B) a trust or trusts for the
exclusive benefit of such Immediate Family Members, (C) a partnership or
partnerships in which such Immediate Family Members are the only partners, or
(D) any other persons or entities as may be approved by the Administrator,
provided that (x) there may be no consideration for any transfer unless approved
by the Administrator, (y) the stock option agreement pursuant to which such
options are granted must be approved by the Administrator, and must expressly
provide for transferability in a manner consistent with this Section 5(f)(ii),
and (z) subsequent transfers of transferred options shall be prohibited except
those in accordance with Section 5(f)(i) or expressly approved by the
Administrator. Following transfer, any such options shall continue to be subject
to the same terms and conditions as were applicable immediately prior to
transfer, provided that, except for purposes of Sections 5(g), (h) and (i) and
11(c) hereof, the terms "optionee," "Stock Option holder" and "Participant"
shall be deemed to refer to the transferee. The events of termination of
employment under Sections 5(g), (h) and (i) hereof shall continue to be applied
with respect to the original optionee, following which the options shall be
exercisable by the transferee only to the extent, and for the periods specified
under such sections unless the option agreement governing such options otherwise
provides. Notwithstanding the transfer, the original optionee will continue to
be subject to the provisions of Section 11(c) regarding payment of taxes,
including the provisions entitling the Company to deduct such taxes from amounts
otherwise due to such optionee. "Qualified domestic partner" for the purpose of
this Section 5(f)(ii) shall mean a domestic partner living in the same household
as the optionee and registered with, certified by or otherwise acknowledged by
the county or other applicable governmental body as a domestic partner or
otherwise establishing such status in any manner satisfactory to the
Administrator.
(g) Termination by Death. If an optionee's employment with the Company
or any Subsidiary terminates by reason of death, the Stock Option may thereafter
be immediately exercised, to the extent then exercisable (or on such accelerated
basis as the Administrator shall determine at or after grant), by the legal
representative of the estate or by the legatee of the optionee under the will of
the optionee, for a period of one year (or such shorter period as the
Administrator shall specify at grant) from the date of such death or until the
expiration of the stated term of such Stock Option, whichever period is shorter.
(h) Termination by Reason of Disability. If an optionee's employment
with the Company or any Subsidiary terminates by reason of Disability, any Stock
Option held by such optionee may thereafter be exercised, to the extent it was
exercisable at the time of such termination (or on such accelerated basis as the
Administrator shall determine at the time of grant), for a period of one year
(or such shorter period as the Administrator shall specify at grant) from the
date of such termination of employment or until the expiration of the stated
term of such
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Stock Option, whichever period is shorter; provided, however, that, if the
optionee dies within such one-year period (or such shorter period as the
Administrator shall specify at grant) and prior to the expiration of the stated
term of such Stock Option, any unexercised Stock Option held by such optionee
shall thereafter be exercisable to the extent to which it was exercisable at the
time of termination for a period of one year (or such shorter period as the
Administrator shall specify at grant) from the time of death or until the
expiration of the stated term of such Stock Option, whichever period is shorter.
In the event of a termination of employment by reason of Disability, if an
Incentive Stock Option is exercised after the expiration of the applicable
exercise periods under Section 422 of the Code, such Stock Option shall
thereafter be treated as a Non-Qualified Stock Option.
(i) Other Termination. Except as otherwise determined by the
Administrator, if an optionee's employment with the Company or any Subsidiary
terminates for any reason other than death or Disability, the Stock Option may
be exercised until the earlier to occur of (i) three months from the date of
such termination, or (ii) the expiration of the stated term of such Stock
Option, or (iii) such shorter period as the Administrator may specify at grant.
(j) Annual Limit on Incentive Stock Options. To the extent that the
aggregate Fair Market Value (determined as of the date the Incentive Stock
Option is granted) of shares of Stock with respect to which Incentive Stock
Options granted to an Optionee under this Plan and all other option plans of the
Company, a Parent Corporation or any Subsidiary become exercisable for the first
time by the Optionee during any calendar year exceeds $100,000, such Stock
Options shall be treated as Non-Qualified Stock Options.
SECTION 6. STOCK APPRECIATION RIGHTS AND LIMITED STOCK APPRECIATION RIGHTS.
(a) Grant and Exercise. Stock Appreciation Rights and Limited Stock
Appreciation Rights may be granted either alone ("Free Standing Rights") or in
conjunction with all or part of any Stock Option granted under the Plan
("Related Rights"). In the case of a Non-Qualified Stock Option, Related Rights
may be granted either at or after the time of the grant of such Stock Option. In
the case of an Incentive Stock Option, Related Rights may be granted only at the
time of the grant of the Incentive Stock Option.
