EXHIBIT 10.40


 


STEEL DYNAMICS, INC.


 


NON-EMPLOYEE DIRECTOR STOCK OPTION
PLAN


 


1. PURPOSE. This
Non-Qualified Stock Option Plan, to be known as the Steel Dynamics, Inc.
Non-Employee Director Stock Option Plan (the “Plan”) is intended to promote the
interests of Steel Dynamics, Inc. (the “Company”) by providing an
inducement to attract and retain the services of qualified persons who are not
employees or officers of the Company to serve as members of its Board of
Directors (the “Board”) and by strengthening the mutuality of interests between
such directors and the Company’s Stockholders.


 


2. AVAILABLE
SHARES. The total number of shares of the Company’s $.01 per share par value
Common Stock (the “Common Stock”) for which options may be granted under this
Plan shall not exceed 100,000 shares, subject to adjustment in accordance with Section 10
of this Plan. Shares subject to this Plan may be authorized but unissued shares
or shares that were once issued and subsequently reacquired by the Company. If
any options granted under the Plan shall expire, terminate or be canceled for
any reason without having been exercised in full, the number of unpurchased
shares shall again become available for purposes of the Plan.


 


3. ADMINISTRATION.
This Plan shall be administered by the Board or by a committee appointed by the
Board (the “Committee”). In the event the Board fails to appoint or refrains
from appointing a Committee, the Board shall have all power and authority to
administer this Plan. In such event, the word “Committee,” wherever used
herein, shall be deemed to mean the Board. Subject to the provisions of the
Plan, the Committee shall have the power to construe this Plan, to determine
all questions hereunder, to accelerate the vesting or exercise of an option,
and to adopt and amend such rules and regulations for the administration
of this Plan as it may deem desirable. The Committee may also correct any
defect, supply any omission, amend or conform the Plan to any change in law or
regulation, or reconcile any inconsistency or ambiguity in the Plan or in any
option in such manner and to the extent it shall deem necessary to carry the
Plan into effect as intended. No member of the Board or the Committee shall be
liable for any action or determination made in good faith with respect to this
Plan or any option granted under it. Any decision, interpretation or other
action made or taken in good faith by the Committee in accordance with this
Plan shall be final, binding and conclusive on the Company, all members of the
Board and Committee, if any, all optionees, and their respective heirs,
executors, administrators, successors and assigns.


 


4. AUTOMATIC GRANT
OF OPTIONS. Subject to the availability of shares under this Plan: (a) each
person who is a member of the Board on the day following the Company’s 2000
Annual Meeting of Stockholders and who is not an employee or officer of the
Company (a “Non-Employee Director”) and each person who is a Non-Employee
Director on November 15, 2000 (each an “Initial Grant Date”) shall be automatically
granted an option to purchase Common Stock of the Company on each such Initial
Grant Date equal to the number of whole shares, rounded up from .50 or down
from .49, calculated by dividing a grant value of $15,000 on each of the
Initial Grant Dates by the fair market value of the Company’s Common Stock on
each such date, and (b) each person who is a Non-Employee Director on May 15
and on November 15 (each a “Grant Date”) in each year beginning on January 1,
2001 during the term of this Plan shall be automatically granted on each such
date a like option to purchase Common Stock of the Company equal to the number
of whole shares, rounded up or down as previously described, calculated by
dividing a grant value of $15,000, or such other amount, whether higher or
lower, as is specified from time to time for “Grade 3 Supervisors/Professionals”
under the Company’s 1996 Incentive Stock Option Plan (or, in lieu thereof, as
may be specified from time to time by the Committee), by the fair market value
of the Company’s Common Stock on each such Grant Date. The number of shares
covered by options granted under this Section 4 shall be subject to
adjustment in accordance with the provisions of Section 10 of this Plan.


 


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5. OPTION PRICE.
The purchase price of the stock covered by options granted pursuant to this
Plan shall be 100% of the fair market value of such shares on the day the
option is granted. The option price will be subject to adjustment in accordance
with the provisions of Section 10 of this Plan. For purposes of this Plan,
“fair market value” shall be determined as of the last trading day for which
the prices or quotes for the Company’s publicly traded stock are available
prior to the date such option is granted and shall mean (i) the last
reported sale price (on that


 


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date) of the
Company’s Common Stock on the Nasdaq National Market, if the Common Stock is
traded on that market; or (ii) the average (on that date) of the high and
low prices of the Company’s Common Stock on the principal national securities
exchange on which the Common Stock is traded if it is in fact traded on such an
exchange; or (iii) the closing bid price (or average of bid prices) last
quoted (on that date) by an established quotation service for over-the-counter
securities, if the Company’s Common Stock is not reported on the Nasdaq
National Market List.


 


6. PERIOD OF
OPTION. Unless sooner terminated in accordance with the provisions of Section 8
of this Plan, an option granted hereunder shall expire on the date which is
five (5) years after the date of grant of the option.


