EXHIBIT 10-O
["THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING SECURITIES THAT
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933."] DATED: AUGUST 20,
1996
PARLEX CORPORATION
1996 OUTSIDE DIRECTORS' STOCK OPTION PLAN
1. PURPOSE.
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This Non-Qualified Stock Option Plan shall be known as the 1996
Outside Directors' Stock Option Plan (the "Plan"). The purpose of the Plan
is to enhance the ability of Parlex Corporation (the "Company") (i) to
attract and retain as Directors of the Company knowledgeable and experienced
persons of the highest caliber who are not employees of the Company, (ii) to
reinforce the mutuality of interests between members of the Board of
Directors and the stockholders of the Company, and (iii) to enable members
of the Board of Directors to participate in the long-term success and growth
of the Company.
2. RIGHTS TO BE GRANTED.
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Under this Plan, options (the "Option" or "Options") are granted that
give an optionee the right for a specified time period to purchase a
specified number of shares of Common Stock, par value $0.10, of the Company
(the "Common Stock"). The option price is determined in each instance in
accordance with the terms of this Plan.
3. ADMINISTRATION.
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The Plan shall be administered by the Board of Directors (the "Board")
of the Company. The Board shall have authority, not inconsistent with the
express provisions of the Plan (a) to grant Options in accordance with the
Plan to such directors as are eligible to receive Options; (b) to prescribe
the form or forms of instruments evidencing Options and any other
instruments required under the Plan and to change such forms from time to
time; (c) to adopt, amend and rescind rules and regulations for the
administration of the Plan; and (d) to interpret the Plan and decide any
questions and settle all controversies and disputes that may arise in
connection with the Plan. Such determinations of the Board shall be
conclusive and shall bind all parties. Subject to Section 17, the Board
shall also have the authority, both generally and in particular instances,
to waive compliance by a director with any obligation to be performed by him
under an Option and to waive any condition or provision of an Option.
4. STOCK SUBJECT TO PLAN.
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Subject to adjustment as provided in Section 16 below, the maximum
number of shares of Common Stock, par value $0.10 per share, reserved and
available for distribution under the Plan shall be 100,000 shares. Such
shares may be authorized and unissued shares or may be shares previously
issued and thereafter reacquired by the Company. If an Option granted under
the Plan shall expire or terminate for any reason without having been
exercised, in whole or in part, the unpurchased shares subject to such
Option shall again be available for subsequent option grants under the Plan.
5. ELIGIBILITY.
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Options may be granted pursuant to this Plan only to non-employee
members of the Board of Directors of the Company (an "Outside Director").
6. GRANT OF OPTIONS.
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(a) Effective as of August 20, 1996, (the "Initial Grant Date")
and on the date of each annual meeting of stockholders thereafter
beginning with the 1997 Annual Meeting of Stockholders ("Annual Grant
Date"), each person (the "Optionee") who is an Outside Director of the
Company shall automatically be granted, without further action by the
Board, an Option to purchase one thousand (1,000) shares of the
Company's Common Stock. The date upon which each option grant is to be
automatically made hereunder is referred to herein as the "Date of
Grant". Anything in this Plan to the contrary notwithstanding, the
effectiveness of this Plan and of the grant of all Options hereunder
is in all respects subject to, and this Plan and Options granted under
it shall be of no force and effect unless and until, and no Option
granted hereunder shall in any way vest or become exercisable in any
respect unless and until, the approval of the Plan by the affirmative
vote of a majority of the Company's shares present (in person or by
proxy) and entitled to vote at a meeting of stockholders at which the
Plan is presented for approval. In the event that such approval as
aforesaid has not been received on or before January 1, 1997, then in
such event this Plan and any options granted hereunder shall be null
and void, and upon the occurrence of such approval as aforesaid, the
Plan and such Options shall be effective as of the date of the Board
of Directors' approval of the Plan.
(b) During the term of the Plan, each member of the Company's
Board of Directors who is not an employee of the Company and becomes a
member of the Board of Directors after August 20, 1996, shall receive,
on the first Annual Grant Date following the date on which he became a
member of the Board, an Option to purchase the number of shares of
Common Stock equal to the product of 1,000 and a fraction, the
numerator of which is the number of days during the year preceding
such Annual Grant Date that such Director served as a member of the
Board and the denominator of which is 365.
(c) In addition to the specific option grants referred to in
subsections (a) and (b) above, the Company's Board of Directors may
award Options on an annual basis to purchase up to one thousand five
hundred (1,500) shares of the Company's Common Stock to Outside
Directors in recognition of extraordinary efforts and contributions to
the Board. Except for the specific Options referred to in subsections
(a),(b), and (c) above, no other Options shall be granted under this
Plan.
(d) No fractional shares shall be granted under the terms of
this Plan.
