Document:

ex10_p.htm

    
      

    

    
      Exhibit 10(p)

       

      TEXAS
INSTRUMENTS 2009 DIRECTOR COMPENSATION PLAN

       

      As
Amended December 3, 2009

       

      SECTION
1.  PURPOSE.

       

      The Texas
Instruments 2009 Director Compensation Plan (“the Plan”) is intended as a
successor plan to the Company’s 2003 Director Compensation Plan (“2003
Plan”).  This Plan is designed to attract and retain qualified
individuals to serve as directors of the Company and to increase the proprietary
and vested interest of such directors in the growth and performance of the
Company.  This Plan is effective for Awards granted on or after the
Effective Date.  With respect to Deferred Compensation, as of the
Effective Date, the Post-2004 Accounts (as defined in the 2003 Plan) of the
participants in the 2003 Plan are hereby merged into the Deferred Compensation
accounts under this Plan and the amounts in those Accounts shall be governed
thereafter by the terms of this Plan.  Any elections made under
Section 8 of the 2003 Plan shall remain applicable to and shall govern the
Deferred Compensation Accounts of this Plan unless changed by the Participant in
accordance with the terms of this Plan.

       

      SECTION
2.  DEFINITIONS.

       

      As used
in the Plan, the following terms shall have the meanings set forth
below:

      

      
        	
                (a)

              	
                “Account” means a Cash
      Account or Stock Unit Account established under Section 9 of the
      Plan.

              

      

      

      
        	
                (b)

              	
                “Administrator” means
      the Board or a committee of directors designated by the Board to
      administer the Plan.

              

      

      

      
        	
                (c)

              	
                “Award” means any
      Option, Restricted Stock Unit, Stock Appreciation Right or other
      stock-based award under the Plan.

              

      

      

      
        	
                (d)

              	
                “Award Agreement” means
      any written agreement, contract or other instrument or document evidencing
      any Award granted under the Plan, which may, but need not, be executed or
      acknowledged by a Director.  An Award Agreement may be in
      electronic form.

              

      

      

      
        	
                (e)

              	
                “Board” means the Board
      of Directors of the Company, as constituted from time to
    time.

              

      

      

      
        	
                (f)

              	
                “Cash Account” means
      the bookkeeping accounts established or maintained pursuant to Section
      9(b)(i) on behalf of each Director who elects pursuant to Section 9(b) to
      have any of his or her Deferred Compensation credited to a cash
      account.

              

      

      

      
        	
                (g)

              	
                Change
      in Control definitions:

              

      

      

      
        	
                 
      

              	
                (i)

              	
                “Change in Control (2010
      Grant)” means an event when (i) any Person, alone or together with
      its Affiliates and Associates or otherwise, shall become an Acquiring
      Person otherwise than pursuant to a transaction or agreement approved by
      the Board prior to the time the Acquiring Person became such, or (ii) a
      majority of the Board shall change within any 24-month period unless the
      election or the nomination for election by the Company’s stockholders of
      each new director has been approved by a vote of at least a majority of
      the directors then still in office who were directors at the beginning of
      the period. For the purposes hereof, the terms Person, Affiliates,
      Associates and Acquiring Person shall have the meanings given to such
      terms in the Rights Agreement dated as of June 17, 1998 between the
      Company and Harris Trust and Savings Bank.  Notwithstanding the
      foregoing, if a Restricted Stock Unit (2010 Grant) granted under this Plan
      is or becomes subject to Section 409A of the Code, then with respect to
      such Restricted Stock Unit, “Change in Control (2010 Grant)” means a
      change in control event as to the Company, as defined in Section 409A of
      the Code and the regulations
thereunder.

              

      

      
        
           

        

        
          1

          
            

          

        

        
           

        

      

      
        	
                 
      

              	
                (ii)

              	
                “Change in Control (Post-2010
      Grant)” shall mean an event that will be deemed to have
      occurred:

              

      

      

      
        	
                 
      

              	
                (A)

              	
                On
      the date any Person, other than (i) the Company or any of its
      Subsidiaries, (ii) a trustee or other fiduciary holding stock under an
      employee benefit plan of the Company or any of its Affiliates, (iii) an
      underwriter temporarily holding stock pursuant to an offering of such
      stock, or (iv) a corporation owned, directly or indirectly, by the
      stockholders of the Company in substantially the same proportions as their
      ownership of stock of the Company, acquires ownership of stock of the
      Company that, together with stock held by such Person, constitutes more
      than 50 percent of the total fair market value or total voting power of
      the stock of the Company.  However, if any Person is considered
      to own more than 50 percent of the total fair market value or total voting
      power of the stock of the Company, the acquisition of additional stock by
      the same Person is not considered to be a Change in Control (Post-2010
      Grant);

              

      

      

      
        	
                 
      

              	
                (B)

              	
                On
      the date a majority of members of the Board is replaced during any
      12-month period by directors whose appointment or election is not endorsed
      by a majority of the Board before the date of the appointment or election;
      or

              

      

      

      
        	
                 
      

              	
                (C)

              	
                On
      the date any Person acquires (or has acquired during the 12-month period
      ending on the date of the most recent acquisition by such Person) assets
      from the Company that have a total gross fair market value equal to or
      more than 80 percent of the total gross fair market value of all of the
      assets of the Company immediately before such acquisition or
      acquisitions.  For this purpose, gross fair market value means
      the value of the assets of the Company or the value of the assets being
      disposed of, determined without regard to any liabilities associated with
      such assets.  However, there is no Change in Control (Post-2010
      Grant) when there is such a sale or transfer to (i) a stockholder of the
      Company (immediately before the asset transfer) in exchange for or with
      respect to the Company’s then outstanding stock; (ii) an entity, at least
      50 percent of the total value or voting power of the stock of which is
      owned, directly or indirectly, by the Company; (iii) a Person that owns,
      directly or indirectly, at least 50 percent of the total value or voting
      power of the outstanding stock of the Company; or (iv) an entity, at least
      50 percent of the total value or voting power of the stock of which is
      owned, directly or indirectly, by a Person that owns, directly or
      indirectly, at least 50 percent of the total value or voting power of the
      outstanding stock of the
Company.

              

      

      
        
           

        

        
          2

          
            

          

        

        
           

        

      

      
        	
                 
      

              	
                (D)

              	
                For
      purposes of (A), (B) and (C) of this Section
  2(g)(ii):

              

      

      

      
        	
                 
      

              	
                (1)

              	
                “Affiliate”
      shall have the meaning set forth in Rule 12b-2 promulgated under Section
      12 of the Securities Exchange Act of 1934, as
  amended;

              

      

      

      
        	
                 
      

              	
                (2)

              	
                “Person”
      shall have the meaning given in Section 7701(a)(1) of the
      Code.  Person shall include more than one Person acting as a
      group as defined by the Final Treasury Regulations issued under Section
      409A of the Code; and

              

      

      

      
        	
                 
      

              	
                (3)

              	
                “Subsidiary”
      means any entity whose assets and net income are included in the
      consolidated financial statements of the Company audited by the Company’s
      independent auditors and reported to stockholders in the annual report to
      stockholders.

              

      

      

      
        	
                 
      

              	
                (E)

              	
                Notwithstanding
      the foregoing, in no case will an event in (A), (B) or (C) of this Section
      2(g)(ii) be treated as a Change in Control (Post-2010 Grant) unless such
      event also constitutes a “change in control event” with respect to the
      Company within the meaning of Treas. Reg. § 1.409A-3(i)(5) or any
      successor provision.

              

      

      

      
        	
                (h) 

              	
                “Code” means the
      Internal Revenue Code of 1986, as
amended.

              

      

      

      
        	
                (i)

              	
                “Company” means Texas
      Instruments Incorporated, together with any successor
    thereto.

              

      

      

      
        	
                (j)

              	
                “Deferred Cash Compensation”
      means that portion of any Director’s Eligible Compensation that is
      payable in cash and that he or she elects pursuant to Section 9(a) to be
      deferred in accordance with this
Plan.

              

      

      

      
        	
                (k)

              	
                “Deferred Compensation”
      means that portion of any Director’s Eligible Compensation that he
      or she elects pursuant to Section 9(a) to be deferred in accordance with
      this Plan.

              

      

      

      
        	
                (l)

              	
                “Deferred Compensation
      Account” means a Cash Account or Stock Unit Account containing
      amounts earned and deferred under this Plan or the 2003 Plan and
      Restricted Stock Units, the receipt of which a Director has elected to
      defer.

              

      

      

      
        	
                (m)

              	
                “Director” means a
      member of the Board who is not an employee of the Company or any
      subsidiary thereof.

              

      

      

      
        	
                (n)

              	
                “Effective Date”
      means the date this Plan is approved by stockholders of the
      Company.

              

      

      

      
        	
                (o)

              	
                “Eligible
      Compensation” means (i) the cash portion of any compensation
      payable by the Company to a Director for his or her services as a Director
      but shall not include any reimbursement by the Company of expenses
      incurred by a Director incidental to attendance at a meeting of the
      Company’s stockholders, the Board, or any committee of the Board, or of
      any other expense incurred on behalf of the Company, (ii) any Restricted
      Stock Units granted by the Company to a Director for his or her services
      as a Director, and (iii) any dividend equivalents paid on Restricted Stock
      Units pursuant to
Section 7(e).

              

      

      
        
           

        

        
          3

          
            

          

        

        
           

        

      

      
        	
                (p)

              	
                “Fair Market Value”
      means the closing price of the Shares on the date specified (or, if
      there is no trading on the New York Stock Exchange on such date, then on
      the first previous date on which there is such trading) as reported in
      “New York Stock Exchange Composite Transactions” in “The Wall Street
      Journal” or by WSJ.com or Bloomberg L.P., or if unavailable,
      then by reference to any other source as may be deemed appropriate by the
      G&SR Committee.

              

      

      

      
        	
                (q)

              	
                “G&SR Committee”
      means the Governance and Stockholder Relations Committee of the
      Board or any successor committee.

              

      

      

      
        	
                (r)

              	
                “Option” means an
      option granted under Section 6.

              

      

      

      
        	
                (s)

              	
                “Participant” means an
      individual who has received an Award or established an Account under the
      Plan.

              

      

      

      
        	
                (t) 

              	
                “Plan” means this Texas
      Instruments 2009 Director Compensation
Plan.