 


7. VESTING OF
SHARES AND NON-TRANSFERABILITY OF OPTIONS.


 


(a) VESTING.
Options granted under this Plan shall not be exercisable until they become
vested. Options granted under this Plan shall become fully vested in the
optionee and thus become exercisable six (6) months after the date of
grant.


 


(b) NON-TRANSFERABILITY.
Any option granted pursuant to this Plan shall not be assignable or
transferable other than by will or the laws of descent and distribution,
pursuant to a valid domestic relations order, or otherwise in accordance with
the terms of the optionee’s stock option agreement, and shall be exercisable
during the optionee’s lifetime only by him or her and then only in accordance
with the provisions of the Securities Act of 1933 and the rules promulgated
thereunder.


 


8. TERMINATION OF
OPTION RIGHTS.


 


(a) If an
optionee ceases to be a director of the Company, for whatever reason, no
further grants of options shall be made to that optionee pursuant to this Plan.


 


(b) Subject
to the provisions of Section 8(d) and except as may otherwise be
specified in the option agreement, in the event that an optionee ceases to be a
director for any reason other than death, any portion of an option which is
then vested but has not been exercised at the time the optionee so ceases to be
a director may be exercised by the optionee, to the extent it is then vested,
at any time prior to the scheduled expiration date of the option.


 


(c) Except as
may be otherwise specified in the option agreement, in the event that an
optionee ceases to be a director by reason of his or her death, any unexercised
options shall be exercisable by the optionee’s personal representative, heir or
legatee at any time prior to the scheduled expiration date of the option.


 


(d) Except as
may be otherwise specified in the option agreement, no portion of an option may
be exercised if the optionee is removed from the Board for any of the following
reasons: (i) disloyalty, gross negligence, dishonesty or breach of
fiduciary duty to the Company; (ii) the commission of an act of
embezzlement, fraud or deliberate disregard of the rules or policies of
the Company; or (iii) the unauthorized disclosure or misappropriation of
any trade secret or confidential information of the Company.


 


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9. EXERCISE OF
OPTION.


 


(a) Subject
to the terms and conditions of this Plan and the option agreements, an option
granted hereunder, to the extent then exercisable, shall be exercisable only
for the full number of shares covered by that option, by giving written notice
to the Company by mail or in person, at its principal executive offices,
accompanied by payment in full for such shares in cash or by check in United
States dollars.


 


(b) Subject
to the applicable requirements of the Securities and Exchange Commission,
Regulation T, the Internal Revenue Code, and other federal, state and local tax
and securities laws, and notwithstanding the requirements for cash payment set
forth in Section 9(a) of this Plan, the Committee shall have the
authority to determine any other methods, if any, by which the exercise price
of an option may be paid by the optionee, including the form of payment and the
methods by which shares of the Company’s stock may be delivered or deemed to be
delivered to the optionee. Likewise, the Committee, in the exercise of its
discretion, may also allow an optionee to pay the exercise price of an option
by delivering previously issued shares of the Company’s Common Stock or by
directing the Company to withhold from the shares of Common Stock that would
otherwise be issued upon exercise of the option that number of shares having an
fair market value on the exercise date equal to the exercise price, all as
determined pursuant to rules and procedures established from time to time
by the Committee.


 


(c) An
optionee shall not exercise an option at any one time as to fewer than five
hundred (500) shares, or all of the remaining shares then purchasable by the
person or persons exercising the option, if fewer than five hundred (500)
shares.


 


(d) The
holder of an option shall not have any rights of a stockholder with respect to
the shares covered by the option, except to the extent that shares shall have
been actually issued and transferred to him or her upon the exercise of the
option.


 


10. ADJUSTMENTS
UPON CHANGES IN CAPITALIZATION AND OTHER EVENTS. Upon the occurrence of any of
the following events, an optionee’s rights with respect to options granted to
him or her hereunder shall be adjusted as hereinafter provided:


 


(a) STOCK
DIVIDENDS AND STOCK SPLITS. If the shares of Common Stock shall be subdivided
or combined into a greater or smaller number of shares or if the Company shall
issue any shares of Common Stock as a stock dividend on its outstanding Common
Stock, the number of shares of Common Stock deliverable upon the exercise of
options shall be appropriately increased or decreased proportionately, and
appropriate adjustments shall be made in the purchase price per share to
reflect such subdivision, combination or stock dividend.


 


(b) OTHER
ADJUSTMENTS. In the event of a reorganization, recapitalization, merger,
consolidation, or any other change in the corporate structure or shares of the
Company, to the extent permitted by Rule 16b-3 under the Securities
Exchange Act of 1934, there shall be an automatic adjustment in the number and
kind of shares authorized by this Plan and in the option price of outstanding
options under this Plan in such manner as will be necessary to maintain the
proportionate interest of the optionee and to preserve, without exceeding, the
value of such option.