A Related Right or applicable portion thereof granted in conjunction
with a given Stock Option shall terminate and no longer be exercisable upon the
termination or exercise of the related Stock Option, except that, unless
otherwise provided by the Administrator at the time of grant, a Related Right
granted with respect to less than the full number of shares covered by a related
Stock Option shall only be reduced if and to the extent that the number of
shares covered by the exercise or termination of the related Stock Option
exceeds the number of shares not covered by the Stock Appreciation Right.
A Related Right may be exercised by an optionee, in accordance with
paragraph (b) of this Section 6, by surrendering the applicable portion of the
related Stock Option. Upon such exercise and surrender, the optionee shall be
entitled to receive an amount determined in the manner prescribed in paragraph
(b) of this Section 6. Stock Options which have been so surrendered, in whole or
in part, shall no longer be exercisable to the extent the Related Rights have
been so exercised.
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(b) Terms and Conditions. Stock Appreciation Rights shall be subject to
such terms and conditions, not inconsistent with the provisions of the Plan, as
shall be determined from time to time by the Administrator, including the
following:
(i) Stock Appreciation Rights that are Related Rights ("Related
Stock Appreciation Rights") shall be exercisable only at such time or times and
to the extent that the Stock Options to which they relate shall be exercisable
in accordance with the provisions of Section 5 and this Section 6; provided,
however, that no Related Stock Appreciation Right shall be exercisable during
the first six months of its term, except that this additional limitation shall
not apply in the event of death or Disability of the optionee prior to the
expiration of such six-month period.
(ii) Upon the exercise of a Related Stock Appreciation Right, an
optionee shall be entitled to receive up to, but not more than, an amount in
cash or that number of shares of Stock (or in some combination of cash and
shares of Stock) equal in value to the excess of the Fair Market Value of one
share of Stock as of the date of exercise over the option price per share
specified in the related Stock Option multiplied by the number of shares of
Stock in respect of which the Related Stock Appreciation Right is being
exercised, with the Administrator having the right to determine the form of
payment.
(iii) Related Stock Appreciation Rights shall be transferable or
exercisable only when and to the extent that the underlying Stock Option would
be transferable or exercisable under paragraph (f) of Section 5.
(iv) Upon the exercise of a Related Stock Appreciation Right, the
Stock Option or part thereof to which such Related Stock Appreciation Right is
related shall be deemed to have been exercised for the purpose of the limitation
set forth in Section 3 on the number of shares of Stock to be issued under the
Plan.
(v) A Related Stock Appreciation Right granted in connection with an
Incentive Stock Option may be exercised only if and when the Fair Market Value
of the Stock subject to the Incentive Stock Option exceeds the exercise price of
such Stock Option.
(vi) Stock Appreciation Rights that are Free Standing Rights ("Free
Standing Stock Appreciation Rights") shall be exercisable at such time or times
and subject to such terms and conditions as shall be determined by the
Administrator at or after grant; provided, however, that no Free Standing Stock
Appreciation Right shall be exercisable during the first six months of its term,
except that this limitation shall not apply in the event of death or Disability
of the recipient of the Free Standing Stock Appreciation Right prior to the
expiration of such six-month period.
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(vii) The term of each Free Standing Stock Appreciation Right shall
be fixed by the Administrator, but no Free Standing Stock Appreciation Right
shall be exercisable more than ten years after the date such right is granted.
(viii) Upon the exercise of a Free Standing Stock Appreciation
Right, a recipient shall be entitled to receive up to, but not more than, an
amount in cash or that number of shares of Stock (or any combination of cash or
shares of Stock) equal in value to the excess of the Fair Market Value of one
share of Stock as of the date of exercise over the price per share specified in
the Free Standing Stock Appreciation Right (which price shall be no less than
100% of the Fair Market Value of the Stock on the date of grant) multiplied by
the number of shares of Stock with respect to which the right is being
exercised, with the Administrator having the right to determine the form of
payment.
(ix) Free Standing Stock Appreciation Rights shall be transferable
or exercisable subject to the provisions governing the transferability and
exercisability of Stock Options set forth in paragraph (f) of Section 5.
(x) In the event of the termination of an employee who has been
granted one or more Free Standing Stock Appreciation Rights, such rights shall
be exercisable to the same extent that a Stock Option would have been
exercisable in the event of the termination of the optionee.