              

      

      

      
        	
                (u)

              	
                “Restricted Stock Unit”
      means a contractual right granted under Section 7 that is
      denominated in Shares, each of which represents a right to receive a Share
      on the terms and conditions set forth in the Plan and the applicable Award
      Agreement.

              

      

      
        	
                 
      

              	 

      

      
        	
                (v)

              	
                “Restricted Stock Unit (2010
      Grant)” means a Restricted Stock Unit granted on or before
      the effective date of the annual grant (as described in Section 7(a)) in
      2010 to a Director of the Company who is a Director on [the effective date
      of this amendment].

              

      

      

      
        	
                (w) 

              	
                “Secretary” means the
      Secretary of the Company.

              

      

      

      
        	
                (x)

              	
                “Separation from Service” means a
      termination of services provided by a Participant as a member of the Board
      or of the board of directors of any other member of the controlled group
      of corporations (as defined in Section 414(b) of the Code) which includes
      the Company (for purposes of this Section 2(x), the controlled group
      members other than the Company are referred to collectively as “ERISA
      Affiliates”), whether such termination is voluntary or involuntary, as
      determined by the Administrator in accordance with Treas. Reg.
      §1.409A-1(h).  In determining whether a Participant has
      experienced a Separation from Service as a member of the Board or of a
      board of directors of an ERISA Affiliate, the following provisions shall
      apply:

              

      

      

      
        	
                 
      

              	
                (i)

              	
                If
      a Director also provides services to the Company or any ERISA Affiliate as
      an employee at the time of his Separation from Service as a member of the
      Board, the services such Participant provides as an employee shall not be
      taken into account in determining whether the Participant has a Separation
      from Service as a Director for purposes of this Plan (provided that this
      Plan is not, at the time of such determination, aggregated under Treas.
      Reg. §1.409A-1(c)(2)(ii) with any plan in which the Participant
      participates as an employee).

              

      

      
        
           

        

        
          4

          
            

          

        

        
           

        

      

      
        	
                 
      

              	
                (ii)

              	
                A
      Participant shall be considered to have experienced a termination of
      services when the facts and circumstances indicate that the Participant,
      the Company and each ERISA Affiliate reasonably anticipate that the
      Participant will perform no further services for the Company or any ERISA
      Affiliate as a member of the Board (or the board of directors of any ERISA
      Affiliate), and the Participant’s term as a member of the Board has
      expired.

              

      

      

      
        	
                 
      

              	
                (iii)

              	
                If
      a Director is also providing additional services to the Company as an
      independent contractor, he or she cannot have a Separation from Service
      for purposes of Section 409A of the Code until he or she has separated
      from service both as a Director and as an independent
      contractor.

              

      

      

      
        	
                (y)

              	
                “Shares” shall mean
      shares of the common stock of the Company, $1.00 par
  value.

              

      

      

      
        	
                (z)

              	
                “Specified Employee”
      means any Participant who is determined to be a “key employee” (as defined
      under Section 416(i) of the Code without regard to paragraph (5) thereof)
      for the applicable period, as determined annually by the Administrator in
      accordance with Treas. Reg. §1.409A-1(i).  In determining
      whether a Participant is a Specified Employee, the following provisions
      shall apply:

              

      

      

      
        	
                 
      

              	
                (i)

              	
                Identification
      of the individuals who fall within the above-referenced definition of “key
      employee” shall be based upon the 12-month period ending on each December
      31st (referred to below as the “identification date”).  In
      applying the applicable provisions of Code Section 416(i) to identify such
      individuals, “compensation” shall be determined in accordance with Treas.
      Reg. §1.415(c)2(a) without regard to (i) any safe harbor provided in
      Treas. Reg. §1.415(c)-2(d), (ii) any of the special timing rules provided
      in Treas. Reg. §1.415(c)-2(e), and (iii) any of the special rules provided
      in Treas. Reg. §1.415(c)-2(g); and

              

      

      

      
        	
                 
      

              	
                (ii)

              	
                Each
      Participant who is among the individuals identified as a “key employee” in
      accordance with part (i) of this Section 2(z) shall be treated as a
      Specified Employee for purposes of this Plan if such Participant
      experiences a Separation from Service during the 12-month period that
      begins on the April 1st following the applicable identification
      date.

              

      

      

      
        	
                (aa)

              	
                “Stock Appreciation
      Right”
      or “SAR” means a
      right granted pursuant to Section 8 to receive, upon exercise by the
      Participant, the excess of (i) the Fair Market Value of one Share on
      the date of exercise or any date or dates during a specified period before
      the date of exercise over (ii) the grant price of the right, which
      grant price shall not be less than the Fair Market Value of one Share on
      the date of grant of the right.

              

      

      

      
        	
                (bb)

              	
                “Stock Unit Account”
      means the bookkeeping accounts established, pursuant to Section
      9(b)(ii), on behalf of each Director who elects, pursuant to
      Section 9(b), to have any of his or her Deferred Cash Compensation
      credited to a stock unit
account.

              

      

      
        
           

        

        
          5

          
            

          

        

        
           

        

      

      
        	
                (cc)

              	
                “Unforeseeable
      Emergency”
      means a severe financial hardship to the Participant resulting from (i) an
      illness or accident of the Participant or the Participant’s spouse,
      beneficiary, or dependent (as defined in Section 152 of the Code, without
      regard to Sections 152(b)(1), (b)(2), and (d)(1)(B) of the Code), (ii)
      loss of the Participant’s property due to casualty, or (iii) other similar
      extraordinary and unforeseeable circumstances arising as a result of
      events beyond the Participant’s control, all as determined by the
      Administrator based on the relevant facts and circumstances and as
      provided for in Treas. Reg. §1.409A-3(i)(3) or any successor
      provision.

              

      

      

      
        	
                (dd) 

              	
                “Year” means a calendar
      year.

              

      

      

      SECTION
3.  ELIGIBILITY.

      

      Each
Director shall be eligible to defer Eligible Compensation and to receive Awards
under the Plan.

      

      SECTION
4.  ADMINISTRATION.

      

      This Plan
shall be administered by the Administrator. Subject to the terms of the Plan and
applicable law, the Administrator shall have full power and authority
to:  (i) interpret, construe and administer the Plan and any
instrument or agreement relating to, or Award granted or Accounts established
under, the Plan; (ii) establish, amend, suspend or waive such rules and
regulations and appoint such agents as it deems appropriate for the proper
administration of the Plan; and (iii) make any other determination and take any
other action that it deems necessary or desirable for the administration of this
Plan.  All decisions of the Administrator shall be final, conclusive
and binding upon all parties, including the Company, the stockholders and the
Directors.

      

      SECTION
5.  SHARES SUBJECT TO THE PLAN.

      

      
        	
                (a)

              	
                Subject
      to adjustment as provided in this Section 5, the number of Shares
      available for issuance under the Plan shall be 2,000,000
      Shares.

              

      

      

      
        	
                (b)

              	
                If,
      after the effective date of the Plan, (i) any Shares covered by an Award
      or Stock Unit Account, or to which such an Award relates, are forfeited,
      or (ii) if an Award or Account expires or is cancelled or is otherwise
      terminated without the delivery of Shares, then such Shares, to the extent
      of any such forfeiture, expiration, cancellation, or termination, shall
      again be, or shall become, available for issuance under the
      Plan.  For purposes of this Section, awards and options granted
      under any previous director compensation plan of the Company shall be
      treated as Awards, and accounts established under any such plan shall be
      treated as Accounts.  For the avoidance of doubt, the number of
      Shares available for issuance under the Plan shall not be
      increased by: (1) the withholding of Shares as a result of the net
      settlement of an outstanding Option; (2) the delivery of Shares to
      pay the exercise price or withholding taxes relating to an Award; or
      (3) the repurchase of Shares on the open market using the proceeds of
      an Option’s exercise.

              

      

      

      
        	
                (c)

              	
                Any
      Shares delivered pursuant to an Award or Stock Unit Account may consist,
      in whole or in part, of authorized and unissued Shares, of treasury Shares
      or of both.

              

      

      
        
           

        

        
          6

          
            

          

        

        
           

        

      

      
        	
                (d)

              	
                In
      the event that any dividend or other distribution (whether in the form of
      cash, Shares, other securities, or other property), recapitalization,
      stock split, reverse stock split, reorganization, merger, consolidation,
      split-up, spin-off, combination, repurchase or exchange of Shares or other
      securities of the Company, issuance of warrants or other rights to
      purchase Shares or other securities of the Company, or other similar
      corporate transaction or event affects the Shares such that an adjustment
      is appropriate in order to prevent dilution or enlargement of the benefits
      or potential benefits intended to be made available under the Plan, then
      the Administrator shall equitably adjust any or all of (i) the number of
      outstanding Restricted Stock Units, (ii) the number and type of Shares
      credited to Stock Unit Accounts, (iii) the number and type of Shares
      subject to Options and SARs, (iv) the exercise price with respect to any
      Option or SAR or, if deemed appropriate, make provision for a cash payment
      to the holder of an outstanding Option or SAR, and (v) the aggregate limit
      specified in Section 5(a); provided, however, that no fractional
      Restricted Stock Units or Shares shall be issued or outstanding
      hereunder.  Any such adjustment with respect to a “Stock Right”
      outstanding under the Plan as defined in Section 409A of the Code, shall
      be made in a manner that is intended to avoid imposition of any additional
      tax or penalty under
Section 409A.

              

      

      

      SECTION
6.  OPTIONS.

      

      Following
the effective date of this Plan, each Director will be granted annually an
Option to purchase 7,000 Shares.  The Options granted will be
nonstatutory stock options not intended to qualify under Section 422 of the Code
and shall have the terms and conditions described in this Section
6:

      

      
        	
                (a)

              	
                Price and Term of
      Options.  The purchase price per share of Shares
      deliverable upon the exercise of each Option shall be 100% of the Fair
      Market Value per share of the Shares on the date the Option is
      granted.  In each Year, the effective date for the annual grant
      of options to the Company’s executive officers by the Compensation
      Committee of the Board (or any successor committee) shall be the date
      Options are granted; provided that in any Year in which the Compensation
      Committee does not grant options to any of the Company’s executive
      officers in connection with the annual compensation review process, then
      the effective date of the first options granted by the Compensation
      Committee in such Year shall be the date Options are
      granted.  Each Option shall have a term not to exceed ten years
      from the date of grant.

