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ALPHA MICROSYSTEMS
1996 NONEMPLOYEE DIRECTOR
STOCK COMPENSATION PLAN
4. ESTABLISHMENT AND PURPOSE.
(a) ALPHA MICROSYSTEMS, a California corporation (the "Company"),
hereby adopts this 1996 Nonemployee Director Stock Compensation Plan (the
"Plan"). The purposes of this Plan are to:
(i) Advance the interests of the Company and its
shareholders by improving the Company's ability to attract and retain
highly qualified persons to serve as Nonemployee Directors of the
Company;
(ii) Align Nonemployee Directors' personal interests more
closely with those of shareholders of the company;
(iii) Promote ownership by Nonemployee Directors of a
greater proprietary interest in the Company; and
(iv) Facilitate the management of the Company's cash flow.
(b) The Plan provides Nonemployee Directors the opportunity to
elect to receive shares of the Company's Common Stock, no par value ("Common
Stock"), in lieu of cash compensation paid for service on the Board of
Directors. Nonemployee Directors who elect to participate in this Plan will
receive shares of Common Stock in an amount equal to the value of cash
compensation otherwise paid for service as a Board member.
5. DEFINITIONS. Where the following terms are used in this Plan
they shall have the meaning specified below, unless the context clearly
indicates otherwise.
(a) "Board" means the Board of Directors of the Company.
(b) "Code" means the Internal Revenue Code of 1986, as amended.
References to any provision of the Code include regulations thereunder and
successor provisions and regulations thereto.
(c) "Committee" means the committee of the Board appointed by the
Board to administer the Plan. Unless otherwise determined by the Board, the
Committee shall be the Compensation Committee of the Board.
(d) "Common Stock" means the Common Stock of the Company, no par
value per share.
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(e) "Compensation" means any cash remuneration earned by a
Nonemployee Director including, but not limited to, annual retainer fees for
service on the Board or a Board committee, fees for attending a meeting of the
Board of a Board committee, and any other fees paid to Nonemployee Directors as
determined by the Board, but excluding any reimbursement of expenses incurred
in connection with meeting attendance and excluding any compensation earned by
a Nonemployee Director other than in his or her capacity as a Director.
(f) "Company" means Alpha Microsystems, a California corporation,
or any successor thereto.
(g) "Director" means a member of the Board.
(h) "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.
(i) "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.
(j) "Fair Market Value" of a share of the Common Stock means, as
of any given date, (i) the closing sale price of a share of Common Stock on the
principal exchange on which shares of Common Stock are then trading, or if the
Common Stock is not traded on an exchange, as reported on the National
Association of Securities Dealers, Inc. Automated Quotation ("Nasdaq") National
Market on such date, or if shares were not traded on such date, then on the
closest preceding date on which a trade occurred, or (ii) if the Common Stock
is not traded on an exchange or on the Nasdaq National Market, the mean between
the closing representative bid and asked prices for the Common Stock on such
date as reported on the over-the-counter market by Nasdaq or, if Nasdaq is not
then in existence, by a successor quotation system; or (iii) if the Common
Stock is not publicly traded, the fair market value of a share of Common Stock
as established by the Committee acting in good faith and considering all
relevant and available information and data.
(k) "Nonemployee Director" means any member of the Board who is
not an Employee of the Company or a Subsidiary.
(l) "Participant" means each Nonemployee Director who elects to
participate in the Plan in accordance with the terms of the Plan.
(m) "Plan" means this 1996 Nonemployee Director Stock Compensation
Plan.
(n) "Rule 16b-3" means Rule 16b-3 promulgated under the Exchange
Act, as such Rule may be amended or superseded from time to time.
(o) "Subsidiary" means any corporation, as defined in Section
424(f) of the Code, in an unbroken chain of corporations beginning with the
Company if each of the corporations other
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than the last corporation in the unbroken chain then owns stock possessing
fifty percent (50%) or more of the total combined voting power of all classes
of stock in one of the other corporations in such chain.
(p) "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.
6. SHARES AVAILABLE UNDER THE PLAN. Subject to adjustment as
provided in Section 7, the total number of shares of Common Stock reserved and
available for issuance under the Plan is one hundred thousand (100,000). Such
shares may be authorized but unissued shares, treasury shares, or shares
acquired in the market for the account of the Participant, or a combination
thereof.