(xi) Limited Stock Appreciation Rights may only be exercised within
the 30-day period following a "Change of Control" (as defined in Section 10
below), and, with respect to Limited Stock Appreciation Rights that are Related
Rights ("Related Limited Stock Appreciation Rights"), only to the extent that
the Stock Options to which they relate shall be exercisable in accordance with
the provisions of Section 5 and this Section 6; provided, however, that no
Related Limited Stock Appreciation Right shall be exercisable during the first
six months of its term, except that this additional limitation shall not apply
in the event of death or Disability of the optionee prior to the expiration of
such six-month period.
(xii) Upon the exercise of a Limited Stock Appreciation Right, the
recipient shall be entitled to receive an amount in cash equal in value to the
excess of the "Change of Control Price" (as defined in Section 10) of one share
of Stock as of the date of exercise over (A) the option price per share
specified in the related Stock Option, or (B) in the case of a Limited Stock
Appreciation Right which is a Free Standing Stock Appreciation Right, the price
per share specified in the Free Standing Stock Appreciation Right, such excess
to be multiplied by the number of shares in respect of which the Limited Stock
Appreciation Right shall have been exercised.
(xiii) For the purpose of the limitation set forth in Section 3 on
the number of shares to be issued under the Plan, the grant or exercise of Free
Standing Stock Appreciation Rights shall be deemed to constitute the grant or
exercise, respectively, of Stock Options with respect to the number of shares of
Stock with respect to which such Free Standing Stock Appreciation Rights were so
granted or exercised.
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SECTION 7. RESTRICTED STOCK, DEFERRED STOCK AND PERFORMANCE SHARES.
(a) General. Restricted Stock, Deferred Stock and Performance Share
awards may be issued either alone or in addition to other awards granted under
the Plan. The Administrator shall determine the Eligible Employees to whom, and
the time or times at which, grants of Restricted Stock, Deferred Stock or
Performance Share awards shall be made; the number of shares to be awarded; the
price, if any, to be paid by the recipient of Restricted Stock, Deferred Stock
or Performance Share awards; the Restricted Period (as defined in Section 7(c))
applicable to Restricted Stock or Deferred Stock awards; the performance
objectives applicable to Performance Share or Deferred Stock awards; the date or
dates on which restrictions applicable to such Restricted Stock or Deferred
Stock awards shall lapse during such Restricted Period; and all other conditions
of the Restricted Stock, Deferred Stock and Performance Share awards. The
Administrator may also condition the grant of Restricted Stock, Deferred Stock
and Performance Share awards upon the exercise of Stock Options, or upon such
other criteria as the Administrator may determine, in its sole discretion. The
provisions of Restricted Stock, Deferred Stock and Performance Share awards need
not be the same with respect to each recipient.
(b) Awards and Certificates. The prospective recipient of a Restricted
Stock, Deferred Stock or Performance Share award shall not have any rights with
respect to such award, unless and until such recipient has executed an agreement
evidencing the award (a "Restricted Stock Award Agreement," "Deferred Stock
Award Agreement," or "Performance Share Award Agreement," as appropriate) and
delivered a fully executed copy thereof to the Company, within a period of sixty
days (or such other period as the Administrator may specify) after the award
date.
Except as otherwise provided below in this Section 7(b), (i) each
Participant who is awarded Restricted Stock or Performance Shares shall be
issued a stock certificate in respect of such shares of Restricted Stock or
Performance Shares; and (ii) such certificate shall be registered in the name of
the Participant, and shall bear an appropriate legend referring to the terms,
conditions, and restrictions applicable to such award, substantially in the
following form:
"The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions (including
forfeiture) of the Alpha Microsystems 1998 Stock Option and Awards Plan
and a Restricted Stock Award Agreement or Performance Share Award
Agreement entered into between the registered owner and Alpha
Microsystems. Copies of such Plan and Agreement are on file in the
offices of Alpha Microsystems."
The Company shall require that the stock certificates evidencing such
shares be held in the custody of the Company until the restrictions thereon
shall have lapsed, and that, as a condition of any Restricted Stock award or
Performance Share award, the Participant shall have delivered a stock power,
endorsed in blank, relating to the Stock covered by such award.
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With respect to Deferred Stock awards, at the expiration of the
Restricted Period, stock certificates in respect of such shares of Deferred
Stock shall be delivered to the Participant, or his legal representative, in a
number equal to the shares of Stock covered by the Deferred Stock award.