              

      

      

      
        	
                (b)

              	
                Payment.  The
      Secretary shall determine the method or methods by which, and the form or
      forms, including, without limitation, cash, Shares, or other property, or
      any combination thereof, having a Fair Market Value on the exercise date
      equal to the relevant exercise price, in which payment of the exercise
      price with respect to an Option may be made or deemed to have been
      made.

              

      

      

      
        	
                (c)

              	
                Exercisability.  Subject
      to Section 6(d), Options shall become exercisable in four equal annual
      installments commencing on the first anniversary date of the
      grant.

              

      

      
        
           

        

        
          7

          
            

          

        

        
           

        

      

      
        	
                (d)

              	
                Termination of Service as a
      Director.  The effect of a Participant’s termination of
      service as a member of the Board shall be as
  follows:

              

      

      

      
        	
                 
      

              	
                (i)

              	
                Termination
      for cause: All outstanding Options held by the Participant shall be
      canceled immediately upon
termination.

              

      

      

      
        	
                 
      

              	
                (ii)

              	
                Death:
      All outstanding Options held by the Participant shall continue to full
      term, becoming exercisable in accordance with Section 6(c), and shall be
      exercisable by such Participant’s heirs or legal
      representatives.

              

      

      

      
        	
                 
      

              	
                (iii)

              	
                Permanent
      disability, termination after 8 years of service, or termination for
      reason of ineligibility to stand for reelection under the Company’s
      By-Laws: All outstanding Options held by the Participant shall continue to
      full term, becoming exercisable in accordance with Section
      6(c).

              

      

      

      
        	
                 
      

              	
                (iv)

              	
                Change
      in Control:  If a Participant experiences a Separation From
      Service (other than for cause) within 24 months after a Change in Control
      (Post-2010 Grant), the provisions of Section 6(c) shall not apply and
      Options held by the Participant shall be immediately exercisable and shall
      continue to full term.

              

      

      

      
        	
                 
      

              	
                (v)

              	
                Other:
      For any termination other than those specified above, all outstanding
      Options held by the Participant shall be exercisable for 30 days after the
      date of termination, only to the extent that such Options were exercisable
      on the date of termination, except that if the Participant dies within 30
      days after his or her termination, then such Participant’s heirs may
      exercise the Options for a period of up to one year after the
      Participant’s death, but only to the extent any unexercised portion was
      exercisable on the date of
termination.

              

      

      

      
        	
                (e)

              	
                Option
      Agreement.  Each Option granted hereunder shall be
      evidenced by an Award Agreement with the Company, which shall contain the
      terms and provisions set forth herein and shall otherwise be consistent
      with the provisions of the Plan.

              

      

      

      SECTION
7.  RESTRICTED STOCK UNITS.

      

      Following
the effective date of this Plan, each Director shall, (i) effective as of the
date of such individual’s initial election or appointment to the Board, be
granted 2,000 Restricted Stock Units; and (ii) shall also be granted annually
2,500 Restricted Stock Units.  Each Restricted Stock Unit granted
pursuant to this Section 7 shall be paid or settled by the issuance of one Share
and shall have the terms and conditions described in this Section
7:

      

      
        	
                (a)

              	
                Effective Date of Annual
      Grant.  In each Year, the effective date for the annual
      grant of restricted stock units to the Company’s executive officers by the
      Compensation Committee of the Board (or any successor committee) shall be
      the date Restricted Stock Units are granted annually under (ii) of the
      first paragraph of this Section; provided that in any Year in which the
      Compensation Committee does not grant restricted stock units to any of the
      Company’s executive officers in connection with the annual compensation
      review process, then the effective date of the first restricted stock
      units granted by the Compensation Committee in such Year shall be the date
      such Restricted Stock Units are
granted.

              

      

      
        
           

        

        
          8

          
            

          

        

        
           

        

      

      
        	
                (b)

              	
                Vesting and
      Settlement.  Subject to Sections 7(c) and 7(d)(iii) and
      subject to a Director’s election to defer the settlement of Restricted
      Stock Units pursuant to Section 9, the shares covered by the Restricted
      Stock Units shall be paid or settled as soon as practicable after the
      fourth anniversary of the date of
grant.

              

      

      

      
        	
                (c)

              	
                Change in
      Control.  With respect to Restricted Stock Units (2010
      Grant), in the event of a Change in Control (2010 Grant), the provisions
      of Sections 7(b) and (d) shall not apply (except for Section 7(d)(iv),
      which shall apply), any election by a Director to defer settlement of
      Restricted Stock Units  (2010 Grant) pursuant to Section 9 shall
      be cancelled and any such Restricted Stock Units outstanding under this
      Plan shall vest and be paid immediately.  See Section 7(d)(iii)
      for the effect of a Change in Control on all other Restricted Stock
      Units.

              

      

      

      
        	
                (d)

              	
                Termination of Service as a
      Director.  The effect of a Participant's termination of
      service as a member of the Board shall be as
  follows:

              

      

      

      
        	
                 
      

              	
                (i)

              	
                Death:  All
      outstanding Restricted Stock Units held by the Participant shall continue
      to full term subject to the other terms and conditions of this Plan, and
      shares shall be issued to such Participant's heirs at such times and in
      such manner as if the Participant were still a member of the
      Board.

              

      

      

      
        	
                 
      

              	
                (ii)

              	
                Permanent
      disability, termination after 8 years of service, or termination for
      reason of ineligibility to stand for reelection under the Company's
      By-Laws:  All outstanding Restricted Stock Units held by the
      Participant shall continue to full term subject to the other terms and
      conditions of this Plan, and shares shall be issued to such Participant at
      such times and in such manner as if the Participant were still a member of
      the Board.

              

      

      

      
        	
                 
      

              	
                (iii)

              	
                Separation
      From Service after a Change in Control:  With respect to
      Restricted Stock Units other than Restricted Stock Units (2010 Grant), in
      the event a Participant experiences a Separation From Service (other than
      for cause) within 24 months after a Change in Control (Post-2010 Grant),
      the provisions of Section 7(b) shall not apply
  and:

              

      

      

      
        	
                 
      

              	
                (A)

              	
                To
      the extent permitted without additional tax or penalty by Section 409A of
      the Code, all shares underlying such Restricted Stock Units held by the
      Participant (including any such Restricted Stock Units subject to an
      election to defer settlement under Section 9) will be issued on, or as
      soon as practicable (but no later than 60 days) after, the Participant’s
      Separation From Service; provided, however, that if the participant is a
      Specified Employee upon such Separation From Service, the shares will be
      issued on, or as soon as practicable (but no more than 10 days) after, the
      first day of the seventh month following the Separation From Service and
      any such Restricted Stock Units outstanding under this Plan shall vest and
      be paid immediately.

              

      

      

      
        	
                 
      

              	
                (B)

              	
                To
      the extent that the issuance of shares is not permitted without additional
      tax or penalty by Section 409A, the Award will continue to full term and
      the shares will be issued at the issuance date specified in the Award
      Agreement as if the Participant were still a Director on such date or (for
      any such Restricted Stock Units subject to an election to defer settlement
      pursuant to Section 9) in accordance with Section
  9(h)(i).

              

      

      
        
           

        

        
          9

          
            

          

        

        
           

        

      

      
        	
                 
      

              	
                (iv)

              	
                Other:  For
      any termination other than those specified above, all outstanding
      Restricted Stock Units held by the Participant shall terminate and become
      void without any shares being
issued.

              

      

      

      
        	
                 
      

              	
                (v)

              	
                With
      respect to Restricted Stock Units (2010 Grant), if a Participant's
      termination of service (other than for cause) occurs within 30 days of a
      Change in Control (2010 Grant), then the Change in Control (2010 Grant)
      shall be deemed to have occurred first and the provisions of Section 7(c)
      shall apply.

              

      

      

      
        	
                (e)

              	
                Restricted Stock Unit
      Agreement.  Each Restricted Stock Unit Award granted
      under this Section 7 shall be evidenced by an Award Agreement with the
      Company, which shall contain the terms and conditions set forth herein and
      shall otherwise be consistent with the provisions of this
      Plan.

              

      

      

      
        
          	
                  (f)

                	
                  Right to Dividend
      Equivalents.  Each recipient of Restricted Stock Units under
      this Plan shall have the right, during the period when such Restricted
      Stock Units are outstanding and prior to the termination, forfeiture or
      payment or settlement thereof, to receive dividend equivalents equal to
      the amount or value of any cash or other distributions or dividends
      payable on the same number of Shares.  The Company shall
      accumulate dividend equivalents on each dividend payment date and, unless
      a Director has elected to defer receipt of such dividend equivalents
      pursuant to Section 9, pay such accumulated amounts without interest in
      December of each fiscal year, but no later than March 15 of the calendar
      year following the calendar year in which the related dividend is
      declared.

                

        

      

      

      
        	
                (g)

              	
                Issuance of
      Shares.  A stock certificate or certificates shall be
      registered and issued or other indicia of ownership of shares shall be
      issued, in the name or for the benefit of the holder of Restricted Stock
      Units and delivered to such holder as soon as practicable after such
      Restricted Stock Units have become payable or settleable in accordance
      with the terms of the Plan.

              

      

      

      SECTION
8.  STOCK APPRECIATION RIGHTS (SARs).

      

      
        	
                (a)

              	
                SARs
      may be granted to Directors with such terms and conditions as the
      Administrator shall determine not inconsistent with the provisions of the
      Plan.

              

      

      

      
        	
                (b)

              	
                The
      term of each SAR shall be fixed by the Administrator but shall not exceed
      10 years.

              

      

      

      SECTION
9.  DEFERRED COMPENSATION.

      

      
        	
                (a)

              	
                Deferral
      Election.  Each Director may elect, with respect to any
      Year, that all or any percentage of his or her Eligible Compensation be
      deferred in accordance with the terms of this
  Plan.

              

      

      
        
           

        

        
          10

          
            

          

        

        
           

        

      

      
        	
                (b)

              	
                Cash Compensation Investment
      Alternatives.  Each Director may elect that his or her
      Deferred Cash Compensation for any Year be credited to a Cash Account or a
      Stock Unit Account or to any combination
  thereof.

              

      

      

      
        	
                 
      

              	
                (i)

              	
                Cash
      Accounts.

