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Exhibit 4
STURM, RUGER & COMPANY, INC.
2001 STOCK OPTION PLAN FOR
NON-EMPLOYEE DIRECTORS
SECTION 1. GENERAL PURPOSE OF PLAN; DEFINITIONS.
(a) The name of this plan is the Sturm, Ruger & Company,
Inc. 2001 Stock Option Plan for Non-Employee Directors (the "Plan"). The purpose
of the Plan is to enable the Company (as defined below) to compensate
Non-Employee Members of the Board (as defined below) and to provide incentives
to such members, which incentives are linked directly to increases in
stockholder value and will therefore inure to the benefit of all stockholders of
the Company.
(b) For purposes of the Plan, the following terms shall be
defined as set forth below:
(i) "Board" means the Board of Directors of the
Company.
(ii) "Code" means the Internal Revenue Code of 1986,
as amended from time to time, or any successor thereto.
(iii) "Committee" means the Compensation Committee of
the Board, or any other committee the Board may
subsequently appoint to administer the Plan. The
Committee shall be composed entirely of directors who
meet the qualifications referred to in Section 2 of the
Plan. If at any time no Committee shall be in office,
then the functions of the Committee specified in the
Plan shall be exercised by the Board.
(iv) "Company" means Sturm, Ruger & Company, Inc., a
corporation organized under the laws of the State of
Delaware, or any successor corporation.
(v) "Fair Market Value" shall mean, with respect to
Stock or other property, the fair market value of such
Stock or other property determined by such methods or
procedures as shall be established from time to time by
the Committee. Unless otherwise determined by the
Committee in good faith, the per share Fair Market Value
of Stock of a particular date shall mean (i) the closing
sale price per share of Stock on the national securities
exchange on which the Stock is principally traded for
the last preceding date on which there was a sale of
such Stock on such exchange, or (ii) if the shares of
Stock are then traded in an over-the-counter market,
the average of the closing bid and asked prices for
the shares of Stock in such over-the-counter market
for the last preceding date on which there
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was a sale of such Stock in such market, or (iii) if
the shares of Stock are not then listed on a national
securities exchange or traded in an over-the-counter
market, such value as the Committee, in its sole
discretion, shall determine.
(vi) "Non-Employee Members of the Board" shall mean
those members of the Board who are not otherwise serving
as officers or employees of the Company or any of its
subsidiaries at the same time that they are serving as
members of the Board; provided, however, that
notwithstanding the foregoing, William B. Ruger shall
not be deemed to be a Non-Employee Member of the Board.
(vii) "Nonqualified Stock Option" means any Stock
Option that is not an "incentive stock option" within
the meaning of Section 422 of the Code.
(viii) "Plan" has the meaning set forth in the first
paragraph hereof.
(ix) "Securities Act" means the Securities Act of
1933, as amended.
(x) "Stock" means the Company's presently authorized
common stock, par value $1.00 per share, except as this
definition may be modified pursuant to Section 3 hereof
to include shares which are substituted for, or
represent adjustments to, the Company's common stock,
par value $1.00 per share, or other Stock.
(xi) "Stock Option" means any option to purchase
shares of Stock granted pursuant to Section 5.
SECTION 2. ADMINISTRATION.
The Plan shall be administered by a Committee of not less than
two persons, who shall be appointed by the Board and who shall serve at the
pleasure of the Board.
SECTION 3. STOCK SUBJECT TO PLAN; SUBSTITUTIONS AND ADJUSTMENTS.
The total number of shares of Stock reserved and available for
issuance under the Plan shall be 200,000. Such shares may consist, in whole or
in part, of authorized and unissued shares or treasury shares. In the event of
any merger, reorganization, consolidation, recapitalization, Stock dividend or
other change in corporate structure affecting the Stock, a substitution or
adjustment shall be made in (a) the aggregate number and kind of shares reserved
and available for issuance under the Plan and (b) the number and option price of
shares subject to outstanding stock Options granted under the Plan as may be
determined by the Committee, provided that the number of shares subject to any
award shall always be a whole number.
SECTION 4. ELIGIBILITY.
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Each Non-Employee Member of the Board shall receive
Nonqualified Stock Options in accordance with the provisions of Section 5. In no
event may any Non-Employee Member of the Board receive an amount of stock
hereunder upon the exercise of non-qualified stock options of more than one
percent of the stock outstanding on the date hereof.
SECTION 5. STOCK OPTIONS.
(a) Stock Options shall be granted in the following manner:
(i) On January 1, 2001, each Non-Employee Member of
the Board shall be granted a Nonqualified Stock Option
to purchase 20,000 shares of Stock; and
(ii) Each new Non-Employee Member of the Board who
has not previously been a Non-Employee Member of the
Board during the term of the Plan shall be granted, on
the date he or she is elected to the Board during the
term of the Plan, a Nonqualified Stock Option to
purchase 20,000 shares of Stock.
(b) Stock Options granted under the Plan shall be subject to
the terms and conditions set forth below:
(i) The exercise price per share of Stock
purchasable under such Stock Options shall be 100% of
the Fair Market Value of the Stock on the date of grant.
(ii) Such options shall be exercisable commencing (A)
immediately as to 5,000 shares of Stock and (B) on each
of the first three anniversaries of the date of grant as
to 5,000 additional shares of Stock, in each case by
payment in full of the exercise price in cash, certified
or cashier's check or delivery of Stock certificates
endorsed in blank or accompanied by executed stock
powers with signatures guaranteed by a national bank or
trust company or a member of a national securities
exchange. For these purposes, the Stock shall be valued
at the Fair Market Value on the date of exercise.
Payment of the exercise price with certificates
evidencing shares of Stock as provided above shall not
increase the number of shares available for the grant of
Stock Options under the Plan.