(c) Restrictions and Conditions. The Restricted Stock, Deferred Stock
and Performance Share awards granted pursuant to this Section 7 shall be subject
to the following restrictions and conditions:
(i) Subject to the provisions of the Plan and the Restricted Stock,
Deferred Stock or Performance Share award agreement, during such period as may
be set by the Administrator commencing on the grant date (the "Restricted
Period"), the Participant shall not be permitted to sell, transfer, pledge or
assign shares of Restricted Stock, Performance Shares or Deferred Stock awarded
under the Plan; provided, however, that the Administrator may, in its sole
discretion, provide for the lapse of such restrictions in installments and may
accelerate or waive such restrictions in whole or in part based on such factors
and such circumstances as the Administrator may determine, in its sole
discretion, including, but not limited to, the attainment of certain performance
related goals, the Participant's termination, death or Disability or the
occurrence of a "Change of Control" as defined in Section 11.
(ii) Except as provided in paragraph (c)(i) of this Section 7, the
Participant shall have, with respect to the shares of Restricted Stock or
Performance Shares, all of the rights of a stockholder of the Company, including
the right to vote the shares, and the right to receive any dividends thereon
during the Restricted Period. With respect to Deferred Stock awards, the
Participant shall generally not have the rights of a stockholder of the Company,
including the right to vote the shares during the Restricted Period; provided,
however, that dividends declared during the Restricted Period with respect to
the number of shares covered by a Deferred Stock award shall be paid to the
Participant. Certificates for shares of unrestricted Stock shall be delivered to
the Participant promptly after, and only after, the Restricted Period shall
expire without forfeiture in respect of such shares covered by the award of
Restricted Stock, Performance Shares or Deferred Stock, except as the
Administrator, in its sole discretion, shall otherwise determine.
(iii) Subject to the provisions of the Restricted Stock, Deferred
Stock or Performance Share award agreement and this Section 7, upon termination
of employment for any reason during the Restricted Period, all shares subject to
any restriction as of the date of such termination shall be forfeited by the
Participant, and the Participant shall only receive the amount, if any, paid by
the Participant for such Restricted Stock or Performance Shares, plus simple
interest on such amount at the rate of 8% per year.
SECTION 8. NONEMPLOYEE DIRECTOR STOCK OPTIONS.
Each Nonemployee Director shall, in his or her capacity as a Nonemployee
Director, receive in lieu of cash compensation for service on the Board of
Directors, automatic grants of Stock Options as set forth in this Section 8.
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(a) Stock Option Grant in Lieu of Other Compensation for Past Services.
Effective upon the date this Plan is approved by the Shareholders, each person
who was a Nonemployee Director for the period commencing December 1, 1997
through September 1, 1998, provided such Nonemployee Director agrees to accept
such Non-Qualified Stock Option in lieu of any other compensation for service on
the Board of Directors (excluding reimbursement of travel expense) for such
period, shall automatically be granted on such date a Non-Qualified Stock Option
to purchase a number of shares calculated as follows: (i) 9,465 (the number of
shares such Director would otherwise have been entitled to receive for his
services during such period) shall be multiplied by the Fair Market Value of a
share on the grant date of the Option; (ii) the product of (i) shall be
multiplied by 3 (a multiplier chosen to reflect that the Director will have to
purchase such shares); (iii) the product of (ii) shall be divided by the Fair
Market Value of a share of Common Stock on August 11, the date the Directors
approved this Plan ($2.72), which quotient shall be the number of shares for
which the Option is granted. The exercise price per share under such
Non-Qualified Stock Option shall be equal to the Fair Market Value of a share of
Common Stock on the date of such grant. Such Non-Qualified Stock Option shall be
exercisable immediately and shall continue to be exercisable for ten (10) years
after the date of grant.
(b) Stock Options to be Granted in Lieu of Future Director Compensation.
(i) Initial Grants. Each Nonemployee Director serving as of the date
this Plan is approved by the Shareholders will be automatically granted on such
date as compensation for his services as a Director a Non-Qualified Stock Option
(the "Initial Grant") to purchase a number of shares calculated as follows: (i)
$30,000, (the amount such Director would otherwise have been paid for his
services during such period) shall be multiplied by 3, since the Option will be
in lieu of compensation for three years service; (ii) the product of (i) shall
be multiplied by 3 (a multiplier chosen to reflect that the Director will have
to purchase such shares); (iii) the product of (ii) shall be divided by the Fair
Market Value of a share of Common Stock on the date of grant, which quotient
shall be the number of shares for which the Option is granted. The exercise
price per share under such Non-Qualified Stock Option shall be equal to the Fair
Market Value of a share of Common Stock on the date of such grant. Such
Non-Qualified Stock Option shall be exercisable one third immediately, and
additional one third on each of the first and second anniversaries of the grant
(provided the Director continues to serve as a Director), and shall continue to
be exercisable for ten (10) years after the date of grant, provided that the
Director continues to serve as a Director of the Company, or as set forth in
Paragraph (c) of this Section 8 should the Director cease to be a Director. New
Nonemployee Directors shall receive Initial Grants upon their first election or
appointment to the Board unless there are any changes in accounting requirements
which would result in such grants having a material adverse impact on the
Company's results of operations, in which case their Initial Grants shall be on
the terms set forth in Subparagraph (ii) below for Subsequent Grants.