              

      

      

      
        	
                 
      

              	
                (A)

              	
                The
      Company shall establish and maintain, as appropriate, separate unfunded
      Cash Accounts for each Director who has elected that any portion of his or
      her Deferred Cash Compensation be credited to a Cash
    Account.

              

      

      

      
        	
                 
      

              	
                (B)

              	
                As
      of the date on which any amount of a Director’s Deferred Cash Compensation
      becomes payable, his or her Cash Account shall be credited with an amount
      equal to that portion of such Deferred Cash Compensation as such Director
      has elected be credited to his or her Cash
  Account.

              

      

      

      
        	
                 
      

              	
                (C)

              	
                As
      of the last day of each month, interest on each Cash Account shall be
      credited on the average of the balances on the first and last day of such
      month.  Interest shall be credited at a rate equivalent to the
      average yield on corporate bonds rated Aaa by Moody’s Investors Service on
      September 30 of the preceding Year (or if there is no such yield reported
      for such date, then on the next preceding date for which such a yield is
      reported) as published in Federal Reserve Statistical Release H.15, or at
      such other rate that would qualify as a "reasonable rate of interest" as
      defined by Section 409A of the Code, as may be determined by the G&SR
      Committee for each Year.

              

      

      

      
        	
                 
      

              	
                (ii)

              	
                Stock Unit
      Accounts.

              

      

      

      
        	
                 
      

              	
                (A)

              	
                The
      Company shall establish and maintain, as appropriate, separate unfunded
      Stock Unit Accounts for each Director who has elected that any portion of
      his or her Deferred Cash Compensation be credited to a Stock Unit
      Account.

              

      

      

      
        	
                 
      

              	
                (B)

              	
                As
      of each date on which any amount of a Director’s Deferred Cash
      Compensation becomes payable, his or her Stock Unit Account shall be
      credited with that number of units as are equal to the number of full or
      fractional Shares as could be purchased at the Fair Market Value on the
      first trading day preceding such date with the portion of such Deferred
      Cash Compensation as such Director has elected be credited to his or her
      Stock Unit Account.

              

      

      

      
        	
                 
      

              	
                (C)

              	
                As
      of the payment date for each dividend on Shares declared by the Board,
      there shall be credited to each Stock Unit Account that number of units as
      are equal to the number of full or fractional Shares as could be purchased
      at the Fair Market Value on the first trading day preceding the payment
      date for such dividend with an amount equal to the product of: (i) the
      dividend per share, and (ii) the number of units in such Stock Unit
      Account immediately prior to the record date for such
      dividend.

              

      

      
        
           

        

        
          11

          
            

          

        

        
           

        

      

      
        	
                (c)

              	
                Restricted Stock
      Units.  Each Director may elect to defer all or a portion
      of any Restricted Stock Unit Award.

              

      

      

      
        	
                (d)

              	
                Dividend
      Equivalents.  Each Director may elect to defer all or a
      portion of any dividend equivalents paid on Restricted Stock
      Units.

              

      

      

      
        	
                (e)

              	
                Time of
      Election.  An election to defer all or any portion of
      Eligible Compensation for any Year shall be made in writing in the form
      (“Election Form”) prescribed by the Secretary.  The Election
      Form shall contain the Participant's elections as to the time of
      distribution of any compensation so
deferred.

              

      

      

      
        	
                 
      

              	
                (i)

              	
                A
      Participant may elect that his or her Deferred Compensation be distributed
      at the time or times indicated
below:

              

      

      

      
        	
                 
      

              	
                (A)

              	
                Entire
      balance to be distributed immediately after Separation from Service for
      any reason other than death;

              

      

      

      
        	
                 
      

              	
                (B)

              	
                Entire
      balance to be distributed a number of months, as specified by the
      Participant on the Election Form, after Separation from Service for any
      reason other than death, but not later than ten years following such
      Separation from Service;

              

      

      

      
        	
                 
      

              	
                (C)

              	
                Approximately
      equal monthly installments for a number of months, as specified by the
      Participant on the Election Form, commencing the month after Separation
      from Service for any reason other than death, provided that distribution
      shall be completed not later than ten years following such Separation from
      Service; or

              

      

      

      
        	
                 
      

              	
                (D)

              	
                A
      percentage of the entire balance to be paid on certain dates, with such
      percentages and dates specified by the Participant on the Election Form,
      provided that distribution shall commence no earlier than Separation from
      Service for any reason other than death, and shall be completed not later
      than ten years following such Separation from
  Service.

              

      

      

      
        	
                 
      

              	
                (ii)

              	
                A
      Participant may revoke an election as to the time of distribution and
      substitute a new election therefore by submitting an Election Form to the
      Secretary in accordance with the following
  criteria:

              

      

      

      
        	
                 
      

              	
                (A)

              	
                Any
      new election regarding the time of distribution must result in a minimum
      of five (5) years’ lapse between the currently applicable distribution
      date and the new date of distribution (as determined in accordance with
      the Regulations under Section 409A of the Code);
  and

              

      

       

      
        	
              	
                (B)

              	
                the election must be made at
      least twelve (12) months prior to the date of distribution that would
      otherwise have been applicable.

              

      

       

      
        	
                 
      

              	
                (iii)

              	
                Except
      as hereinafter provided, to be effective, an Election Form relating to
      payments for a Year, or to Restricted Stock Units that may be granted in
      such Year, must be received by the Secretary on or before December 31 of
      the preceding Year.  In the case of a Director’s initial
      election to the Board, the initial Election Form must be received not more
      than 30 days following his or her election to the Board and, if received
      within such 30-day period, the Election Form shall be effective only for
      Eligible Compensation earned after the election becomes irrevocable
      pursuant to Section 9(f).  The time of election and the time of
      distribution shall comply in all respects with the applicable requirements
      of Section 409A of the Code.

              

      

      
        
           

        

        
          12

          
            

          

        

        
           

        

      

      
        	
                (f)

              	
                Irrevocability of
      Election.  A Director’s election to defer all or any
      portion of his or her Eligible Compensation for any Year and a revocation
      and substitution of an election regarding the time of distribution shall
      be irrevocable upon receipt by the Secretary of a completed Election Form
      from the Director.

              

      

      

      
        	
                (g)

              	
                Form of
      Distributions.

              

      

      

      
        	
                 
      

              	
                (i)

              	
                Distributions
      of amounts credited to each Participant’s Cash Account shall be made in
      cash.

              

      

      

      
        	
                 
      

              	
                (ii)

              	
                Distributions
      of units credited to each Participant’s Stock Unit Account shall be made
      by issuing to such Participant an equivalent number of
    Shares.

              

      

      

      
        
          	
                	
                  (iii)

                	
                  Distribution
      of Shares relating to vested Restricted Stock Units the Participant
      has elected to defer shall be made by issuing to such Participant the
      whole number of Shares attributable to such vested Restricted Stock
      Units.  Notwithstanding the foregoing, no fractional shares will
      be issued and any fractional unit will be distributed by payment of cash
      in the amount represented by such fractional unit based on the Fair Market
      Value on the date preceding the date of
payment.

                

        

      

      

      
        
          	
                  (h)

                	
                  Time of
      Distributions.

                

        

      

      

      
        	
                 
      

              	
                (i)

              	
                Normal
      Distributions.  Except as otherwise hereinafter provided,
      distributions from a Participant's Deferred Compensation Account shall be
      made (Y) on the first day of the month following such Participant’s
      Separation from Service on the Board for any reason other than death, or
      (Z) at such later time as the Participant has elected on his or her
      Election Form in accordance with the terms of this
  Plan.

              

      

      

      Notwithstanding
the foregoing, no distribution may be made to a Specified Employee before the
date that is six months after the date of Separation from Service or, if
earlier, the date of death.

      

      
        	
                 
      

              	
                (ii)

              	
                Change
      in Control.  In the event a Participant experiences a Separation
      From Service (other than for cause) within 24 months after a Change in
      Control (Post-2010 Grant), then, to the extent permitted without
      additional tax or penalty by Section 409A of the Code, such Participant
      shall receive a distribution of the balances credited to the Participant’s
      Account which are attributable to amounts credited to the account
      beginning on or after January 1, 2010.  See Section 7(d)(iii)
      for the effect of such Separation From Service on deferred Restricted
      Stock Units.

              

      

      

      The
amounts to be distributed pursuant to this Section 9(h)(ii) shall be paid on, or
as soon as practicable (but no later than 60 days) after, the Participant’s
Separation from Service, provided, however, that if the Participant is a
Specified Employee upon such Separation From Service, the balances credited to
the Participant’s Account will be distributed on, or as soon as practicable (but
no more than 10 days) after, the first day of the seventh month following such
Separation From Service.

      

      To the
extent that distributions of amounts pursuant to this Section 9(h)(ii) are not
permitted without additional tax or penalty by Section 409A of the Code, the
affected Participant shall receive distribution of the amounts referred to in
this Section 9(h)(ii) in accordance with Section 9(h)(i).

      
        
           

        

        
          13

          
            

          

        

        
           

        

      

      
        	
                 
      

              	
                (iii)

              	
                Unforeseeable
      Emergency.  An earlier distribution may be made upon a finding
      that the Participant is suffering from an Unforeseeable
      Emergency.  A withdrawal on account of Unforeseeable Emergency
      may not be made to the extent that such emergency is or may be relieved
      (A) through reimbursement or compensation from insurance or otherwise, (B)
      by liquidation of the Participant’s assets, to the extent the liquidation
      of such assets would not cause severe financial hardship, or (C) by
      cessation of deferrals under the
Plan.

              

      

      

      Withdrawal
because of an Unforeseeable Emergency must be limited to the amount reasonably
necessary to satisfy the emergency need (which may include amounts necessary to
pay any federal, state, local, or foreign income taxes or penalties reasonably
anticipated to result from the distribution), as determined by the
Administrator, in its sole discretion.  The Participant must apply in
writing for a payment upon an “Unforeseeable Emergency,” using the form
prescribed by the Administrator.  The Administrator retains the sole
and absolute discretion to grant or deny a payment upon an Unforeseeable
Emergency.  In the event of approval of a payment upon an
Unforeseeable Emergency, the Participant’s outstanding deferral elections under
the Plan shall be cancelled.