(iii) Each Stock Option shall cease to be exercisable
on the date that is ten years following the date of
grant.
(iv) The aggregate number of shares of Stock that may
be granted to any Non-Employee Member of the Board
pursuant to the Plan may not exceed 20,000 shares.
(v) Except as provided in this Section 5(b)(v),
Stock Options shall not be transferable other than by
will or the laws of descent and distribution and shall
be exercisable during the optionee's lifetime only by
the optionee
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or by the optionee's guardian or legal representative.
Subject to such administrative conditions as the
Committee may prescribe, an optionee may, upon providing
written notice to the Committee or its designee, elect
to transfer, without consideration therefor, all or any
portion of the Stock Options granted to the optionee to
members of his or her "immediate family" (as defined
below), to a trust or trusts maintained solely for the
benefit of the optionee and/or the members of his or her
immediate family, or to such other entities as may be
determined by the Committee (each, a "permissible
transferee"). Any purported assignment, alienation,
pledge, attachment, sale, transfer or encumbrance that
does not qualify as a permissible transfer under this
Section 5(b)(v) shall be void and unenforceable against
the Plan and the Company. For purposes of this Section
5(b)(v), the term "immediate family" shall mean, with
respect to a particular optionee, the optionee's spouse,
parents, children, stepchildren, legally adopted
children and grandchildren, and such other persons as
may be determined by the Committee. The terms of any
Stock Option shall be binding upon the beneficiaries,
executors, administrators, heirs and successors of the
optionee and, as applicable, a permissible transferee
hereunder. The exercise of a Stock Option that is
transferred pursuant to this Section 5(b)(v) and the
shares of Stock acquired thereby shall be subject to the
applicable provisions of the Plan and to all applicable
requirements of law, including, but not limited to, to
the extent applicable, the registration requirements
under the Securities Act. Upon any transfer of a Stock
Option, as provided in this Section 5(b)(v), the
permissible transferee with respect to such option shall
be subject to the provisions of the Plan that otherwise
would apply to such option if it were still held by the
optionee. The Committee may further restrict the
transferability of such shares and require a legend to
be endorsed on the certificates representing the shares.
(vi) Each recipient of a Stock Option shall enter
into a stock option agreement with the Company, which
agreement shall set forth, among other things, the
exercise price of the option, the term of the option and
provisions regarding exercisability of the option
granted thereunder, which provisions shall not be
inconsistent with the terms set forth herein.
SECTION 6. AMENDMENT AND TERMINATION.
The Board may amend, alter, modify or discontinue the Plan at
any time, provided that the Board may not amend or alter the provisions of the
Plan relating to the amount, price and timing of awards more than once every six
months, other than to comport with changes in the Code, or the rules thereunder,
or the Employee Retirement Income Security Act of 1974, as amended, or the rules
thereunder.
SECTION 7. UNFUNDED STATUS OF PLAN.
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The Plan is intended to constitute an "unfunded" plan for
incentive compensation. With respect to any payments not yet made to a recipient
by the Company, nothing contained herein shall give any such recipient any
rights that are greater than those of a general creditor of the Company.
SECTION 8. GENERAL PROVISIONS.
(a) The Plan and the rights of all persons claiming
hereunder shall be construed and determined in accordance with the laws of the
State of Delaware without giving effect to the choice of law principles thereof.
(b) The obligation of the Company to sell or deliver shares
with respect to Stock Options granted under the Plan shall be subject to all
applicable laws, rules and regulations, including all applicable federal and
state securities laws, and the obtaining of all such approvals by governmental
agencies as may be deemed necessary or appropriate by the Committee. Moreover,
each Stock Option is subject to the requirement that, if at any time the
Committee determines, in its absolute discretion, that the listing, registration
or qualification of shares issuable pursuant to a Stock Option is required by
any securities exchange or under any state or federal law, or the consent or
approval of any governmental regulatory body is necessary or desirable as a
condition of, or in connection with, the grant of a Stock Option, or the
issuance of shares thereunder, no Stock Options shall be granted or shares
issued, in whole or in part, unless such listing, registration, qualification,
consent or approval has been effected or obtained, free of any conditions, as
acceptable to the Committee. In the event that the issuance or disposition of
shares acquired pursuant to a Stock Option is not covered by a then current
registration statement under the Securities Act and is not otherwise exempt from
such registration, such shares shall be restricted against transfer to the
extent required by the Securities Act or regulations thereunder, and the
Committee may require the holder of a Stock Option receiving shares pursuant to
that Stock Option, as a condition precedent to receipt of such shares, to make
such representations as the Committee deems appropriate, including, without
limitation, a representation to the Company in writing that the shares acquired
by such Stock Option holder are acquired for investment only and not with a view
to distribution.
(c) Each recipient of a Stock Option shall, no later than
the date as of which the value of a Stock Option first becomes includible in the
gross income of such recipient for federal income tax purposes, pay to the
Company, or make arrangements satisfactory to the Committee regarding payment
of, any federal, state, or local taxes. The obligations of the Company under the
Plan shall be conditional on such payment or arrangements and the Company shall,
to the extent permitted by law, have the right to deduct any such taxes from any
payment of any kind otherwise due to the recipient.
(d) No member of the Board or the Committee, nor any officer
or employee of the Company acting on behalf of the Board or the Committee, 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 or the
Committee 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.
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SECTION 9. EFFECTIVE DATE OF PLAN.
The Plan shall be effective on the date it is adopted by the
Board.
SECTION 10. TERM OF PLAN.
No Stock Option shall be granted pursuant to the Plan on or
after the tenth anniversary of the effective date of the Plan, but Stock Options
previously granted may extend beyond that date.
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