(ii) Subsequent Grants. On the third anniversary of the date of a
Nonemployee Director's Initial Grant (or on the first anniversary of the date of
a Nonemployee Director's Initial Grant if the Initial Grant was on the terms set
forth in this Subparagraph (ii)),
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and on each anniversary thereafter, such Nonemployee Director if then serving on
the Board shall be granted automatically a Non-Qualified Stock Option to
purchase a number of shares calculated as follows: (i) $30,000 (the amount such
Director would otherwise have been paid for his services during such period)
shall be multiplied by 3 (a multiplier chosen to reflect that the Director will
have to purchase such shares); (ii) the product of (i) shall be divided by the
Fair Market Value of a share of Common Stock on the date of grant, which
quotient shall be the number of shares for which the Option is granted. The
purchase price of each share under such Non-Qualified Stock Option shall equal
the Fair Market Value of a share of Common Stock on the date of such grant. Such
Option shall equal the Fair Market Value of a share of Common Stock on the date
of such grant. Such Option shall be exercisable immediately, and shall continue
to be exercisable for ten (10) years after the date of grant, provided that the
Director continues to serve as a Director of the Company, or as set forth in
Paragraph (c) of this Section 8 should such Director cease to be a Director.
(c) Option Terms.
(i) Method of Exercise. Each Non-Qualified Stock Option granted
pursuant to this Section 8 may be exercised in whole or in part at any time
during the option period, by giving written notice of exercise to the Company
specifying the number of shares to be purchased, accompanied by payment in full
of the purchase price in cash or its equivalent as determined by the
Administrator. As determined by the Administrator, in its sole discretion,
payment in whole or in part may also be made (i) by cancellation of any
indebtedness owed by the Company to the optionee, (ii) by a promissory note
executed by the optionee, (iii) in the form of unrestricted Stock already owned
by the optionee, (iv) by having shares withheld to pay the exercise price, or
(v) by any combination of the foregoing. Any payment in the form of stock
already owned by the optionee may be effected by use of an attestation form
approved by the Administrator. An optionee shall generally have the rights to
dividends and other rights of a stockholder with respect to shares subject to
the option only after the optionee has given written notice of exercise, has
paid in full for such shares, and, if requested, has given the representation
described in paragraph (a) of Section 11.
(ii) Cessation of Directorship. After a Nonemployee Director granted
Non-Qualified Stock Options ceases to be a Director, his or her rights to
exercise any unexercised Non-Qualified Stock Options shall be as follows:
(A) If a Nonemployee Director ceases to be a Director by reason
of death, the portion of such Director's Non-Qualified Stock Option
exercisable at the time of such Director's death may thereafter be
immediately exercised by the legal representative of the estate or
by the legatee of the optionee under the will of the optionee, for a
period of one year (or such shorter period as the Administrator
shall specify at grant) from the date of such death or until the
expiration of the stated term of such Stock Option, whichever period
is shorter.
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(B) If a Nonemployee Director ceases to be a Director by reason
of Disability, that portion of the Non-Qualified Stock Option which
was exercisable at the time such Director ceased to be a Director
may thereafter be exercised for a period of one year (or such
shorter period as the Administrator shall specify at grant) from the
date of such cessation or until the expiration of the stated term of
such Non-Qualified Stock Option, whichever period is shorter.
(C) If a Nonemployee Director ceases to be a Director for any
reason other than death or Disability, that portion of the
Non-Qualified Stock Option which was exercisable at the Time such
Director ceased to be a Director may be exercised until the earlier
to occur of (i) three months from the date of such cessation, or
three years if the Non-Employee Director had served as a Director
for ten years or more or had reached the age of 70 at the date he
ceased to be a Director; or (ii) the expiration of the stated term
of such Non-Qualified Stock Option.
