EXHIBIT 10.4(b)
CITATION CORPORATION
NON-QUALIFIED STOCK OPTION PLAN
FOR NON-EMPLOYEE DIRECTORS
AS APPROVED BY SHAREHOLDERS FEBRUARY 22, 1996
1. PURPOSE
This Non-Qualified Stock Option Plan for Non-Employee Directors (the
"Plan") is intended to enable Citation Corporation, a Delaware corporation (the
"Company"), to attract and retain capable non-employee Directors to the service
of the Company and to provide them with incentives to promote the best interests
of the Company by enabling them and encouraging them, through the grant of stock
options, to acquire Company stock. Options to acquire Common Stock under this
Plan are sometimes hereinafter referred to individually as an "Option" and,
collectively as the "Options."
2. ADMINISTRATION
The Plan shall be administered by the Compensation Committee of the Board
of Directors (the "Committee"), which shall consist of at least two members of
the Board of Directors. It is intended that this Plan shall constitute a
"formula award" plan within the meaning of Rule 16b-3(c)(2)(ii) under the
Securities Exchange Act of 1934, as amended (the "Act"); if for any reason it
shall be determined that this Plan does not constitute a formula award plan, or
if for any other reason the Board of Directors may consider it advisable, the
Committee shall consist solely of directors who are "disinterested persons"
within the meaning of Rule 16b-3(c)(2)(i) under the Act.
The Committee shall have the authority to establish, from time to time,
such rules and regulations, not inconsistent with the provisions of the Plan,
for the proper administration of the Plan, and to make such determinations and
interpretations under or in connection with the Plan and the Options granted
hereunder as it deems necessary or advisable. All such rules, regulations,
determinations and interpretations shall be binding and conclusive upon the
Company, its shareholders, and directors of the Company and upon their
respective legal representatives, beneficiaries, successors and assigns and upon
all other persons claiming under or through any of them.
3. ELIGIBILITY
The Directors eligible to participate in the Plan shall be those Directors
of the Company or any of its subsidiaries who are not employed by the Company or
its subsidiaries. The Directors eligible to receive options under the Plan are
hereinafter referred to as "Eligible Individuals."
4. STOCK SUBJECT TO THE PLAN
Subject to the provisions of Section 7 hereof, 100,000 shares of the
Company's Common Stock, par value $.01 per share (the "Shares"), shall be
available for the grant of Options under the Plan. Shares issuable under the
Plan may be authorized but unissued Shares or reacquired Shares,
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as the Board shall determine.
If any Option granted under the Plan expires or otherwise terminates, in
whole or in part, without having been exercised, the Shares subject to the
unexercised portion of such Option shall be available for the granting of
Options under the Plan as fully as if such Shares had never been subject to an
Option.
5. GRANTS, TERMS AND CONDITIONS OF OPTIONS
Each Eligible Individual shall automatically be granted an Option to
purchase 10,000 Shares on the first Grant Date occurring on or after such
Eligible Individual first became a Director of the Company. A "Grant Date" is
either (a) thirty (30) days (or the first business day following the 30th day)
after the date this Plan is adopted by the Board of Directors; or (b) the date
on which an Eligible Individual first became a Director of the Company. Options
granted pursuant to this Plan shall be subject to the following terms and
conditions, and such further terms and conditions as are not inconsistent with
the provisions of this Plan, as determined by the Committee.
(a) PRICE. The option price per Share under each Option granted
under the Plan shall be the Fair Market Value of the Shares on the date of
grant of such Option. "Fair Market Value" means the average between the
last reported highest and the lowest selling prices quoted on the NASDAQ
National Market System, or other principal exchange on which the Common
Stock is traded, on the pertinent date.
(b) TERM. The duration of each Option shall be five (5) years from
the date of grant (the "Expiration Date").
(c) EXERCISE AND PAYMENT. Each Option granted to each Optionee shall
become immediately exercisable in whole or in part, subject to Section 5(h)
hereafter. An Option shall be exercised in the manner set forth in the
Option Agreement (as defined in Section 5(h) hereafter) relating thereto
and payment in full for all Shares being purchased at the time shall be
made coincidentally therewith. Such payment shall be in United States
dollars effected by means of cash, certified check or bank draft.
Alternatively, such payment may be made, in whole or in part, in Shares of
Common Stock of the Company, and any such Shares so tendered in payment
shall be valued for such purpose at the then Fair Market Value.
(d) CESSATION OF SERVICE OF A LIVING OPTIONEE: In all cases of
cessation of service as a Director of a living Optionee, the Optionee must
exercise his Options within ninety (90) days after the date he ceases to be
a Director of the Company or its subsidiary, or such Options shall
automatically terminate.
