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                                                                  EXHIBIT 99(b)
 
                           PARK-OHIO INDUSTRIES, INC.
                  1996 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
 
1. PURPOSES
 
     The purposes of the Park-Ohio Industries, Inc. 1996 Non-employee Director
Stock Option Plan (the "Plan") are to promote the interests of Park-Ohio
Industries, Inc. (the "Company") and its subsidiaries by providing an incentive
to attract and retain qualified directors for the board of the Company based
upon the success and growth of the Company and its subsidiaries and by
furthering the identity of interests of the directors and the stockholders of
the Company.
 
2. SHARES SUBJECT TO THE PLAN
 
     The maximum aggregate number of shares as to which stock options may at any
time be granted under the Plan (the "Options") shall be two hundred fifty
thousand (250,000) shares of the Company's common stock, par value $1.00 per
share (the "Common Stock"), subject to adjustment in accordance with Section 10.
Common Stock issued upon exercise of Options may be either authorized but
unissued shares or shares previously issued and reacquired by the Company. If
and to the extent Options terminate, expire or are cancelled without having been
exercised, the shares subject to such Options shall again be available for
purposes of, and may be optioned under, the Plan. All Options shall be
"nonqualified" under and for purposes of the Internal Revenue Code of 1986, as
amended ("Tax Code").
 
3. ELIGIBILITY FOR PARTICIPATION
 
     Any member of the Company's Board of Directors ("Board") who is not an
employee of the Company or any of its subsidiaries shall be eligible to
participate in the Plan. Nothing contained in the Plan shall be construed to
limit the right of the Company to grant options to purchase its Common Stock
otherwise than under the Plan or to grant a particular person more than one
Option.
 
4. GRANTING OF OPTIONS
 
     (a) Each director of the Company who is eligible to participate in this
Plan on the date of the Annual Meeting of Shareholders of any year, that is
whose term of office will continue for at least the year following such Annual
Meeting, shall be granted an Option as of such date, with the number of shares
of Common Stock subject to such Option to be equal to 6,000. Each Option shall
have an exercise price per share equal to the average Fair Market Value per
share of Common Stock for the five (5) trading days immediately preceding the
date as of which such Option is granted. Each Option grant to each director
shall be in lieu of any and all retainer fees (and meeting fees) otherwise
payable to the director for his service as such and/or on any committees of the
Board for the 12 month period beginning on the date of the Annual Meeting of
Shareholders as of which the Option is granted. Except as otherwise provided
herein, all Options granted pursuant to the Plan shall become exercisable six
months after the date of grant.
 
     (b) For purposes of the Plan, the Fair Market Value of a share of Common
Stock as of any trading day shall be the reported closing price for a share of
Common Stock on the NASDAQ National Market.
 
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5. TERM OF OPTIONS
 
     Except as provided in Section 7, Options granted hereunder shall be
exercisable for a term of ten years from the date of grant (the "Expiration
Date"). Notwithstanding anything to the contrary contained herein, no Option
shall be exercisable earlier than six months after its date of grant.
 
6. EXERCISE OF OPTIONS
 
     (a) The exercise price of the shares as to which an Option shall be
exercised shall be paid in full at the time of exercise in cash or Common Stock
(valued at its Fair Market Value at the date of exercise) or a combination of
cash and Common Stock.
 
     (b) Except as provided in Section 7, no Option may be exercised at any time
unless the holder thereof is then a director of the Company and has continuously
remained a director of the Company at all times since the date of grant of such
Option.
 
     (c) Options shall be exercised by the holder thereof giving written notice
of such exercise to the Company. An Option may be exercised only with respect to
a whole number of shares of Common Stock. Subject to the other provisions
hereof, Options may be exercised at any time and in any order. Also subject to
the other provisions hereof, subsequent to the death of a director or former
director, any Options held by such decedent may be exercised by his personal
representative or the person or persons to whom said Option shall have been
transferred, as permitted hereunder.
 
     (d) An Option shall be exercisable during a director's or former director's
lifetime only by the director or former director, the director's transferee, as
permitted hereunder, or, if the director or former director has become disabled,
by his legal representative.
 