      

      
        
          	
                  (i)

                	
                  Death of
      Participant.  Notwithstanding the foregoing, in the event
      of the death of a Participant prior to receipt by such Participant of the
      full amount of cash and number of shares to be distributed from his or her
      Deferred Compensation Account, all such cash and/or shares will be
      distributed to the beneficiary or beneficiaries designated by the
      Participant, or if no beneficiary has been designated, to the
      Participant’s estate as soon as practicable following the month in which
      the death occurred.  Shares to be distributed to the Participant
      in connection with deferred Restricted Stock Units shall also be
      distributed as described in the preceding sentence but in no event earlier
      than the fourth anniversary of the date of
  grant.

                

        

      

      

      
        
          	
                  (j)

                	
                  Certain Rights Reserved by the
      Company.  In the event that, pursuant to Section 11, the
      Company suspends, modifies or terminates this Plan, the Company shall have
      the right to distribute to each Participant all amounts in such
      Participant’s Cash Account or Shares equivalent to units in such
      Participant’s Stock Unit Account, including, in the case of Stock Unit
      Accounts, the right to distribute cash equivalent to the units in such
      Accounts and all Shares attributable to vested Restricted Stock Units that
      a Participant has elected to defer, provided that any such suspension,
      modification or termination may be effected without penalty under Section
      409A of the Code.

                

        

      

      
        
           

        

        
          14

          
            

          

        

        
           

        

      

      
        	
                (k)

              	
                Certain
      Affiliations.  In the event that a Participant terminates
      his or her membership on the Board and becomes affiliated with a
      government agency, all amounts in such Participant’s Cash Account, shares
      equivalent to units in such Participant’s Stock Unit Account and Shares
      attributable to Restricted Stock Units that such Participant has elected
      to defer will be distributed to the Participant if such payment is
      necessary to avoid violation of any applicable federal, state, local or
      foreign ethics or conflict of interest law or if necessary to comply with
      an ethics agreement with the federal
government.

              

      

      

      SECTION
10.  OTHER STOCK-BASED AWARDS.

      

      The
Administrator is hereby authorized to grant to Directors such other Awards that
are denominated or payable in, valued in whole or in part by reference to, or
otherwise based on or related to, Shares (including, without limitation,
securities convertible into Shares) as are deemed by the Administrator to be
consistent with the purposes of the Plan.  Subject to the terms of the
Plan, the Administrator shall determine the terms and conditions of such
Awards.  Shares or other securities delivered pursuant to a purchase
right granted under this Section 10 shall be purchased for such consideration,
which may be paid by such method or methods and in such form or forms,
including, without limitation, cash, Shares, other securities, other Awards, or
other property, or any combination thereof, as the Administrator shall
determine, the value of which consideration, as established by the
Administrator, shall not be less than the Fair Market Value of such Shares or
other securities as of the date such purchase right is granted.  The
Company intends that such other Awards granted pursuant to this Section shall
comply with Section 409A of the Code if applicable.

      

      SECTION
11.  AMENDMENT AND TERMINATION.

      

      Except to
the extent prohibited by or inconsistent with applicable law:

      

      
        	
                (a)

              	
                Amendments.  The
      Board may amend, alter, suspend, discontinue or terminate the Plan,
      including, without limitation, the number of shares subject to Awards
      granted pursuant to Sections 6, 7 and 8, without the consent of any
      stockholder, Participant, other holder or beneficiary of any Award, or
      other person; provided,
      however, that no such amendment, alteration, suspension,
      discontinuation or termination shall be made without (i) stockholder
      approval if such approval is necessary to comply with the listing
      requirements of the New York Stock Exchange or (ii) the consent of the
      affected Participants, if such action would adversely affect the rights of
      such Participants under any outstanding Award; and provided further, that
      no such amendment or alteration shall increase the aggregate number of
      shares that may be issued under the Plan except as provided in Section
      5(d).  In addition, any such amendment shall be in compliance
      with Section 409A of the Code.  The Administrator may modify any
      outstanding Awards to comply with Section 409A without consent from
      Participants.  Notwithstanding any other provision of the Plan
      or any Award Agreement, no amendment, alteration, suspension,
      discontinuation or termination of the Plan or any Award Agreement shall be
      made that would (1) permit Options or SARs to be granted with a per Share
      exercise price of less than the Fair Market Value of a Share on the date
      of grant thereof or (2) except as provided in Section 5(d), (w) reduce the
      exercise price of any Option or SAR established at the time of grant
      thereof, (x) be treated as a repricing under U.S. generally accepted
      accounting principles (“GAAP”), (y) cancel an Option or
      SAR  in exchange for another Option, SAR, restricted stock unit
      or any other Award, or (z) terminate an Option or SAR in exchange for
      a cash amount equal to or greater than the excess, if any, of the Fair
      Market Value of the underlying Shares on the date of cancellation over the
      exercise price times the number of Shares outstanding under the
      Award.  A cancellation and exchange described in clause (y) of
      the immediately preceding sentence is prohibited regardless of whether the
      option, SAR, restricted stock unit or other equity is delivered
      simultaneously with the cancellation and regardless of whether the
      cancellation and exchange are treated as a repricing under GAAP or are
      voluntary on the part of the
Participant.

              

      

      
        
           

        

        
          15

          
            

          

        

        
           

        

      

      
        	
                (b)

              	
                Correction of Defects,
      Omissions and Inconsistencies.  The Administrator may
      correct any defect, supply any omission, or reconcile any inconsistency in
      the Plan or any Award in the manner and to the extent it shall deem
      desirable to carry the Plan into
effect.

              

      

      

      SECTION
12.  GENERAL PROVISIONS.

      

      
        	
                (a)

              	
                No Rights of
      Stockholders.  Neither a Participant nor a Participant’s
      legal representative shall be, or have any of the rights and privileges
      of, a stockholder of the Company in respect of any Shares issuable under
      the Plan in connection with any Award or Account, in whole or in part,
      unless and until certificates or other indicia of ownership of such shares
      shall have been issued.

              

      

      

      
        	
                (b)

              	
                Limits of Transfer of
      Awards.  No Award and no right under any such Award,
      shall be assignable, alienable, saleable or transferable by a Participant
      otherwise than by will or by the laws of descent and
      distribution.  During the Participant’s lifetime, rights under
      an Award shall be exercisable only by the Participant, or if permissible
      under applicable law, by the Participant’s guardian or legal
      representative.

              

      

      

      
        	
                (c)

              	
                No Limit on Other Compensation
      Arrangements.  Nothing contained in the Plan shall
      prevent the Company from adopting or continuing in effect other or
      additional compensation arrangements, and such arrangements may be either
      generally applicable or applicable only in specific
  cases.

              

      

      

      
        	
                (d)

              	
                Governing
      Law.  The validity, construction, and effect of the Plan
      and any rules and regulations relating to the Plan shall be determined in
      accordance with the laws of the State of Delaware without giving effect to
      the principles of conflict of laws
thereof.

              

      

      

      
        	
                (e)

              	
                Severability.  If
      any provision of the Plan or any Award Agreement is or becomes or is
      deemed to be invalid, illegal, or unenforceable in any jurisdiction, or as
      to any person, Award or Account, or would disqualify the Plan or any Award
      under any law deemed applicable by the Administrator, such provision shall
      be construed or deemed amended to conform to applicable laws, or if it
      cannot be so construed or deemed amended without, in the determination of
      the Administrator, materially altering the intent of the Plan or the
      Award, such provision shall be stricken as to such jurisdiction, person or
      Award, and the remainder of the Plan and any such Award shall remain in
      full force and effect.

              

      

      

      
        	
                (f)

              	
                No Trust or Fund
      Created.  Neither the Plan nor any Award or Account shall
      create or be construed to create a trust or separate fund of any kind or a
      fiduciary relationship between the Company and a Participant or any other
      person.  To the extent that any person acquires a right to
      receive an Award or Account, or Shares pursuant to an Award or Account,
      from the Company pursuant to this Plan, such right shall be no greater
      than the right of any unsecured general creditor of the
      Company.

              

      

      
        
           

        

        
          16

          
            

          

        

        
           

        

      

      
        	
                (g)

              	
                Accounts
      Unsecured.  Until distributed, all amounts credited to
      any Cash Accounts or represented by units credited to any Stock Unit
      Account shall be property of the Company, available for the Company’s use,
      and subject to the claims of general creditors of the
      Company.  The rights of any Participant or beneficiary to
      distributions under this Plan are not subject to anticipation, alienation,
      sale, transfer, assignment, or encumbrance, and shall not be subject to
      the debts or liabilities of any Participant or
  beneficiary.

              

      

      

      
        	
                (h)

              	
                Withholding.  The
      Company shall be authorized to withhold from any Awards granted or any
      transfer made under any Award or under the Plan or from any dividend
      equivalents to be paid on Restricted Stock Units the amount (in cash,
      Shares, other securities, or other property) of any taxes required to be
      withheld in respect of a grant, exercise, payment or settlement of an
      Award or any payment of dividend equivalents under Restricted Stock Units
      or under the Plan and to take such other action as may be necessary in the
      opinion of the Company to satisfy all obligations of the Company for the
      payment of any such taxes.

              

      

      

      
        	
                (i)

              	
                No Right to Continued Board
      Membership.  The grant of an Award or establishment of an
      Account shall not be construed as giving a Participant the right to be
      retained as a director of the Company.  The Board may at any
      time fail or refuse to nominate a Participant for election to the Board,
      and the stockholders of the Company may at any election fail or refuse to
      elect any Participant to the Board free from any liability or claim under
      this Plan or any Award or Account.

              

      

      

      
        	
                (j)

              	
                409A
      Compliance.  The Company makes no representations or
      covenants that any Award granted or Deferred Compensation arrangement
      maintained under the Plan will comply with Section 409A of the
      Code.

              

      

      

      SECTION
13.  EFFECTIVE DATE OF THE PLAN.

      

      The Plan
shall be effective as of the date of its approval by the stockholders of the
Company.

      

      SECTION
14.  TERM OF THE PLAN.

      

      No Award
shall be granted or compensation deferred under the Plan after the tenth
anniversary of the Effective Date of the Plan.  However, unless
otherwise expressly provided in the Plan or in an applicable Award Agreement,
any Award granted or Account established prior to the termination of the Plan
may extend beyond such date, and the authority of the Committee and the Board
under Section 11 to amend, alter, adjust, suspend, discontinue, or terminate any
such Award or Account, or to waive any conditions or rights thereunder, shall
extend beyond such date.

    

     

     

    17Unassociated Document

     

    ART'S-WAY
MANUFACTURING CO., INC.

