Exhibit 10.1
ARTS WAY MANUFACTURING CO., INC.
2007 NON-EMPLOYEE DIRECTORS
STOCK OPTION PLAN
1. NAME.
The name of this Plan
is the Arts Way Manufacturing Co., Inc., 2007
Non-Employee Directors 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) Code means the
Internal Revenue Code of 1986, as amended from time
to time, and the Treasury regulations promulgated thereunder.
(d) Common Stock means
the common stock, $.01 par value per share, of the
Company or any security of the Company identified by the Board as
having
been issued in substitution or exchange therefor or in lieu
thereof.
(e) Company means Arts
Way Manufacturing Co., Inc., a Delaware corporation.
(f) Effective Date
means January 25, 2007.
(g) Employee means an
individual whose wages are subject to the
withholding of federal income tax under Section 3401 of the
Code.
(h) Exchange Act means
the Securities Exchange Act of 1934, as amended
from time to time, or any successor statute.
(i) Fair Market Value
of a Share as of a specified date means the average
of the highest and lowest market prices of a Share as quoted on the
OTC
Bulletin Board on such date, 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 then quoted on the
OTC
Bulletin Board, the Fair Market Value of a Share shall be
determined by reference to the principal market or exchange on
which the
Shares are then traded.
(j) Non-Employee
Director means an individual who (i) is now or hereafter
becomes a member of the Board, and (ii) is not an Employee of the
Company or
of any Subsidiary or Affiliate on the date of the grant of the
NQSO.
(k) NQSO means a stock
option that is not qualified under Section 422 of
the Code.
(l) 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.
(m) Participant means
a Non-Employee Director who is granted an NQSO
under the Plan.
(n) Plan means this
2007 Non-Employee Directors Stock Option Plan.
(o) 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.
(p) Share means one
share of
Common Stock, adjusted in accordance with Section 9(b), if
applicable.
(q) Stock Option
Agreement means the written agreement between the
Company and the Participant that contains the terms and
conditions
pertaining to the NQSO.
(r) Subsidiary means
any corporation or entity 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, unless the Board shall determine that any such
corporation
or entity shall be excluded hereunder from the definition of the
term
Subsidiary.
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
Non-Employee Directors so that they will be encouraged to serve on
the
Board and exert their best efforts on behalf of the Company.
4. ADMINISTRATION.
(a) Board of
Directors.
The Plan
shall be administered by the Board of Directors, which shall
have the authority to administer the Plan in its sole and
absolute
discretion to grant NQSOs, and to determine the number of Shares
subject
to NQSOs and the price at which each Share covered by an NQSO may
be
purchased pursuant to the Plan, all as set forth in Section 8. To
this
end, the Board of Directors is authorized to construe and interpret
the
Plan and to make all other determinations necessary or advisable
for the
administration of the Plan. Subject to the foregoing, any
determination,
decision or action of the Board of Directors 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.
(b) Liability of Board
Members.
No member
of the Board will be liable for any action or determination
made in good faith by the Board with respect to the Plan or any
grant or
exercise of an NQSO thereunder.
(c) NQSO Accounts.
The
Company shall maintain a journal in which a separate account
for
each Participant shall be established. Whenever NQSOs are granted
to or
exercised by a Participant, the Participants 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 9(b).
5. EFFECTIVE DATE OF
THE PLAN; TERM; PLAN YEAR.
(a) Effective Date of
the Plan.
The Plan
was adopted by the Board and became effective on January
25, 2007.
(b) Term of the
Plan.
No NQSO
shall be granted pursuant to the Plan on or after
January 25, 2017 but NQSOs theretofore granted may extend beyond
that
date.
(c) Plan Year.
The
initial Plan Year begins on the date of the 2007 annual meeting
of stockholders and ends on the day prior to the 2008 annual
meeting of
the stockholders. Subsequent Plan Years begin on the date of the
annual
meeting of stockholders of each year and end on the day prior to
the
meeting of the following year.
6. SHARES SUBJECT TO
THE PLAN.
The maximum aggregate
number of Shares which may be subject to NQSOs
granted to Non-Employee Directors under the Plan shall be One
Hundred
Thousand (100,000). The limitation on the number of Shares which
may be
subject to NQSOs under the Plan shall be subject to adjustment
as
provided in Section 9(b).
If any NQSO granted
under the Plan expires, or is terminated for any reason
without having been exercised in full, the Shares allocable to
the
unexercised portion of such NQSO shall again become available for
grant
pursuant to the Plan. 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 NQSOs.
7. SOURCE OF SHARES
ISSUED UNDER THE PLAN.
Common Stock issued
under the Plan shall be authorized and unissued
Shares. No fractional Shares shall be issued under the Plan.
8. NON-QUALIFIED STOCK
OPTIONS.
(a) Grant of
NQSOs.
On the beginning date
of each Plan Year, NQSOs to purchase One Thousand
(1,000) Shares shall be granted automatically to each
Non-Employee
Director. With respect to any Non-Employee Director who first
becomes a
member of the Board after the beginning date of a Plan Year, NQSOs
to
purchase One Thousand (1,000) Shares shall be granted automatically
on
the next succeeding business day following his or her election to
the
Board. Additional NQSOs may be granted to any Non-Employee Director
by
the Board in its sole and absolute discretion.
(b) The Exercise
Price.
The exercise price of
a Share shall be the Fair Market Value of such
Share on the first day of the Plan Year for which the options
are
granted (or the next business day if such date falls on a weekend
or
holiday), or if granted on another day then the date of such
grant.
(c) Terms and Conditions.
All NQSOs granted
pursuant to the Plan shall be evidenced by a Stock
Option Agreement (which need not be the same for each Participant
or
NQSO), approved by the Board, which shall be subject to the
following
express terms and conditions and to the other terms and
conditions
specified in this Section 8, and to such other terms and conditions
as
shall be determined by the Board in its sole and absolute
discretion
which are not inconsistent with the terms of the Plan:
(i) all
NQSOs automatically granted to a Participant shall vest
and become first exercisable immediately upon grant; those
NQSOs
granted pursuant to the Boards discretion shall vest as provided by
the
Board on the date of such grant;
(ii) the
failure of an NQSO to vest for any reason whats