(iv) Limits on Transferability of Options. No Non-Qualified Stock
Option granted hereunder shall be transferable by the optionee otherwise than by
will or by the laws of descent and distribution or pursuant to a "qualified
domestic relations order," as such term is defined in ERISA, provided that to
the extent the Company generally permits other optionees under the Plan to do so
and more than three years have elapsed since the Non-Qualified Option was
granted, all or a portion of the Non-Qualified Stock Options granted hereunder
be transferred to (A) the spouse, qualified domestic partner, children or
grandchildren of the optionee and any other persons related to the optionee as
may be approved by the Administrator ("Immediate Family Members"), (B) a trust
or trusts for the exclusive benefit of such Immediate Family Members, (C) a
partnership or partnerships in which such Immediate Family Members are the only
partners, or (D) any other persons or entities as may be approved by the
Administrator, provided that (x) there may be no consideration for any transfer
unless approved by the Administrator, and (y) subsequent transfers of
transferred options shall be prohibited except those expressly approved by the
Administrator. Following transfer, any such options shall continue to be subject
to the same terms and conditions as were applicable immediately prior to
transfer, provided that, except the terms "optionee," "Stock Option holder" and
"Participant" shall be deemed to refer to the transferee. The events of
cessation of directorship as set forth in this Section 8 hereof shall continue
to be applied with respect to the original optionee, following which the options
shall be exercisable by the transferee only to the extent, and for the periods
specified under this Section 8. Notwithstanding the transfer, the original
optionee will continue to be subject to the provisions of Section 11(c)
regarding payment of taxes, including the provisions entitling the Company to
deduct such taxes from amounts otherwise due to such optionee. "Qualified
domestic partner" for the purpose of this paragraph (iv) shall mean a domestic
partner living in the same household as the optionee and registered with,
certified by or otherwise acknowledged by the county or other applicable
governmental body as a domestic partner or otherwise establishing such status in
any manner satisfactory to the Administrator.
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SECTION 9. AMENDMENT AND TERMINATION.
(a) Except as set forth in paragraph (b) of this Section 9, the Board
may amend, alter or discontinue the Plan, but no amendment, alteration or
discontinuation shall be made that would impair the rights of a Participant
under any award theretofore granted without such Participant's consent, or that
without the approval of the stockholders (as described below) would:
(i) except as provided in Section 3, increase the total number of
shares of Stock reserved for the purpose of the Plan;
(ii) change the employees or class of employees eligible to
participate in the Plan; or
(iii) extend the maximum option period under paragraph (d) of
Section 5 of the Plan.
(b) With respect to the amount, price and timing of issuance of Stock
hereunder to the persons eligible under Section 4(b), the provisions hereof
shall not be amended more than once every six months other than to comport with
changes in the Code, the Employee Retirement Income Security Act or the rules
thereunder. The Board of Directors may, in its discretion, submit any proposed
amendment to the Plan to the stockholders of the Company for approval and shall
submit proposed amendments to the Plan to the stockholders of the Company for
approval if such approval is required in order for the Plan to comply with Rule
16b-3 of the Exchange Act (or any successor rule).
(c) The Administrator may amend the terms of any award theretofore
granted, prospectively or retroactively, but, subject to Section 3, no such
amendment shall impair the rights of any holder without his or her consent.
SECTION 10. UNFUNDED STATUS OF PLAN.
The Plan is intended to constitute an "unfunded" plan for incentive
compensation. With respect to any payments not yet made to a Participant or
optionee by the Company, nothing contained herein shall give any such
Participant or optionee any rights that are greater than those of a general
creditor of the Company.
SECTION 11. CHANGE OF CONTROL.
The following acceleration and valuation provisions shall apply in the
event of a "Change of Control" as defined in paragraph (b) of this Section 11:
(a) In the event of a "Change of Control," unless otherwise set forth in
writing under any individual agreement:
(i) any Stock Appreciation Rights outstanding for at least six
months and any Stock Options awarded under the Plan not previously exercisable
and vested shall become fully exercisable and vested;
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(ii) the restrictions applicable to any Restricted Stock, Deferred
Stock and Performance Share awards under the Plan shall lapse, and such shares
and awards shall be deemed fully vested;
(iii) each Stock Option and Stock Appreciation Right outstanding
hereunder shall terminate within a specified number of days after notice to the
holder, and such holder shall receive, with respect to each share of Common
Stock subject to such Stock Option or Stock Appreciation Right, an amount equal
to the excess of the Fair Market Value of such shares of Common Stock
immediately prior to the occurrence of such Change in Control over the exercise
price per share of such Stock Option or Stock Appreciation Right; such amount to
be payable in cash, in one or more kinds of property (including the property, if
any, payable in the transaction) or in a combination thereof.