7. ADMINISTRATION OF THE PLAN. The Plan will be administered by
the Committee. The Committee shall have the full power, discretion, and
authority to interpret and administer the Plan consistent with the Plan
provisions and to delegate to employees of the Company or any Subsidiary the
authority to perform administrative functions under the Plan; provided,
however, in no event shall the Committee have the power to determine the
persons eligible to participate in the Plan or the amount, price, or timing of
Common Stock to be issued under the Plan, all such determinations being
automatic pursuant to Plan provisions. The Committee shall serve at the
pleasure of the Board of Directors. 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. Any action taken by the Committee with respect to the
administration of the Plan which would result in any Nonemployee Director
ceasing to be a "disinterested person" for purposes of any other plan
maintained by the Company within the meaning of Rule 16b-3 of the Exchange Act
or which would result in a Nonemployee Director ceasing to be an "outside
director" within the meaning of Section 162(m) of the Code, shall be null and
void.
8. ELIGIBILITY. Each Director of the Company who, on any date on
which Compensation is to be paid, is not an Employee of the Company, will be
eligible, at such date, to be granted shares of Common Stock under Section 6.
A Nonemployee Director's eligibility under the Plan automatically terminates on
the date of Termination of Board Service. No person other than those specified
in this Section 5 will be eligible to participate in the Plan.
9. RECEIPT OF STOCK IN LIEU OF CASH COMPENSATION. Each
Nonemployee Director of the Company may, in lieu of receipt of Compensation in
his or her capacity as a Nonemployee Director in cash, receive such
Compensation in the form of Common Stock in accordance with this Section 6;
provided, however, that such Nonemployee Director is eligible to do so under
Section 5 at the date any such Compensation is otherwise payable.
(a) Election to Receive Stock. Each Nonemployee Director who
elects to receive Compensation for a given calendar year in the form of Common
Stock must file an irrevocable
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written election with the Secretary of the Company not later than December 31
of the year preceding such calendar year. Subject to compliance with Rule
16b-3 promulgated under the Exchange Act, elections to receive Compensation in
the form of Common Stock may also be made from time to time during any calendar
year. A Nonemployee Director may elect to receive the payment of all of the
Compensation payable for services as a Nonemployee Director in Common Stock by
completing and delivering to the Secretary of the Company a Stock Payment
Election Form in the form provided by the Company. Elections may only be made
with respect to all Compensation payable to a Nonemployee Director and may not
be made with respect to only a portion of Compensation.
An election to receive Common Stock shall remain in effect until
terminated or changed as provided herein. An election by a Nonemployee
Director shall be deemed to be continuing and therefore applicable to
subsequent Plan years unless the Nonemployee Director revokes or changes such
election by filing a new election form.
Notwithstanding the foregoing, with respect to the calendar year
commencing 1996, each Nonemployee Director shall be deemed to have elected to
receive either cash Compensation or Common Stock in lieu of receipt of cash
Compensation for calendar year 1996 in accordance with the election of such
Nonemployee Director made at the December 1, 1995 Board meeting, which election
must be confirmed in writing not later than ten (10) days following adoption of
this Plan by the Shareholder.
(b) Payment of Compensation in the Form of Stock. At any date on
which Compensation is payable to a Participant who has elected to receive such
Compensation in the form of Common Stock, the Company will issue to such
Participant, or to an account maintained by a third party and designated by
such Participant, a number of shares of Common Stock having an aggregate Fair
Market Value at that date equal to the compensation, or as nearly as possible
equal to the Compensation (but in no event greater than the Compensation), that
would have been payable at such date but for the Participant's election to
receive Common Stock in lieu thereof. Any fractional shares resulting from
this calculation will be payable in cash to the Participant. Notwithstanding
the foregoing, with respect to calendar year 1996, shares of Common Stock that
would have been issued to a Participant in accordance with this Section 6(b) on
the date on which such Compensation was payable to such Participant, shall be
issued to such Participant on the date that the Plan is first approved by the
Company's shareholders. The number of shares of Common Stock to be issued to
such Participants with respect to calendar year 1996, however, shall be based
upon the Fair Market Value of a share of Common Stock on the date the
Compensation would have been payable to the Participant but for the
Participant's election to receive Common Stock in lieu thereof.