(e) DEATH OF OPTIONEE. If an Optionee dies prior to the Expiration
Date of his Option, such Option may be exercised, by the Optionee's estate,
personal representative or beneficiary who acquired the right to exercise
such Option by bequest or inheritance or by reason of the death of the
Optionee, to the extent of the number of Shares with respect to which the
Optionee could have exercised it on the date of his death, at any time
prior to the earlier of (i) one (1) year following the date of the
Optionee's death, or (ii) the Expiration Date of such Option. In the event
of the death of an Optionee, a condition of exercising any
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Option shall be the delivery to the Company of such tax waivers and other
documents as the Committee shall determine to be necessary or desirable.
(f) TRANSFERABILITY. No Option shall be assignable or transferable
by an Optionee otherwise than by will or by the laws of descent and
distribution, or pursuant to a qualified domestic relations order as
defined by the Internal Revenue Code of 1986, as amended, or Title I of the
Employee Retirement income Security Act, or the rules thereunder, and
during the lifetime of the Optionee, the Option shall be exercisable only
by him, or in the event of his legal disability, by his legal
representative.
(g) RIGHTS AS A SHAREHOLDER. An Optionee shall have no rights as a
shareholder with respect to any Shares covered by his Option until the
issuance of a stock certificate to him representing such Shares.
(h) SEQUENTIAL EXERCISE OF OPTIONS. Options granted under the plan
shall be exercisable at the discretion of the Optionee without regard to
the price or the date of grant of any other outstanding Option which was
granted under this Plan or any other plan of the Company or a related
corporation, or a predecessor of the Company or a related corporation
before or after the granting of such Option to the same Optionee to
purchase Shares, or to purchase stock in a corporation which (at the time
of granting of such option) was a related corporation or to purchase stock
in a predecessor corporation of the Company or a related corporation.
(i) OPTION AGREEMENT AND FURTHER CONDITIONS. As soon as practicable
after the grant of an option, each Optionee shall enter into, and be bound
by the terms of, a stock option agreement (the "Option Agreement") which
shall state the exercise price of the Options granted, and such other terms
and conditions as the Committee shall determine and as are not inconsistent
with this Plan. It is specifically contemplated that, in order to
facilitate compliance with Rule 16b-3 under the Act and notwithstanding the
immediate exercisability set forth in Section 5(c) above, Option Agreements
may delay exercisability until the expiration of six months after the date
of grant, or may require such other holding period as may be necessary or
desirable under federal securities or tax laws.
(j) WITHHOLDING. The obligation of the Company to deliver Shares
upon the exercise of any Option shall be subject to any applicable federal,
state and local tax withholding requirements.
(k) NO OBLIGATION TO EXERCISE OPTION. The granting of an Option
shall impose no obligation upon an Optionee to exercise such Option.
6. INVESTMENT PURPOSES
Each Optionee, or his legal representative or beneficiaries, may be
required to give satisfactory assurance that Shares acquired upon exercise of an
Option are being acquired for investment and not with a view to distribution,
and certificates representing such Shares may be legended accordingly. Such
Shares shall be transferable thereafter only if the proposed transfer is
permissible under the Plan and the Option and if, in the opinion of counsel (who
shall be satisfactory
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to the Company), such transfer shall at such time be in compliance with
applicable securities laws.
7. ADJUSTMENTS
The number of Shares and the option price for the Shares covered by each
outstanding Option shall all be proportionately adjusted for any increase or
decrease in the number of Shares of Common Stock resulting from a subdivision or
consolidation of the issued Shares of Common Stock or the payment of a stock
dividend on Common Stock or any other increase or decrease in the number of such
Shares effected without receipt of consideration by the Company. In the event
of a change in the Company's presently authorized Common Stock which is limited
to a change of all of its presently authorized shares with par value, or any
change of the then authorized shares with par value into the same number of
shares without par value, or any change of the then authorized shares with par
value, the shares resulting from any such change shall be deemed to be Shares of
Common Stock as defined in Section 4. In the event that the outstanding Shares
of Common Stock of the Company shall be changed into or exchanged for a
different number or kind of shares of stock or other securities of the Company
or of another corporation, whether through reorganization, recapitalization,
stock split-up, combination of shares, sale of assets, merger or consolidation,
whether or not the Company shall be the surviving corporation then, there shall
be substituted for each Share of Common Stock subject to any such Option and for
each Share of Common Stock reserved for issuance pursuant to this Plan but not
yet covered by an Option the number and kind of shares of stock or other
securities into which each outstanding Share of Common Stock shall be so changed
or for which each such Share shall be exchanged. In the event there shall be
any change, other than as specified above in this Section 7, in the number or
kind of Shares then subject to an Option or Options and of the shares
theretofore reserved for issuance pursuant to this Plan but not yet covered by
an Option, such adjustment shall be made by the Committee and shall be effective
and binding for all purposes of this Plan and of each Option hereunder and each
Stock Option Agreement hereunder entered into in accordance with this Plan. No
adjustment or substitution provided for in this Section 7 shall require the
Company to buy or sell a fractional share under any Stock Option Agreement, and
the total substitution or adjustment with respect to each Stock Option Agreement
hereunder shall be limited accordingly.