(e) If at any time there are insufficient shares available
under the Plan to grant the Options prescribed by this Section 6, the
number of shares for which Options shall be granted shall be prorated
equally among the Outside Directors entitled to receive such Options.
7. FORM OF OPTION AGREEMENT.
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Each Option granted under the provisions of this Plan shall be
evidenced by an Option Agreement in such form not inconsistent with the Plan
as may be specified by the Board of Directors.
8. OPTION PRICE.
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The purchase price of the stock covered by an Option granted pursuant
to this Plan shall be the Market Price (as defined below) as determined on
the date when the Options are initially granted to the Outside Director.
For purposes of this Plan, the Market Price shall be the closing sale price
of a share of Common Stock as listed on the NASDAQ National Market System on
the date of grant (or the last closing sale price of the next business day
in the event there were no such trades on the date of grant).
9. METHOD OF EXERCISE OF OPTION.
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(a) Subject to the terms and conditions of this Plan and the
Option Agreement, an Option granted hereunder shall, to the extent
then exercisable, be exercisable in whole or in part by giving written
notice to the Company, stating the number of shares with respect to
which the Option is being exercised, accompanied by payment in full
for such shares, which payment may be in whole or in part in shares of
the Common Stock of the Company already owned by the person or persons
exercising the Option, valued at the Market Price determined in
accordance with the provisions of Section 8; provided, however, that
there shall be no such exercise at any one time as to fewer than one
hundred (100) shares or all of the remaining shares then purchasable
by the person or persons exercising the Option, if fewer than one
hundred (100) shares.
(b) In the event of a Change of Control (as defined herein),
all Options outstanding (whether or not then exercisable) as of the
date of such Change in Control shall automatically become vested and
fully exercisable, but in no event shall they be exercised later than
the specified expiration date of the option. For purposes of the
Plan, the term "Change of Control" means the happening of any of the
following: (i) when any "person," as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934 (the"Act")
(other than the Company or a subsidiary or any employee benefit plan
(including its trustee) of either the Company or a subsidiary) becomes
the "beneficial owner" (as defined in Rule 13d-3 under the Act),
directly or indirectly of securities of the Company representing 30
percent or more of the combined voting power of the Company's then
outstanding securities; or (ii) the occurrence of a transaction
requiring stockholder approval for the acquisition of the Company by
an entity other than the Company or its subsidiary through purchase of
assets, or by merger, or otherwise; or (iii) if, as a result of, or in
connection with, any tender or exchange offer, merger or other
business combination, sale of assets or contested election, or any
combination of the foregoing transactions, the persons who were
directors of the Company before such transaction shall cease to
constitute a majority of the Board of Directors of the Company or of
any successor institution. For purposes of this Section (i) above,
the term "person" shall exclude all persons who are currently officers
or directors of the Company, or spouses, blood relatives or
stepchildren of such officers or directors, and trusts for the benefit
of any such persons, and the estates of any such persons.
10. OPTION PERIOD.
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Each Option and all rights thereunder shall expire ten years from the
day on which the Option is granted, subject to earlier termination as
provided in the Plan.
11. EXERCISE OF OPTIONS.
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Each Option granted under the Plan shall become exercisable one (1)
year from the date of the grant of such Option. Upon any exercise of an
Option, the Optionee shall specify for which Option or portion thereof he
wishes to exercise up to the full amount which have become exercisable as of
that date. To the extent that an Option is not exercised by an Optionee
when it becomes initially exercisable, it shall not expire but shall be
carried forward and shall be exercisable until the expiration of the
exercise period.
12. NONTRANSFERABILITY OF OPTIONS.
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No Option granted under the Plan shall be assignable or transferable
by the person to whom it is granted, either voluntarily or by operation of
law, except by will or the laws of descent and distribution. During the
life of the Optionee, the Option shall be exercisable only by such person.
13. TERMINATION OF OPTION RIGHTS.
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(a) In the event an Optionee ceases to be a member of the Board
of Directors of the Company for any reason other than death or
disability, any then unexercised Options granted to such Optionee
shall, to the extent not then exercisable, immediately terminate and
become void, and any Options which are then exercisable but have not
been exercised at the time the Optionee so ceases to be a member of
the Board of Directors may be exercised, to the extent they are then
exercisable, by the Optionee within a period of thirty (30) days
following such time the Optionee so ceases to be a member of the Board
of Directors, but in no event later than the expiration date of the
Option.
(b) In the event that an Optionee ceases to be a member of the
Board of Directors of the Company by reason of his or her disability
or death, any Option granted to such Optionee shall be immediately and
automatically accelerated and become fully vested and all unexercised
Options shall be exercisable by the Optionee (or by the Optionee's
personal representative, heir or legatee, in the event of death)
during the period ending one hundred eighty (180) days after the date
the Optionee so ceases to be a member of the Board of Directors, but
in no event later than the expiration date of the Option.