 


(c) OTHER
ADJUSTMENTS. Upon the happening of any of the foregoing events, the class and
aggregate number of shares set forth in Sections 2 and 4 of this Plan that are
subject to options shall also be appropriately adjusted to reflect such events,
including the conversion of the underlying shares into another class of
securities, into securities of another person, into cash or into other
property. The Board shall determine the specific adjustments to be made under
this Section 10 and its determination shall be conclusive.


 


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11. RESTRICTIONS
ON ISSUANCE OF SHARES. Notwithstanding the provisions of Sections 4 and 9 of
this Plan, the Company shall have no obligation to deliver any certificate or
certificates or to cause the electronic transfer of shares upon exercise of an
option until one of the following conditions shall be satisfied:


 


(i) The
issuance of the underlying shares with respect to which the option has been
exercised is at the time of the issuance of such shares effectively registered
under applicable federal and state securities laws as now in force or hereafter
amended; or


 


(ii) Counsel
for the Company shall have rendered an opinion that the issuance of such shares
is exempt from registration under applicable federal and state securities laws
as now in force or hereafter amended; and the Company has complied with all
applicable laws and regulations with respect thereto, including without
limitation, all regulations required by the Nasdaq National Market or by any
stock exchange upon which the Company’s outstanding Common Stock is then
listed.


 


12. LEGEND ON
CERTIFICATES. The certificates representing shares issued pursuant to the
exercise of an option granted hereunder may, if restricted, carry such
appropriate legend, or appropriate restrictions may be noted electronically, as
may be deemed necessary or advisable by counsel to the Company in order to
comply with the requirements of the Securities Act of 1933 or any state
securities laws.


 


13. OPTION
AGREEMENT. Each option granted under the provisions of this Plan shall be
evidenced by an option agreement, which agreement shall be duly executed and
delivered on behalf of the Company and by the optionee to whom such option is
granted. The option agreement shall contain such terms, provisions and
conditions not inconsistent with this Plan as may be determined by the
Committee or by its designee executing such option.


 


14. TERMINATION
AND AMENDMENT OF PLAN. Options may no longer be granted under this Plan after January 1,
2010, and this Plan shall terminate when all options granted or to be granted
hereunder are no longer outstanding. The Board may at any time terminate this
Plan or make such modification or amendment thereof as it deems advisable.
Subject to the provisions of Section 10, termination or any modification
or amendment of this Plan shall not, without consent of a participant, affect
his or her rights under any option already granted to him or her.


 


15. WITHHOLDING OF
INCOME TAXES. Upon the exercise of an option, the Company, in accordance with Section 3402(a) of
the Internal Revenue Code, may require the optionee to pay withholding taxes in
respect of amounts considered to be compensation includible in the optionee’s
gross income.


 


16. COMPLIANCE
WITH REGULATIONS. It is the Company’s intent that the Plan comply in all
respects with Rule 16b-3 under the Securities Exchange Act of 1934 (or any
successor or amended provision thereof) and any applicable Securities and
Exchange Commission interpretations thereof. If any provision of this Plan is
deemed not to be in compliance with Rule 16b-3, the provision shall be
null and void and may be modified and corrected by the Committee without the
necessity of securing further stockholder approval.


 


17. NONQUALIFIED
OPTIONS. All options granted under this Plan shall be nonqualified stock
options (i.e., options that do not qualify as “incentive stock options” under Section 422
of the Internal Revenue Code).


 


18. NO RIGHT TO
CONTINUE RELATIONSHIP. Neither the Plan nor the grant of an option under the
Plan shall confer upon any person any right to continue as a director of the
Company or to obligate the Company to nominate any director for reelection by
the Company’s stockholders.


 


19. COSTS. The
Company shall bear all expenses incurred in administering


 


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the Plan, including
the expenses of issuing Common Stock upon the exercise of options and of
registering the same.


 


20. SEVERABILITY.
If any part of this Plan shall be determined to be invalid or void in any
respect, such determination shall not affect, impair, invalidate or nullify the
remaining provisions of this Plan, which shall continue in full force and
effect and may be adjusted, in the Committee’s discretion, so as to most
closely approximate the original intent expressed herein.


 


21. GOVERNING LAW.
The validity and construction of this Plan and the instruments evidencing
options shall be governed by the laws of the State of Indiana, without giving
effect to the principles of conflicts of law thereof.


 


22. EFFECTIVE
DATE. This Plan shall be effective as of the 1st day of January, 2000, subject,
however, to stockholder approval at the Company’s annual meeting of
stockholders on May 18, 2000, or any adjournment thereof, or pursuant to
any special meeting of stockholders held thereafter but prior to December 31,
2000. In the event that such approval is not obtained, all option grants made
hereunder shall be deemed null and void and the Plan shall be deemed terminated
on the earlier to occur of stockholder nonapproval, if any, or December 31,
2000.


 


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