1996 Nonemployee Director Stock Compensation Plan

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 ...