14. GENERAL RESTRICTIONS.
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(a) The Company may require any person to whom an Option is
granted, as a condition of exercising such Option, to give written
assurances in substance and form satisfactory to the Company to the
effect that such person is acquiring the Common Stock subject to the
Option for his or her own account for investment and not with any
present intention of selling or otherwise distributing the same, and
to such other effects as the Company deems necessary or appropriate in
order to comply with federal and applicable state securities laws.
The certificates for any shares of stock acquired under the Plan may
include any legend which the Company deems appropriate to reflect any
restrictions on transfer.
(b) Each Option shall be subject to the requirement that if, at
any time, counsel to the Company shall determine that the listing,
registration or qualification of the shares subject to such Option
upon any securities exchange or under any state or federal law, or the
consent or approval of any governmental or regulatory body, is
necessary as a condition of, or in connection with, the issuance or
purchase of shares thereunder, such Option may not be exercised, in
whole or in part, unless such listing, registration, qualification,
consent or approval shall have been effected or obtained on conditions
acceptable to the Company. Nothing herein shall be deemed to require
the Company to apply for or to obtain such listing, registration or
qualification.
(c) No member of the Board, nor any officer or employee of the
Company acting on behalf of the Board or the Company, 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 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.
15. RIGHTS AS A STOCKHOLDER AND DIRECTOR.
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(a) The holder of an Option shall have no rights as a
stockholder with respect to any shares covered by the Option until the
date of issue of a stock certificate to him for such shares. No
adjustment shall be made for dividends or other rights for which the
record date is prior to the date such stock certificate is issued.
(b) Neither the Plan, nor the granting of an Option nor any
other action taken pursuant to the Plan, shall constitute or be
evidence of any agreement or understanding, express or implied, that
the director has a right to continue as a director for any period of
time, or at any particular rate of compensation.
16. ADJUSTMENTS TO OPTIONS.
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In the event that the outstanding shares of Common Stock of the
Company are changed into or exchanged for a different number or kind of
shares or other securities of the Company by reason of any reorganization,
merger, consolidation, recapitalization, or reclassification, or in the
event of a stock split, stock dividend, combination of shares or
subdivision, an automatic adjustment shall be made in the number and kind of
shares as to which outstanding Options or portions thereof then unexercised
shall be exercisable and in the available shares under the Plan, to the end
that the proportionate interest of the option holder shall be maintained as
it existed before the occurrence of such event. Such adjustment to
outstanding Options shall be made without change in the total price
applicable to the unexercised portion of such Options and a corresponding
adjustment in the applicable option price per share shall be made. No such
adjustment shall be made which would, within the meaning of any applicable
provisions of the Act, constitute a modification, extension or renewal of
any option or a grant of additional benefits to the holder of an option.
17. AMENDMENT OF THE PLAN.
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The Board of Directors may at any time alter, amend, modify, suspend
or terminate the Plan; provided however, that except as provided in Section
9(b) above, no alteration, amendment, modification, suspension or
termination shall be made, without approval by the affirmative vote of a
majority of the Company's shares present (in person or by proxy) and
entitled to vote at a meeting of stockholders, which would:
(a) increase the maximum number of shares for which Options may be
granted under the Plan;
(b) change the option exercise price (except as provided in Section
16);
(c) change the designation of the class of persons eligible to
participate in the Plan;
(d) otherwise materially increase benefits accruing to option
holders under the Plan; or
(e) impair the rights of a participant under an Option previously
granted to him, without the participant's consent.
Notwithstanding the foregoing, in no event may the Plan be amended
more than once every six months. It is the intention that the Plan and the
operation thereof qualify for the exemption provisions contained in Rule
16b-3 adopted by the Securities and Exchange Commission under the Act, as
amended, as in effect from time to time or any successor rule ("Rule"). To
the extent that the implementation or operation of any provision hereof does
not comply with the requirements of the Rule as applicable to the Plan, such
provision shall be inoperative or shall be interpreted, to the extent
practicable, to apply in a manner not inconsistent with the requirements of
the Rule.
18. TAXES.
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The Company's obligation to deliver shares upon the exercise of any
option granted under the Plan shall be subject to the Optionee's
satisfaction of all applicable federal, state and local income and
employment tax withholding requirements.
19. EFFECTIVE DATE AND DURATION OF THE PLAN.
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(a) Effective Date. The effectiveness of this Plan and of the
grant of all options hereunder is in all respects subject to approval
by the Company's stockholders, all as more fully set forth in Section
6 above.
(b) Termination. Unless sooner terminated as provided herein,
the Plan shall terminate upon the date on which all shares available
for issuance under the Plan shall have been issued pursuant to the
exercise of options granted under the Plan.