(c) Restrictions on Stock Received in Lieu of Cash Compensation.
Common Stock received in lieu of Compensation may not be sold, transferred,
encumbered, or hypothecated for a period of six (6) months and one (1) day
following the date of receipt.
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10. ADJUSTMENT PROVISIONS
(a) Corporate Transactions and Events. In the event any
recapitalization, reorganization, merger, consolidation, 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 affects the Common Stock such that the Committee
determines that an adjustment is appropriate in order to prevent dilution or
enlargement of each Participant's rights under the Plan, then the Committee may
make an adjustment in the number and/or kind of securities issuable under the
Plan in a manner that is proportionate to the change to the Common Stock and
otherwise equitable in the number and kind of shares of Common Stock remaining
available for issuance under the Plan.
(b) Insufficient Number of Shares. If at any date an insufficient
number of shares of Common Stock are available under the Plan for the receipt
of Compensation in the form of Common Stock, Compensation shall be paid in the
form of Common Stock proportionately among Nonemployee Directors who are
eligible to participate and who have elected to receive Common Stock in lieu of
Compensation to the extent shares are then available under the Plan. Shares of
Common Stock so issued to Participants shall be rounded down to the greatest
number of whole shares.
11. GENERAL PROVISIONS
(a) Amendment and Discontinuance. The Board may alter, amend,
suspend, discontinue or terminate the Plan, provided that no such action shall
deprive any Participant without such Participant's consent of any rights
theretofore granted pursuant hereto and provided further that the provisions
hereof with respect to the amount, price and timing of issuance of Common Stock
hereunder shall not be amended more than once every six (6) 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 shareholders of the Company
for approval and shall submit proposed amendments to the Plan to the
shareholders 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).
(b) 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.
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(c) 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.
(d) No Right to Continue as a Director. Nothing contained in the
Plan or any agreement hereunder will confer upon any Participant any right to
continue to serve as a Nonemployee Director of the Company.
(e) No Shareholder 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
shareholder of the Company unless and until shares of Common Stock are in fact
issued to such Participant (or person).
(f) Nonexclusivity of the Plan. Neither the adoption of the Plan
by the Board nor its submission to the shareholders of the Company for approval
shall be construed as creating any limitations on the power of the Board to
adopt such other compensatory arrangements for Nonemployee Directors as it may
deem desirable.
(g) 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.
(h) Severability. In the event any provision of the Plan or any
action taken pursuant to the Plan shall be held illegal or invalid for any
reason, the illegality or invalidity shall not affect the remaining parts of
the Plan, and the Plan shall be construed and enforced as if the illegal or
invalid provision had not been included, and the illegal or invalid action
shall be deemed null and void.
(i) Withholding Taxes. To the extent required by applicable law
or regulation, each Nonemployee Director must arrange with the Company for the
payment of any federal, state or local income or other tax applicable to the
receipt of Common Stock under the Plan before the Company shall be required to
deliver to the Nonemployee Director a certificate for Common Stock.
(j) Availability of Plan. A copy of this Plan shall be delivered
to any Nonemployee Director making reasonable inquiry concerning the Plan.
(k) 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
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been given and received on the date three (3) 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.
(l) 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.
12. EFFECTIVE DATE. The Plan will be effective if, and at such
time as, the shareholders 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 shareholders.
13. SHAREHOLDER APPROVAL. Shareholder approval of the Plan must
be obtained not later than the final adjournment of the first annual meeting of
shareholders of the Company held after the date the Board has adopted the Plan.
14. PLAN TERMINATION. Unless earlier terminated by action of the
Board, the Plan will remain in effect until such time as no shares of Common
Stock remain available for issuance under the Plan and the Company and
Participants have no further rights or obligations under the Plan.
I hereby certify that the foregoing Plan was duly adopted by the Board
of Directors of ALPHA MICROSYSTEMS on December 1, 1995 and by the shareholders
of ALPHA MICROSYSTEMS on August 13, 1996.
Executed on this 13th day of August, 1996.
/s/JOHN F. GLADE
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John F. Glade, Secretary
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