(b) For purposes of paragraph (a) of this Section 11, a "Change of
Control" shall be deemed to have occurred if:
(i) any "person," as such term is used in Sections 13(d) and 14(d)
of the Act (other than the Company, any trustee or other fiduciary holding
securities under an employee benefit plan of the Company, or any company owned,
directly or indirectly, by the stockholders of the Company in substantially the
same proportions as their ownership of Stock of the Company) is or becomes after
the Effective Date the "beneficial owner" (as defined in Rule 13d-3 under the
Act), directly or indirectly, of securities of the Company (not including in the
securities beneficially owned by such person any securities acquired directly
from the Company or its affiliates) representing 50% or more of the combined
voting power of the Company's then outstanding securities; or
(ii) during any period of two consecutive years (not including any
period prior to the Effective Date), individuals who at the beginning of such
period constitute the Board, and any new director (other than a director
designated by a person who has entered into an agreement with the Company to
effect a transaction described in clause (i), (iii) or (iv) of this Section
11(b)) whose election by the Board or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so approved,
cease for any reason to constitute at least a majority thereof; or
(iii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than (A) a merger
or consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity), in combination with the ownership of any trustee or other
fiduciary holding securities under an employee benefit plan of the Company,
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at least 75% of the combined voting power of the voting securities of the
Company or such surviving entity outstanding immediately after such merger or
consolidation or (B) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no person
acquires more than 50% of the combined voting power of the Company's then
outstanding securities; or
(iv) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets.
(c) For purposes of this Section 11, "Change of Control Price" means the
higher of (i) the highest price per share paid or offered in any transaction
related to a Change of Control of the Company or (ii) the highest price per
share paid in any transaction reported on the exchange or national market system
on which the Stock is listed, at any time during the preceding sixty-day period
as determined by the Administrator.
SECTION 12. GENERAL PROVISIONS.
(a) Investment Representation; Legend. The Administrator may require
each person purchasing shares pursuant to a Stock Option to represent to and
agree with the Company in writing that such person is acquiring the shares
without a view to distribution thereof. The certificates for such shares may
include any legend which the Administrator deems appropriate to reflect any
restrictions on transfer.
All certificates for shares of Stock delivered under the Plan shall be
subject to such stock-transfer orders and other restrictions as the
Administrator may deem advisable under the rules, regulations, and other
requirements of the Commission, any stock exchange upon which the Stock is then
listed, and any applicable federal or state securities law, and the
Administrator may cause a legend or legends to be placed on any such
certificates to make appropriate reference to such restrictions.
(b) Nonexclusivity of Plan. Nothing contained in the Plan shall prevent
the Board from adopting other or additional compensation arrangements, subject
to stockholder approval if such approval is required; and such arrangements may
be either generally applicable or applicable only in specific cases.
(c) Income Taxes. Each Participant shall, no later than the date as of
which the value of an award first becomes includable in the gross income of the
Participant for federal income tax purposes, pay to the Company, or make
arrangements satisfactory to the Administrator regarding payment of, any
federal, state, or local taxes of any kind required by law to be withheld with
respect to the award. The obligations of the Company under the Plan shall be
conditional on the making of such payments or arrangements, and the Company
(and, where applicable, its Subsidiaries) shall, to the extent permitted by law,
have the right to deduct any such taxes from any payment of any kind otherwise
due to the Participant.
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(d) No Liability. No member of the Board or the Administrator, nor any
officer or employee of the Company acting on behalf of the Board or the
Administrator, shall be personally liable for any action, determination, or
interpretation taken or made in good faith with respect to the Plan, and all
members of the Board or the Administrator and each and any officer or employee
of the Company acting on their behalf shall, to the extent permitted by law, be
fully indemnified and protected by the Company in respect of any such action,
determination or interpretation.
(e) No Enlargement of Employee Rights. This Plan is purely voluntary on
the part of the Company, and while the Company hopes to continue it
indefinitely, the continuance of the Plan shall not be deemed to constitute a
contract between the Company and any employee, or to be consideration for or a
condition of the employment of any employee. Nothing contained in the Plan shall
be deemed to give any employee the right to be retained in the employ of the
Company or its Subsidiaries, or to interfere with the right of the Company or it
Subsidiaries to discharge or retire any employee thereof at any time. No
employee shall have any right to or interest in Stock Options, Stock
Appreciation Rights or Limited Stock Appreciation Rights, Restricted Stock,
Deferred Stock, or Performance Shares authorized hereunder prior to the grant of
such a Stock Option or other award described herein to such employee, and upon
such grant he or she shall have only such rights and interests as are expressly
provided herein, subject, however, to all applicable provisions of the Company's
Articles of Incorporation, as the same may be amended from time to time.