7. EXERCISE ON TERMINATION OF EMPLOYMENT
 
     (a) Except as otherwise provided herein, if a director to whom an Option
has been granted ceases to be a member of the Board (otherwise than as a result
of his death or after attainment of age 65), such Option may be exercised at any
time within six (6) months after the date on which he ceased to be a director;
provided, that in no event shall any Option be exercisable for a period of six
months from the date of grant.
 
     (b) If a director to whom an Option has been granted dies while a member of
the Board or, notwithstanding Section 7(a), within six (6) months after he
ceases to be a member of the Board, or ceases to be a member of the Board after
attainment of age 65, such Option may be exercised at any time within one (1)
year after the later of the date of the director's death or the date after
attainment of age 65 that the director ceased to be a Board member, as the case
may be; provided, that in no event shall any Option be exercisable for a period
of six months from the date of grant.
 
     (c) Notwithstanding anything to the contrary herein contained, if a
director resigns his directorship and such resignation is effective prior to his
attainment of age 65, any Option granted to him within six months prior to the
effective date of such resignation shall terminate as of the effective date of
such resignation. Moreover, at such other time as the right of any Option holder
to exercise an Option terminates, such Option, to the extent not theretofore
exercised, shall terminate.
 
     (d) Notwithstanding anything to the contrary herein contained, in no event
shall any Option be exercisable after its Expiration Date.
 
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8. CONFIDENTIALITY/NONSOLICITATION
 
     Each director accepting an Option covenants and agrees that he will not,
while a director of Company or at any time thereafter, disclose, duplicate,
distribute or use any Confidential Information, other than on behalf and for the
benefit of Park-Ohio. The foregoing agreement shall not be construed as
superseding or abridging any other stricter requirements or greater restrictions
with respect to the subject matter thereof that may also be applicable to such
director. The obligations contained in this Section 8 are, and constitute,
separate and several obligations of each such director, and such obligations
shall not be affected by, but rather shall survive, any termination of the Plan
and/or any exercise or termination of any Option. For purposes of this Section
8:
 
          (a) "Confidential Information" means customer lists, rating formulae,
     rate sheets, trade secrets, market studies, financial data and projections,
     analyses, strategic plans and other documents, material and/or information,
     whether or not in writing, acquired by a director of the Company as a
     result of such director's service as such, which are (a) not totally within
     the public domain and (b) such that a reasonable, prudent businessman would
     not voluntarily relinquish, disseminate or communicate same to an actual or
     potential competitor, customer or supplier.
 
          (b) "Park-Ohio" includes the Company and also includes any other
     entity in which the Company owns, whether directly or indirectly, fifty
     percent (50%) or more of the stock and/or assets.
 
     Notwithstanding any other provision of the Plan, any and all unexercised
Options and all rights under the Plan of a director or former director who
received an Option (or his legal transferee, designated beneficiary or legal
representatives) including the right to exercise the unexercised Options, shall
be forfeited if, prior to the time of such exercise, the director or former
director shall violate any of the agreements and covenants contained in this
Section 8.
 
9. NON-TRANSFERABILITY OF OPTIONS
 
     A holder's Options and other rights and interests under the Plan (including
the right to exercise unexercised Options) may not be assigned or transferred
except that, (i) in the case of a holder's death, such Options, and other rights
and interests, shall be transferable to the person or persons to whom the Option
shall have been transferred by will or the laws of descent and distribution,
(ii) a holder's Options, and other rights and interests, may be transferred to
(I) any trust or estate in which the original holder (or such holder's spouse or
other immediate relative) has a substantial beneficial interest or (II) a spouse
or other immediate relative of the original holder, and (iii) a holder's
Options, and other rights and interests, may be transferred pursuant to a
qualified domestic relations order (as defined in the Tax Code). Any Option so
transferred shall continue to be subject to all the terms and conditions
contained in this Plan or any written agreement, pursuant to Section 14.
 
10. ADJUSTMENTS FOR CERTAIN EVENTS
 
     In the event of a stock dividend, recapitalization, merger, consolidation,
split-up, combination or any other change in shares of Common Stock of the
Company, the Common Stock available for purposes of the Plan or subject to
Options outstanding hereunder shall be correspondingly increased, diminished or
changed, so that by exercise of any outstanding Option, the holder of the Option
shall receive, without change in aggregate purchase price, securities, as so
increased, diminished or changed, comparable to the number of shares of Common
Stock he would have received if he had exercised his Option prior to such event
and had continued to hold the Common Stock so purchased until affected by such
event.
 