    2007

    STOCK
OPTION PLAN

     

    
      	
              (1)  

            	
              NAME.

            

    

     

    The name
of this Plan is the Art's-Way Manufacturing Co., Inc. 2007 Stock Option
Plan.

     

    
      	
              (2)  

            	
              DEFINITIONS.

            

    

     

    For the
purposes of the Plan, the following terms shall be defined as set forth
below:

    
      	 	 	 
	 	(a)	"Affiliate" means
      any partnership, corporation, firm, joint venture, association, trust,
      limited liability company, unincorporated organization or other entity
      (other than a Subsidiary) that, directly or indirectly through one or more
      intermediaries, is controlled by the Company, where the term "controlled
      by" means the possession, direct or indirect, of the power to cause the
      direction of the management and policies of such entity, whether through
      the ownership of voting interests or voting securities, as the case may
      be, by contract or otherwise.
	 	 	 
	 	(b)	"Board" means the
      board of directors of the Company.
	 	 	 
	 	(c)
      	"Cause" as applied
      to any Officer or Employee means: (i) the conviction of such individual
      for the commission of any felony; (ii) the commission by such individual
      of any crime involving moral turpitude (e.g., larceny, embezzlement) which
      results in harm to the business, reputation, prospects or financial
      condition of the Company, any Subsidiary or Affiliate; or (iii) a
      disciplinary discharge pursuant to the terms of the Company's management
      handbooks or policies as in effect at the time.
	 	 	 
	 	(d)	"Chairman"
      means the individual appointed by the Board to serve as the chairman of
      the Committee.
	 	 	 
	 	(e)
      	“Code” means the
      Internal Revenue Code of 1986, as amended from time to time and the
      Treasury regulations promulgated
thereunder.

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	 	 
	 	(f)
      	"Committee" means
      the committee appointed by the Board to administer the Plan as provided in
      Section 4(a).
	 	 	 
	 	(g)	"Common Stock" means
      the Common Stock, $0.01 par value per share, of the Company or any
      security of the Company identified by the Committee as having been issued
      in substitution or ex-change therefor or in lieu thereof.
	 	 	 
	 	(h)	"Company" means
      Art's-Way Manufacturing Co., Inc., a Delaware corporation.
	 	 	 
	 	(i)	"Employee" means an
      individual employed by the Company or a Subsidiary whose wages are subject
      to the withholding of federal income tax under Section 3401 of the
      Code.
	 	 	 
	 	(j)	 "Exchange Act"
      means the Securities Exchange Act of 1934, as amended from time to time,
      or any successor statute.
	 	 	 
	 	(k)	 "Fair Market
      Value" of a Share as of a specified date means the average of the highest
      and lowest market prices of a Share on the principal market or exchange on
      which the Common Stock is then traded, or, if no trading of Common Stock
      is reported for that day, the next preceding day on which trading was
      reported. In the event the Common Stock is not publicly traded, the Fair
      Market Value of a Share shall be determined by the good faith judgment of
      the Board of Directors.
	 	 	 
	 	(l)	"Incentive Stock
      Option" (otherwise designated as an "ISO") means any stock option granted
      pursuant to the Plan that is intended to be and is specifically designated
      as an "Incentive Stock Option" within the meaning of Section 422 of the
      Code.
	 	 	 
	 	(m)	"Non-qualified Stock
      Option" (otherwise designated as a "NQSO") means any stock option granted
      pursuant to the provisions of the Plan that is not an ISO.
	 	 	 
	 	(n)	"Officer" means an
      individual elected or appointed by the Board or by the board of directors
      of a Subsidiary or chosen in such other manner as may be prescribed by the
      Bylaws of the Company or a Subsidiary, as the case may be, to serve as
      such.
	 	 	 
	 	(o)	
              "Option"
      means an ISO or a NQSO granted under the Plan.

            
	 	 	 
	 	(p)	
              "Participant" means
      an individual who is granted an Option under the Plan.

            
	 	 	 
	 	(q)	"Plan" means this
      2007 Stock Option Plan. 
	 	 	 
	 	(r)	"Rule
      16b-3" means Rule 16b-3 promulgated by the Securities and Exchange
      Commission under the Exchange Act, or any successor or replacement rule
      adopted by the Securities and Exchange
  Commission.

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	 	 
	 	(s)	"Share"
      means one share of Common Stock, adjusted in accordance with Section 10(b)
      of the Plan, if applicable.
	 	 	 
	 	(t)	"Stock Option
      Agreement" means the written agreement between the Company and the
      Participant that contains the terms and conditions pertaining to an
      Option.
	 	 	 
	 	(u)	"Subsidiary" means
      any corporation of which the Company, directly or indirectly, is the
      beneficial owner of fifty percent (50%) or more of the total voting power
      of all classes of its stock having voting power and which qualifies as a
      subsidiary corporation pursuant to Section 424(f) of the
Code.
	 	 	 
	 	(v)	"Ten Percent
      Stockholder" means a Participant who prior to the grant of an ISO owned,
      directly or indirectly within the meaning of Section 424(d) of the Code,
      ten percent (10%) or more of the total combined voting power of all
      classes of stock of the Company, any Subsidiary or any parent of the
      Company (as defined in Section 425(e) of the Code).
	 	 	 

    

    
      	
              (3)  

            	
              PURPOSE.

            

    

     

    The
purpose of the Plan is to enable the Company to provide incentives, which are
linked directly to increases in stockholder value, to certain key personnel in
order that they will be encouraged to promote the financial success and progress
of the Company.

    
      	 	 
	
              (4)  

            	
              ADMINISTRATION.

            

    

     

    
      	 	(a)	Composition
      of the Committee.
	 	 	 
	 	 	
              The
      Plan shall be administered by a Committee appointed by the Board,
      consisting of not less than two "Non-Employee Directors" (as such term is
      defined in Rule 16b-3), to be a director who is not currently an officer
      or otherwise employed by the Company, or a parent or Subsidiary of the
      Company; does not receive compensation directly or indirectly from the
      Company or a Subsidiary for services rendered as a consultant or in any
      capacity other than as a director, (except for an amount less than
      $60,000); does not possess an interest in any other transaction for which
      disclosure would be required pursuant to Item 404(a) of Regulation S-K;
      and is not engaged in a business relationship for which disclosure would
      be required pursuant to Item 404(b) of Regulation S-K. In the event the
      Company is, at any time unable to qualify a Committee of two or more
      Non-Employee Directors, the Plan shall be administered by the Board.
      Subject to the provisions of the first sentence of this Section 4(a), the
      Board may from time to time remove members from, or add members to, the
      Committee. Vacancies on the Committee, however caused, shall be filled by
      the Board. The Board shall appoint one of the members of the Committee as
      Chairman.

            
	 	 	 

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	(b)	Actions
      by the Committee.
	 	 	 
	 	 	The
      Committee shall hold meetings at such times and places as it may
      determine. Acts approved by a majority of the members of the Committee
      present at a meeting at which a quorum is present, or acts reduced to or
      approved in writing by a majority of the members of the Committee, shall
      be the valid acts of the Committee.
	 	 	 
	 	(c)	Powers
      of the Committee.
	 	 	 
	 	 	Subject to the
      express terms and conditions hereof, the Committee shall have the
      authority to administer the Plan in its sole and absolute discretion. To
      this end, the Committee is authorized to construe and interpret the Plan
      and to make all other determinations necessary or advisable for the
      administration of the Plan, including, but not limited to, the authority
      to determine the eligible individuals who shall be granted Options, the
      number of Options to be granted, the vesting period, if any, for all
      Options granted hereunder, the date on which any Option becomes first
      exercisable, the number of Shares subject to each Option, the exercise
      price for the Shares subject to each Option, and, whether the Option to be
      granted is an ISO or a NQSO. Any determination, decision or action of the
      Committee in connection with the construction, interpretation,
      administration or application of the Plan shall be final, conclusive and
      binding upon all Participants and any person validly claiming under or
      through a Participant.
	 	 	 

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	(d)	Liability
      of Committee Members.
	 	 	 
	 	 	No
      member of the Board or the Committee will be liable for any action or
      determination made in good faith by the Board or the Committee with
      respect to the Plan or any grant or exercise of an Option
      thereunder.
	 	 	 
	 	(e)	
              Option
      Accounts.

            
	 	 	 
	 	 	The
      Committee shall maintain a journal in which a separate account for each
      Participant shall be established. Whenever an Option is granted to or
      exercised by a Participant, the Participant's account shall be
      appropriately credited or debited. Appropriate adjustment shall also be
      made in the journal with respect to each account in the event of an
      adjustment pursuant to Section 10(b) of the
  Plan.

    

     

    
      	
              (5)  

            	
              EFFECTIVE
      DATE AND TERM OF THE
      PLAN.                                                                              

            

    

     

    
      	 	(a)	Effective Date of
      the Plan.
	 	 	 
	 	 	The Plan was adopted
      by the Board and became effective on January 25, 2007, subject to approval
      by the stockholders of the Company at a meeting duly called and held
      within twelve months following such date.

    

    
      	 	 	 
	 	(b)	Term
      of Plan.
	 	 	 
	 	 	No
      Option shall be granted pursuant to the Plan on or after January 25, 2017,
      but Options theretofore granted may extend beyond that
    date.
	 	 	 

    

     

    
      	
              (6)  

            	
              TYPE
      OF OPTIONS AND SHARES SUBJECT TO THE PLAN.

            
	 	 

    

    Options
granted under the Plan may be either ISOs or NQSOs. Each Stock Option Agreement
shall specify whether the Option covered thereby is an ISO or a
NQSO.

    

    The
maximum aggregate number of Shares that may be issued under the Plan is ______
Shares. Up to and including all ______ Shares reserved for issuance under the
Plan may be designated as ISOs. The limitation on the number of Shares which may
be subject to Options under the Plan shall be subject to adjustment as provided
in Section 10(b) of the Plan.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    If any
Option granted under the Plan expires or is terminated for any reason, any
Shares as to which the Option has not been exercised shall again be available
for purchase under Options subsequently granted. At all times during the term of
the Plan, the Company shall reserve and keep available for issuance such number
of Shares as the Company is obligated to issue upon the exercise of all then
outstanding Options.

    
      
        	 	 
	
                (7)  

              	
                SOURCE
      OF SHARES ISSUED UNDER THE PLAN.

