Preferred Shareholder Agreement

EXHIBIT 4.10


PREFERRED SHAREHOLDER AGREEMENT


This Preferred Shareholder Agreement, (the "Agreement"), dated as of January 22, 1999, is by and between Alpha Microsystems, a California corporation (the "Company") and the sole holder (the "Holder") of shares of the Company's issued and outstanding Class A Cumulative, Redeemable and Exchangeable Preferred Stock (the "Class A Preferred Stock") and Class B Cumulative, Redeemable and Exchangeable Preferred Stock (the "Class B Preferred Stock").


WHEREAS, the Nasdaq Stock Market believes that the Company no longer has net tangible assets of at least $4,000,000, as required for continued listing on the Nasdaq National Market;


WHEREAS, the Company has been informed by its independent accountants that the mandatory redemption feature of its issued and outstanding Class A Preferred Stock and Class B Preferred Stock has caused $15,000,000 in Liquidation Value of such Preferred Stock to be treated as redeemable stock and thereby classified other than as stockholder's equity pursuant to interpretations of the Securities and Exchange Commission; thereby causing the Company's net tangible assets to fall below $4,000,000;


WHEREAS, the Company and the Holder have agreed to exchange the outstanding Preferred Stock for shares of the Company's Class A1 Cumulative, Redeemable and Exchangeable Preferred Stock (the "Class A1 Preferred Stock"), Class A2 Cumulative, Redeemable and Exchangeable Preferred Stock (the "Class A2 Preferred Stock") and Class B1 Cumulative, Redeemable and Exchangeable Preferred Stock (the "Class B1 Preferred Stock"), in each case having the rights, preferences, privileges and restrictions set forth in the Certificate of Determination of Rights and Preferences attached hereto as Exhibit A (the "Certificate of Determination");


WHEREAS, the Company's independent accountants have confirmed that the foregoing exchange will permit $12,500,000 in Liquidation Value of such Class A1 Preferred Stock, Class A2 Preferred Stock and Class B1 Preferred Stock to be treated as stockholder's equity, such that the Company's reported net tangible assets, giving pro forma effect to the Certificate of Determination and the exchange contemplated hereunder as of November 22, 1998, would be $6,731,000; and


WHEREAS, the Board of Directors of the Company, in order to establish the new series of Preferred Stock and designate the terms thereof, will cause the Certificate of Determination to be filed with the Secretary of State of the State of California on or about January 25, 1999;


2


WHEREAS, the Company and the Holder desire to effect the exchange contemplated hereunder as of the date the Certificate of Determination becomes effective with the Secretary of State of the State of California;


NOW, THEREFORE, in consideration of the premises and mutual covenants and obligations hereinafter set forth, the Company and the Holder hereby agree as follows:


SECTION 1. Definitions. Capitalized terms used but not otherwise defined herein shall have the meaning given to them in the Certificate of Determination. As used in this Agreement, the following terms shall have the following meanings:


"Dividend Referenc ...