(f) Compliance with Governmental Regulations. Notwithstanding any
provision of the Plan or the terms of any agreement entered into pursuant to the
Plan, the Company shall not be required to issue any shares hereunder prior to
registration of the shares subject to the Plan under the Securities Act of 1933,
as amended, or the Exchange Act, if such registration shall be necessary, or
before compliance by the Company or any Participant with any other provisions of
either of those acts or of regulations or rulings of the Securities and Exchange
Commission thereunder, or before compliance with other federal and state laws
and regulations and rulings thereunder, including the rules of the National
Association of Securities Dealers, Inc. The Company shall use its best efforts
to effect such registrations and to comply with such laws, regulations and
rulings forthwith upon advice by its counsel that any such registration or
compliance is necessary.
(g) No Right to Continue as a Director. Nothing contained in the Plan or
any agreement hereunder will confer upon any Participant who is a Nonemployee
Director any right to continue to serve as a Nonemployee Director of the
Company.
(h) No Stockholder Rights Conferred. Nothing contained in the Plan or
any agreement hereunder will confer upon any Participant (or any person or
entity claiming rights by or through a Participant) any rights of a stockholder
of the Company unless and until shares of Stock are in fact issued to such
Participant (or person).
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(i) Governing Law. To the extent not preempted by Federal law, the Plan
and any agreement pursuant to the Plan shall be construed in accordance with and
governed by the internal laws of the State of California.
(j) Notices. Any notice or other communication required or permitted to
be given pursuant to the Plan or under any agreement hereunder must be in
writing and may be given by registered or certified mail, and if given by
registered or certified mail, shall be determined to have been given and
received on the date three days after a registered or certified letter
containing such notice, properly addressed with postage prepaid, is deposited in
the United States mails; and if given other than by registered or certified
mail, it shall be deemed to have been given when delivered to and received by
the party to whom addressed. Notice shall be given to Participants at their most
recent addresses shown in the Company's records. Notice to the Company shall be
addressed to the Company at the address of the Company's principal executive
offices, to the attention of the Secretary of the Company.
(k) Titles and Headings. Titles and headings of sections and articles of
this Plan are for convenience of reference only and shall not affect the
construction of any provision of this Plan.
SECTION 13. INVALID PROVISION.
(a) Severability. In the event that any provision of this Plan is found
to be invalid or otherwise unenforceable under any applicable law, such
invalidity or unenforceability shall not be construed as rendering any other
provisions contained herein invalid or unenforceable, and all such other
provisions shall be given full force and effect to the same extent as though the
invalid unenforceable provision was not contained herein.
(b) Compliance with Rule 16b-3. It is the intent of the Company that
this Plan and all transactions under this Plan comply in all respects with
applicable provisions of Rule 16b-3 under the Exchange Act (or any successor
rule). Accordingly, if any provision of this Plan, any agreement hereunder, or
any transaction pursuant to the Plan does not comply with the requirements of
Rule 16b-3 as then applicable to a Participant, such provisions will be
construed or deemed amended to the extent necessary to conform to the applicable
requirements with respect to such Participant. To the extent that any provision
of the Plan, any agreement hereunder, or any action by the Board or the
Committee fails to so comply, it shall be deemed null and void to the extent
permitted by law and to the extent deemed advisable by the Board or the
Committee.
SECTION 14. SUCCESSORS AND ASSIGNS.
This Plan shall be binding on and inure to the benefit of the Company
and the employees to whom an Option is granted hereunder, and such employees'
heirs, executors, administrators, legatees, personal representatives, assignees
and transferees.
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SECTION 15. EFFECTIVE DATE OF PLAN.
The Plan will be effective if, and at such time as, the stockholders of
the Company have approved it by the affirmative vote of the holders of a
majority of the securities of the Company present, or represented, and entitled
to vote on the subject matter at a duly held meeting of stockholders (the
"Effective Date").
SECTION 16. TERM OF PLAN.
No Stock Option, Stock Appreciation Right, Limited Stock Appreciation
Right, Restricted Stock, Deferred Stock or Performance Share award shall be
granted pursuant to the Plan on or after the tenth anniversary of the Effective
Date, but awards theretofore granted may extend beyond that date.
SECTION 17. STOCKHOLDER APPROVAL.
Stockholder approval of the Plan must be obtained not later than the
final adjournment of the first annual meeting of stockholders of the Company
held after the date the Board has adopted the Plan.
I hereby certify that the foregoing Plan was duly adopted by the Board
of Directors of ALPHA MICROSYSTEMS on August 11, 1998.
Executed on this 11th day of August, 1998.
---------------------------------
Secretary
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EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement on
Form S-8 pertaining to the Alpha Microsystems 1998 Stock Option and Award Plan,
as amended, of our report dated March 8, 1999, with respect to the consolidated
financial statements and schedule of Alpha Microsystems included in its
Transition Report on Form 10-K for the transition period from February 23, 1998
to December 31, 1998, filed with the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
Orange County, California
July 15, 1999