              
	 	 

      

    

    Common
Stock issued under the Plan shall be authorized and unissued Shares and/or
Treasury Shares. No fractional Shares shall be issued under the
Plan.

    
      	 	 
	
              (8)  

            	
              ELIGIBILITY.

            
	 	 

    

    The
individuals eligible for the grant of Options under the Plan shall be: (i) all
Officers and Employees; and (ii) such individuals determined by the Committee to
be rendering substantial services as a consultant or independent contractor to
the Company or any Subsidiary or Affiliate of the Company, as the Committee
shall determine from time to time in its sole and absolute discretion; provided, however, that only Employees of the
Company or any Subsidiary shall be eligible to receive ISOs. Any Participant
shall be eligible to be granted more than one Option hereunder.

    
      	 	 
	
              (9)  

            	
              OPTIONS.

            
	 	 

    

    
      	 	 	 
	 	(a)	Grant
      of Options.
	 	 	 
	 	 	Subject to any
      applicable requirements of the Code and any regulations issued thereunder,
      the date of the grant of an Option shall be the date on which the
      Committee determines to grant the Option.
	 	 	 
	 	(b)	Exercise
      Price of ISOs.
	 	 	 
	 	 	The exercise price
      of each Share subject to an ISO shall not be less than the Fair Market
      Value of a Share on the date of grant of the ISO, except that in the case
      of a grant of an ISO to a Participant who at the time such ISO was granted
      was a Ten Percent Stockholder, the exercise price shall not be less than
      110% of the Fair Market Value of a Share on the date of the grant of the
      ISO.

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	 	 
	 	(c)
      	Exercise
      Price of NQSOs.
	 	 	 
	 	 	The exercise price
      of each Share subject to a NQSO shall be determined by the Committee at
      the time of grant but will not be less than eighty-five percent (85%) of
      the Fair Market Value of a Share on the date of grant.
	 	 	 
	 	(d)	Exercise
      Period.
	 	 	 
	 	 	Each Option granted
      pursuant to this Plan shall vest and become first exercisable as
      determined by the Committee.
	 	 	 
	 	(e)
      	Terms
      and Conditions.
	 	 	 
	 	 	All Options granted
      pursuant to the Plan shall be evidenced by a Stock Option Agreement (which
      need not be the same for each Participant or Option), approved by the
      Committee which shall be subject to the following express terms and
      conditions and the other terms and conditions as are set forth in this
      Section 9, and to such other terms and conditions as shall be determined
      by the Committee in its sole and absolute discretion which are not
      inconsistent with the terms of the Plan:
	 	 	 

    

    
      
        	 	 	
                
                  (i)
      the failure of an Option to vest for any reason whatsoever shall cause the
      Option to expire and be of no further force or effect;

                  

                  (ii)
      unless terminated earlier pursuant to Sections 9(i) or 11, the term of any
      Option granted under the Plan shall be ten years from the date of grant;
      provided, however, that no ISO granted to
      a Ten Percent Stockholder shall have a term of more than five years from
      the date of grant;

                  

                  (iii)
      in the case of an ISO, the aggregate Fair Market Value (determined as of
      the time the ISO is granted) of Shares exercisable for the first time by a
      Participant during any calendar year (under the Plan and any other
      incentive stock option plans of the Company, any Subsidiary or any parent
      of the Company (as defined in Section 424(e) of the Code) shall not exceed
      $100,000;

                

              

      

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	 	(i)
      Options
      shall not be transferable by the Participant otherwise than by will or by
      the laws of descent and distribution, and shall be exercisable during the
      lifetime of the Participant only by him or by his guardian or legal
      representative; 

              

              (v)
      no Option or interest therein may be transferred, assigned, pledged or
      hypothecated by the Participant during his lifetime whether by operation
      of law or otherwise, or be made subject to execution, attachment or
      similar process; and

              

              (vi)
      payment for the Shares to be received upon exercise of an Option may be
      made in cash, in Shares (determined with reference to their Fair Market
      Value on the date of exercise) or any combination
  thereof.

            

    

     

    
      	 	 	 
	 	(f)	Exercise.

    

     

    
      
        	 	 	 
	 	 	(i)
      The
      holder of an Option may exercise the same by filing with the Corporate
      Secretary of the Company and the Chairman a written election, in such form
      as the Committee may determine, specifying the number of Shares with
      respect to which such Option is being exercised, and accompanied by
      payment in full of the exercise price for such Shares. Notwithstanding the
      foregoing, the Committee may specify a reasonable minimum number of Shares
      that may be purchased on any exercise of an Option, provided that such
      minimum number will not prevent the holder from exercising the Option with
      respect to the full number of Shares as to which the Option is then
      exercisable. 

                

                The
      holder of an Option may surrender Common Stock owned by the holder in lieu
      of or in addition to cash to exercise the Option. Common Stock surrendered
      shall be valued as follows:

              

      

      
        	 	 	 
	 	 	(A) If traded on a
      securities exchange or on the Nasdaq NMS, the value shall be deemed to be
      the average of the closing prices of the Common Stock on such exchange
      during the thirty calendar day period ending three (3) calendar days prior
      to the exercise date;

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        	 	 	 
	 	 	
                (B)
      If actively traded over-the-counter, the value shall be deemed to be the
      average of the closing bid or sale prices (whichever is applicable) during
      the thirty calendar day period ending three (3) calendar days prior to the
      exercise date; and

                

                (C)
      If there is no active public market, the value shall be the fair market
      value thereof, as determined by the Board of Directors in the good faith
      exercise of its reasonable business judgment.

              
	 	 	 

      

      
        
          	 	 	 
	 	 	(i)
      The
      Option holder may elect in writing delivered to the Company as provided
      above to receive, without payment of additional consideration, shares of
      Common Stock equal to the value of the Option or any portion of the Option
      by the surrender of the Option or such portion to the Company at its
      principal office. Thereupon, the Company shall issue to the Option holder
      such number of fully paid and nonassessable shares of Common Stock as is
      computed using the following formula:
	 	 	 

        

      

      
        	 	 	X =
      Y (A-B) 

                          
      A

              
	 	 	 

      

       

      
        	 	 	where
      X = the number of shares to be issued to such Option holder pursuant to
      this subsection 9(f)(ii) . 

                

                Y =
      the number of shares covered by the Options in respect of which the net
      issue election is made pursuant to this subsection 9(f)(ii).

                

                A =
      the fair market value of one share of Common stock, as determined in good
      faith by the Board of Directors of the Company in accordance with the
      provisions of subsection 9(f)(i), at the time the net issue election is
      made pursuant to this subsection 9(f)(ii).

                

                B =
      the Exercise Price in effect under the Option at the time the net issue
      election is made pursuant to this subsection 9(f)(ii) .

                

                The
      Board of Directors of the Company shall promptly respond in writing to an
      inquiry by an Option holder as to the fair market value of one share of
      Common Stock.

              
	 	 	 

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        	 	 	 
	 	 	
                (iii)
      Partial Exercise. On any
      partial exercise, the Company shall promptly issue and deliver to the
      Option holder a new Option or Options of like tenor in the name of that
      Option holder providing for the right to purchase that number of shares as
      to which the Option has not been exercised.

              
	 	 	 

      

    

    

      
        	
              	 	 
	 	(g)	Withholding
      Taxes.
	 	 	 
	 	 	Prior to issuance of
      the Shares upon exercise of an Option, the Participant shall pay or make
      adequate provision for the payment of any federal, state, local or foreign
      withholding obligations of the Company or any Subsidiary or Affiliate of
      the Company, if applicable. In the event a Participant shall fail to make
      adequate provision for the payment of such obligations, the Company shall
      have the right to issue a stock certificate for an amount of Shares equal
      to the difference obtained by subtracting: (i) the number of Shares,
      rounded up for any fraction to the next whole number, that have a Fair
      Market Value (as of the date of exercise) equal to such amount as is
      sufficient to satisfy applicable federal, state or local withholding
      obligations; from (ii) the number of Shares attributable to that portion
      of the Option so exercised. The Company shall promptly remit, or cause to
      be remitted, to the appropriate taxing authorities the amount so withheld.
      In such cases, although the stock certificate delivered to the Participant
      will be for a net number of Shares, such Participant shall be considered,
      for tax purposes, to have received the number of Shares equal to the full
      number of Shares to which the Option had been exercised.
	 	 	 
	 	(h)	Termination
      of Options.
	 	 	 
	 	 	Options granted
      under the Plan shall be subject to the following events of
      termination:

      

    

    
      
        
          	 	 	
                  (i)
      in the event the employment of a Participant who is an Officer or Employee
      is terminated for Cause, all unexercised Options held by such Participant
      on the date of such termination of employment (whether or not vested) will
      expire immediately; and 

                
	 	 	 
	 	 	(ii)
      in the event a Participant is no longer an Officer or Employee other than
      for the reasons set forth in Sections 9(i)(i) or 9(i)(ii), all Options
      which remain unvested at the time the Participant is no longer a Director,
      Officer or Employee, as the case may be, shall expire immediately, and all
      Options which have vested prior to such time shall expire twelve months
      thereafter unless by their terms they expire sooner.
	 	 	 

        

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    10.
ANTI-DILUTION PROVISIONS.

    

    If any of
the following events shall occur at any time or from time to time during the
effective period of this Plan, the following adjustments shall be made in the
Exercise Price of the Option, as appropriate, with the exceptions hereinafter
provided.

    
      	 	 	 
	 	(a)	In
      case the Company shall at any time subdivide its outstanding shares of
      Common Stock into a greater number of shares, the Exercise Price in effect
      immediately prior to such subdivision shall be proportionately reduced and
      the number of shares purchasable pursuant to the Option shall be
      proportionately increased; and conversely, in case the Common Stock of the
      Company shall be combined into a smaller number of shares, the Exercise
      Price in effect immediately prior to such combination shall be
      proportionately increased and the number of shares purchasable pursuant to
      the Option shall be proportionately reduced.
	 	 	 
	 	(b)	If the Company shall declare a dividend on
      its Common Stock payable in stock or other securities of the Company or of
      any other corporation, or in property or otherwise than in cash, to
      holders of record of Common Stock as of a date prior to the date of
      exercise of an Option, the holder of such Option shall, in addition to the
      Common Stock to which such holder would otherwise be entitled upon such
      exercise, the number of shares of stock or other securities or property
      which such holder would have been entitled to receive if such holder had
      been of such Common Stock on such record date.
	 	 	 