8. TERMINATION, AMENDMENT OR DISCONTINUANCE OF THE PLAN
(a) TERMINATION. This Plan will terminate not later than June 1,
2010, and after that date no options may be granted hereunder. All Options
outstanding at the time of termination of the Plan shall remain in effect
until such Options have expired in accordance with their terms, have been
terminated in accordance with the Plan, or have been terminated by mutual
consent of the parties. The Board of Directors in its discretion may
terminate the Plan at any time with respect to any Shares for which Options
have not theretofore been granted.
(b) AMENDMENT. The Board of Directors shall have the right to alter
or amend the Plan or any part thereof from time to time, including, but not
limited to, such modifications and amendments as shall be in the judgment
of the Board or the Committee required to satisfy the conditions of Rule
16b-3 under the Securities Exchange Act of 1934 as it now exists or may
from time to time be amended and/or superseded, or to conform to any change
in any law or regulation applicable thereto; provided, however that:
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(i) no change in any Option theretofore granted may be made which
would impair the rights of the Optionee without the consent of such
Optionee;
(ii) the Board of Directors may not make any alteration or
amendment which would materially increase the benefits accruing to
participants under the Plan, increase the aggregate number of Shares
which may be issued under the Plan (other than increase reflecting a
stock dividend, stock split, share combination or similar change in
capitalization of the Company), materially modify the requirements as
to eligibility for receipt of Options under the Plan, or extend the
term of the Plan, without the approval of the shareholders of the
Company; and
(iii) the Board of Directors may not amend this Plan more than
once every six months, other than to comport with changes in the
Internal Revenue Code, the Employee Retirement Income Security Act, or
regulations thereunder.
9. ABSENCE OF RIGHTS
The granting of an Option to an Eligible Director shall confer no rights of
any sort except such rights as are contained in this Plan and the Option
Agreement.
10. INDEMNIFICATION AND EXCULPATION
(a) Each person who is or shall have been a member of the Board of
Directors or of the Committee shall be indemnified and held harmless by the
Company against and from any and all loss, cost, liability or expense that
may be imposed upon or reasonably incurred by him in connection with or
resulting from any claim, action, suit or proceeding to which he may be a
party or in which he may be involved by reason of any action taken or
failure to act under this Plan and against and from any and all amounts
paid by him in settlement thereof (with the Company's written approval) or
paid by him in satisfaction of a judgment in any such action, suit or
proceeding, except a judgment in favor of the Company based upon a finding
of his bad faith; subject, however, to the condition that upon the
institution of any such claim, action, suit or proceeding against him, he
shall in writing give the Company an opportunity, at its own expense, to
handle and defend the same before he undertakes to handle and defend it on
his behalf. The foregoing right of indemnification shall not be exclusive
of any other right to which such person may be entitled as a matter of law
or otherwise, or any power that the Company may have to indemnify him or
hold him harmless.
(b) Each member of the Board of Directors or of the Committee, and
each officer and employee of the Company shall be fully justified in
relying or acting upon any information furnished in connection with the
administration of this Plan by any person or persons other than himself.
In no event shall any person who is or shall have been a member of the
Board of Directors or of the Committee, or an officer or employee of the
Company be liable for any determination made or other action taken or any
omission to act in reliance upon any such information or for any action
(including the furnishing of information) taken or any failure to act, if
in good faith.
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11. APPLICATION OF PROCEEDS
The proceeds received by the Company from the sale of Common Stock pursuant
to Options will be used for general corporate purposes.
12. PRONOUNS; HEADINGS.
Wherever any words are used in the masculine gender, they shall be
construed as though they were also used in the feminine gender in all cases
where they would so apply. Headings used herein are for general information
only and do not constitute part of the Plan.
13. SHAREHOLDER APPROVAL
This Plan is subject to the approval of the holders of a majority of the
securities of the Company present or represented and entitled to vote at a
meeting duly held in accordance with applicable laws of the State of Delaware.
14. SAVINGS CLAUSE
Any provision of this Plan which, if given effect, would disqualify any
Option granted hereunder, or Shares issuable upon exercise thereof, from
exemption from the operation of Section 16(b) of the Securities Exchange Act of
1934 shall be null and void and of no effect, and any such provision shall be
deemed not to be a part of this Plan for purposes of construction hereof.
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