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11. AMENDMENT AND TERMINATION
 
     The Plan shall terminate on December 31, 2001 and no Options shall be
granted hereunder after such date. The Board may at any time and from time to
time terminate, modify or amend the Plan; provided, however, that unless also
approved or ratified by a vote of the holders of the outstanding shares of the
capital stock of the Company in accordance with the requirements of paragraph
(b) of Rule 16b-3, any such modification or amendment shall not (subject,
however, to the provisions of Section 10): (a) increase the maximum amount of
Common Stock for which Options may be granted under the Plan; (b) reduce the
Option exercise price at which Options may be granted; (c) extend the period
during which Options may be exercised beyond the times originally prescribed;
(d) materially modify the requirements as to eligibility for participation in
the Plan; or (e) materially increase the benefits accruing to Participants under
the Plan; provided, further, that the Plan provisions may not be amended more
than once every six months, other than to comport with changes in the Tax Code,
the Employee Retirement Income Security Act of 1974, as amended, or in either
case the rules thereunder. No such termination, modification or amendment may
diminish, limit or other wise impair the rights of a holder of an outstanding
Option. Nevertheless, with the consent of the holder affected, any such action
may be taken and outstanding Options may be amended in a manner not inconsistent
with the terms of the Plan.
 
12. RIGHTS OF AN OPTION HOLDER
 
     Neither the Plan nor any action taken hereunder shall be construed as
giving any director any right to be retained as a director of the Company or
restrict the right to terminate his Board membership.
 
13. RIGHTS AS A STOCKHOLDER
 
     A holder of an Option shall have no rights as a stockholder with respect to
any Common Stock covered by an Option until he shall have become the holder of
record of such Common Stock, and, except as provided in Section 10 hereof, no
adjustment shall be made for dividends (ordinary or extraordinary, whether in
cash, securities or other property) or distributions or other rights in respect
of such share for which the record date is prior to the date on which he shall
become the holder of record thereof.
 
14. AGREEMENTS WITH OPTION HOLDERS
 
     Each Option granted under the Plan shall be evidenced by a written
agreement executed by an officer of the Company and the optionee and containing
such terms and conditions not inconsistent with the Plan as may be prescribed by
the officer executing the same.
 
15. REQUIREMENTS FOR ISSUANCE OF SHARES
 
     The Company shall have the right to condition the issuance of Common Stock
to any holder of an Option upon exercise thereof on such holder's undertaking in
writing to comply with such restrictions on his subsequent disposition of such
Common Stock as the Company shall deem necessary or advisable as a result of any
applicable law, regulation or official interpretation thereof, and certificates
representing such share may be legended to reflect any such restrictions.
 
16. EFFECTIVE DATE
 
     Subject to the approval of the Plan by the holders of a majority of the
Common Stock present or represented and entitled to vote at the Company's 1996
Annual Meeting of Shareholders or any adjournment
 
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thereof at which a quorum is present, the Plan shall be effective as of May 1,
1996. If the condition set forth above is not satisfied, the Plan shall
terminate automatically.
 
17. PLAN ADMINISTRATION
 
     The Plan shall be administered by the Compensation and Stock Option
Committee of the Board (the "Committee"). The Committee, subject to the other
provisions of the Plan, shall have the sole authority to determine any matters
arising under the Plan. Subject to the other provisions of the Plan, the
Committee shall have full power and authority to administer and interpret the
Plan and to adopt or amend such rules, regulations, agreements and instruments
for implementing the Plan and for conduct of its business as it deems necessary
or advisable, except to the extent, in each case, different provision is made by
the Regulations of the Company or by resolution of the Board. Subject to the
express provisions of the Plan, the Committee's interpretations of the Plan and
all determinations made by the Committee pursuant to the powers vested in it
hereunder shall be conclusive and binding on all persons having any interest in
the Plan or in any options granted hereunder. A majority of the Committee shall
constitute a quorum for purposes of meetings which may be held at such times and
places and on such notice as the Committee deems appropriate. All actions and
determinations of the Committee shall be made by not less than a majority of its
members and may be made at a meeting or by written consent in lieu of a meeting,
except to the extent, in each case, different provision is made by the
Regulations of the Company or by resolution of the Board.