	 	(c)	In case of any
      capital reorganization or reclassification of the Common Stock of the
      Company, or the consolidation or merger of the Company with or into
      another corporation, or any sale of all or substantially all of the
      Company's property or assets, or any liquidation of the Company, the
      holder of an Option upon the exercise hereof on or before the record date
      for determination of stockholders entitled pursuant to the Option, shall
      receive, in lieu of any shares of Common Stock of the Company, the
      proportionate share of all stock, securities or other property issued,
      paid or delivered for or on all of the Common Stock of the Company as is
      allocable to the shares of Common Stock then called for by the
      Option.
	 	 	 
	 	 	 

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    11.
RECAPITALIZATION.

    
      	 	 	 
	 	(a)	Corporate
      Flexibility.
	 	 	 
	 	 	
              The
      existence of the Plan and the Options granted hereunder shall not affect
      or restrict in any way the right or power of the Board or the stockholders
      of the Company, in their sole and absolute discretion, to make, authorize
      or consummate any adjustment, recapitalization, reorganization or other
      change in the Company's capital structure or its business, any merger or
      consolidation of the Company, any issue of bonds, debentures, Common
      Stock, preferred or prior preference stock ahead of or affecting the
      Company's capital stock or the rights thereof, the dissolution or
      liquidation of the Company or any sale or transfer of all or any part of
      its assets or business, or any other grant of rights, issuance of
      securities, transaction, corporate act or proceeding and notwithstanding
      the fact that any such activity, proceeding, action, transaction or other
      event may have, or be expected to have, an impact (whether positive or
      negative) on the value of any Option.

            
	 	 	 
	 	(b)	Adjustments
      Upon Changes in Capitalization.
	 	 	 
	 	 	Except
      as otherwise provided in Section 11 and subject to any required action by
      the stockholders of the Company, in the event of any change in
      capitalization affecting the Common Stock of the Company, such as a stock
      dividend, stock split or recapitalization, the Committee, in its sole and
      absolute discretion, may make proportionate adjustments with respect to:
      (i) the aggregate number of Shares available for issuance under the Plan;
      (ii) the number of Shares available for any individual award; (iii) the
      number and exercise price of Shares subject to outstanding Options; provided, however, that the number of
      Shares subject to any Option shall always be a whole number; and (iv) such
      other matters as shall be appropriate in light of the
      circumstances.
	 	 	 

    

    12.
CHANGE OF CONTROL.

    

    In the
event of a Change of Control (as defined below), unless otherwise determined by
the Committee at the time of grant or by amendment (with the holder's consent)
of such grant, those Options that would have vested within one year of the
effective time of any such Change of Control shall vest immediately as of such
effective time, while those Options that would have vested later than one year
after the effective time of any such Change of Control shall expire as of such
effective time. The Committee in its discretion may make
provisions for the assumption of outstanding Options, or the substitution for
outstanding Options of new incentive awards covering the stock of a successor
corporation or a parent or subsidiary thereof, with appropriate adjustments as
to the number and kind of shares and prices so as to prevent dilution or
enlargement of rights.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    A "Change
of Control" will be deemed to occur on the date any of the following events
occur:

    
      	 	 	 
	 	(a)	any person or
      persons acting together which would constitute a "group" for purpose of
      Section 13(d) of the Exchange Act (other than the Company, any Subsidiary
      and any entity beneficially owned by any of the foregoing) beneficially
      own (as defined in Rule 13d-3 under the Exchange Act) without Board
      approval, directly or indirectly, at least 50% of the total voting power
      of the Company entitled to vote generally in the election of the
      Board;
	 	 	 
	 	(b)	the stockholders of
      the Company approve (i) a plan of complete liquidation of the Company, or
      (ii) an agreement providing for the merger or consolidation of the Company
      (A) in which the Company is not the continuing or surviving corporation
      (other than consolidation or merger with a wholly-owned subsidiary of the
      Company in which all Shares outstanding immediately prior to the
      effectiveness thereof are changed into or exchanged for the same
      consideration) or (B) pursuant to which the Shares are converted into
      cash, securities or other property, except a consolidation or merger of
      the Company in which the holders of the Shares immediately prior to the
      consolidation or merger have, directly or indirectly, at least a majority
      of the common stock of the continuing or surviving corporation immediately
      after such consolidation or merger or in which the Board immediately prior
      to the merger or consolidation would, immediately after the merger or
      consolidation, constitute a majority of the board of directors of the
      continuing or surviving corporation; or
	 	 	 
	 	(c)	the stockholders of
      the Company approve an agreement (or agreements) providing for the sale or
      other disposition (in one transaction or a series of transactions) of all
      or substantially all of the assets of the Company.
	 	 	 

    

    13.
SECURITIES LAW REQUIREMENTS.

    

    No Shares
shall be issued under the Plan unless and until: (i) the Company and the
Participant have taken all actions required to register the Shares under the
Securities Act of 1933, as amended, or perfect an exemption from the
registration requirements thereof; (ii) any applicable requirement of Nasdaq or
any stock exchange on which the Common Stock is listed has been satisfied; and
(iii) any other applicable provision of state or Federal law has been satisfied.
The Company shall be under no obligation to register the Shares under the
Securities Act of 1933, as amended, or to effect compliance with the
registration or qualification requirements of any state securities
laws.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    14.
AMENDMENT AND TERMINATION. (a) 

    
      	 	 	 
	 	(a)	

              Modifications
      to the Plan.

            
	 	 	 
	 	 	The Board may,
      insofar as permitted by law, from time to time, with respect to any Shares
      at the time not subject to Options, suspend or terminate the Plan or
      revise or amend the Plan in any respect whatsoever. However, unless the
      Board specifically otherwise provides, any revision or amendment that
      would cause the Plan to fail to comply with Rule 16b-3, Section 422 or
      162(m) of the Code or any other requirement of applicable law or
      regulation if such amendment were not approved by the stockholders of the
      Company shall not be effective unless and until such approval is
      obtained.
	 	 	 
	 	(b)	Rights
      of Participant.
	 	 	 
	 	 	No amendment,
      suspension or termination of the Plan that would adversely affect the
      right of any Participant with respect to an Option previously granted
      under the Plan will be effective without the written consent of the
      affected Participant.

    

    

    15.
MISCELLANEOUS.

    
      	 	 	 
	 	(a)	Stockholders'
      Rights. 

              

              No
      Participant and no beneficiary or other person claiming under or through
      such Participant shall acquire any rights as a stockholder of the Company
      by virtue of such Participant having been granted an Option under the
      Plan. No Participant and no beneficiary or other person claiming under or
      through such Participant will have any right, title or interest in or to
      any Shares, allocated or reserved under the Plan or subject to any Option
      except as to Shares, if any, that have been issued or transferred to such
      Participant. No adjustment shall be made for dividends or distributions or
      other rights for which the record date is prior to the date of exercise of
      an Option, except as may be provided in the Stock Option
      Agreement.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	 	 
	 	(b)	Other
      Compensation Arrangements. 

              

              Nothing
      contained in the Plan shall prevent the Board from adopting other
      compensation arrangements, subject to stockholder approval if such
      approval is required. Such other arrangements may be either generally
      applicable or applicable only in specific cases.

            
	 	 	 
	 	(c)
      	Treatment
      of Proceeds. 

              

              Proceeds
      realized from the exercise of Options under the Plan shall constitute
      general funds of the Company.

            
	 	 	 
	 	(d)	Costs
      of the Plan. 

              

              The
      costs and expenses of administering the Plan shall be borne by the
      Company.

            
	 	 	 
	 	(e)
      	No
      Right to Continue Employment or Services. 

              

              Nothing
      contained in the Plan or in any instrument executed pursuant to the Plan
      will confer upon any Participant any right to continue to render services
      to the Company, a Subsidiary or Affiliate; to continue as an Officer or
      Employee; or affect the right of the Company, a Subsidiary, the Board, the
      board of directors of a Subsidiary, the stockholders of the Company or a
      Subsidiary, as applicable, to terminate the office or employment, as the
      case may be, of any Participant at any time with or without Cause or with
      or without any other cause, reason or justification. The term "Cause" as
      defined herein is included solely for the purposes of the Plan and is not,
      and shall not be deemed to be: (i) a restriction on the right of the
      Company or a Subsidiary, as the case may be, to terminate any Officer or
      Employee for any reason whatsoever; or (ii) a part of the employment
      relationship (whether oral or written, express or implied) of any such
      individual.

            
	 	 	 
	 	(f)
      	
              Severability.

              

              The
      provisions of the Plan shall be deemed severable and the validity or
      unenforceability of any provision shall not affect the validity or
      enforceability of the other provisions
hereof.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	 	 
	 	(g)	Binding
      Effect of Plan. 

              

              The
      Plan shall inure to the benefit of the Company, its successors and
      assigns.

            
	 	 	 
	 	(h)	No
      Waiver of Breach. 

              

              No
      waiver by any party hereto at any time of any breach by another party
      hereto of, or compliance with, any condition or provision of the Plan to
      be performed by such other party shall be deemed a waiver of the same, any
      similar or any dissimilar provisions of conditions at the same or at any
      prior or subsequent time.

            
	 	 	 
	 	(i)	
              Governing
      Law.

               

              The Plan
      and all actions taken thereunder shall be enforced, governed and construed
      by and interpreted under the laws of the State of Delaware applicable to
      contracts made and to be performed wholly within such State without giving
      effect to the principles of conflict of laws thereof.

            
	 	 	 
	 	(j)	Headings.
	 	 	 
	 	 	The headings
      contained in the Plan are for reference purposes only and shall not affect
      in any way the meaning or interpretation of the Plan.
	 	 	 

    

    16.
EXECUTION.

     

    To record
the adoption of the Plan to read as set forth herein, the Company has caused the
Plan to be signed by its Chairman and attested by its Secretary on ___________,
2007.

    
      
        	 	 	 
	 	 	 
	 	 	ART'S-WAY
      MANUFACTURING CO., INC. 
	 	 	 
	 	 	/s/ J. Ward
      McConnell, Jr. 
	 	 	
                J.
      Ward McConnell, Jr., Chairman

              

      

      

    

    ATTEST:

    
    

    
      
        	 	 	 
	Carrie
      L. Majeski 

                Secretary

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