10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549
FORM 10-Q
(MARK ONE)
/ X /   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE                SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2006
OR
/    /   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE               SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________________ to ____________________
Commission File Number 0-2648
HNI Corporation (Exact name of Registrant as specified in its charter)
Iowa (State or other jurisdiction of incorporation or organization)	42-0617510 (I.R.S. Employer Identification Number)
P. O. Box 1109, 408 East Second Street Muscatine, Iowa 52761-0071 (Address of principal executive offices)	52761-0071 (Zip Code)
Registrant’'s telephone number, including area code: 563/272-7400
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES   X             NO   ____
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated filer" and "large accelerated filer" in Rule 12b-2 of the Exchange Act. Large accelerated filer       X         Accelerated filer   ____      Non-accelerated filer   ___
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    YES   ___   NO    X
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practical date.
Class Common Shares, $1 Par Value	Outstanding at September 30, 2006 48,617,261

HNI Corporation and SUBSIDIARIES
INDEX
PART I.    FINANCIAL INFORMATION
	Page
Item 1.    Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets September 30, 2006, and December 31, 2005	3
Condensed Consolidated Statements of Income Three Months Ended September 30, 2006, and October 1, 2005	5
Condensed Consolidated Statements of Income Nine Months Ended September 30, 2006, and October 1, 2005	6
Condensed Consolidated Statements of Cash Flows Nine Months Ended September 30, 2006, and October 1, 2005	7
Notes to Condensed Consolidated Financial Statements	8
Item 2.    Management's Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.    Quantitative and Qualitative Disclosure about Market Risk	24
Item 4.    Controls and Procedures	24
PART II.    OTHER INFORMATION
Item 1.     Legal Proceedings	26
Item 1A. Risk Factors	26
Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds	26
Item 3.    Defaults Upon Senior Securities - None	-
Item 4.    Submission of Matters to a Vote of Security Holders - None	-
Item 5.    Other Information - None	-
Item 6.    Exhibits	27
SIGNATURES	28
EXHIBIT INDEX	29

PART I.     FINANCIAL INFORMATION

Item 1.     Financial Statements (Unaudited)

HNI Corporation and SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS
		Sep. 30, 2006 (Unaudited)		Dec. 31, 2005
ASSETS	(In thousands)
CURRENT ASSETS
Cash and cash equivalents   Short-term investments   Receivables   Inventories (Note C)   Deferred income taxes   Prepaid expenses and other current assets	$	34,151 8,716 324,472 123,900 16,745 17,168	$	75,707 9,035 278,515 91,110 15,831 16,400
Total Current Assets		525,152		486,598
PROPERTY, PLANT, AND EQUIPMENT, at cost
Land and land improvements   Buildings   Machinery and equipment   Construction in progress		27,536 262,218 544,467 20,425		26,361 240,174 523,240 23,976
Less accumulated depreciation		854,646 540,820		813,751 519,091
Net Property, Plant, and Equipment		313,826		294,660
GOODWILL		253,892		242,244
OTHER ASSETS		164,742		116,769
Total Assets	$	1,257,612	$	1,140,271

See accompanying Notes to Condensed Consolidated Financial Statements.

HNI Corporation and SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS
		Sep. 30, 2006 (Unaudited)		Dec. 31, 2005
LIABILITIES AND SHAREHOLDERS'' EQUITY	(In thousands, except share and per share value data)
CURRENT LIABILITIES
Accounts payable and accrued expenses      Income taxes      Note payable and current maturities of long-term debt      Current maturities of other long-term obligations	$	303,207 6,642 51,660 3,505	$	307,952 1,270 40,350 8,602
Total Current Liabilities		365,014		358,174
LONG-TERM DEBT		299,740		103,050
CAPITAL LEASE OBLIGATIONS		728		819
OTHER LONG-TERM LIABILITIES		52,135		48,671
DEFERRED INCOME TAXES		31,545		35,473
MINORITY INTEREST IN SUBSIDIARY		538		140
SHAREHOLDERS'' EQUITY
Capital Stock:      Preferred, $1 par value, authorized 2,000,000 shares, no shares outstanding		-		-
Common, $1 par value, authorized 200,000,000 shares, outstanding -      2006 - 48,617,261 shares;      2005 - 51,848,591 shares		48,617		51,849
Paid-in capital      Retained earnings      Accumulated other comprehensive income		2,323 456,901 71		941 540,822 332
Total Shareholders' Equity		507,912		593,944
Total Liabilities and Shareholders' Equity	$	1,257,612	$	1,140,271

See accompanying Notes to Condensed Consolidated Financial Statements.

HNI Corporation and SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
	Three Months Ended
		Sep. 30, 2006			Oct. 1, 2005
	(In thousands, except share and per share data)
Net sales	$	687,732		$	632,280
Cost of sales		450,309			396,042
Gross profit		237,423			236,238
Selling and administrative expenses		177,059			171,802
Restructuring and impairment charges		(27	)		1,071
Operating income		60,391			63,365
Interest income		339			195
Interest expense		4,450			693
Earnings before income taxes and minority interest		56,280			62,867
Income taxes		20,542			22,317
Earnings before minority interest		35,738			40,550
Minority interest in earnings of subsidiary		(24	)		(11	)
Net income	$	35,762		$	40,561
Net income per common share - basic	$	0.73		$	0.74
Average number of common shares outstanding - basic		49,323,698			55,011,758
Net income per common share - diluted	$	0.72		$	0.73
Average number of common shares outstanding - diluted		49,591,889			55,447,480
Cash dividends per common share	$	0.18		$	0.155
See accompanying Notes to Condensed Consolidated Financial Statements.

HNI Corporation and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

	Nine Months Ended
		Sep. 30, 2006			Oct. 1, 2005
	(In thousands, except share and per share data)
Net sales	$	2,007,680		$	1,788,709
Cost of sales		1,306,134			1,142,338
Gross profit		701,546			646,371
Selling and administrative expenses		544,843			487,348
Restructuring and impairment charges		1,920			1,071
Operating income		154,783			157,952
Interest income		810			1,175
Interest expense		9,454			1,520
Earnings before income taxes and minority interest		146,139			157,607
Income taxes		53,341			55,950
Earnings before minority interest		92,798			101,657
Minority interest in earnings of subsidiary		(86	)		(11	)
Net income	$	92,884		$	101,668
Net income per common share - basic	$	1.83		$	1.84
Average number of common shares outstanding - basic		50,722,997			55,106,182
Net income per common share - diluted	$	1.82		$	1.83
Average number of common shares outstanding - diluted		51,051,237			55,484,189
Cash dividends per common share	$	0.54		$	0.465

See accompanying Notes to Condensed Consolidated Financial Statements.

HNI Corporation and SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
	Nine Months Ended
		Sep. 30, 2006			Oct. 1, 2005
	(In thousands)
Net Cash Flows From (To) Operating Activities:
Net income	$	92,884		$	101,668
Noncash items included in net income:
Depreciation and amortization		52,044			49,565
Other postretirement and post employment benefits		1,582			1,502
Excess tax benefits from stock compensation		(742	)		-
Deferred income taxes		(4,725	)		(10,485	)
(Gain)/Loss on sale, retirement and impairment of property, plant and equipment		(2,878	)		924
Stock issued to retirement plan		7,948			6,199
Other - net		4,660			1,213
Net increase (decrease) in non-cash operating assets and liabilities		(76,530	)		(49,610	)
Increase (decrease) in other liabilities		(3,094	)		1,618
Net cash flows from (to) operating activities		71,149			102,594
Net Cash Flows From (To) Investing Activities:
Capital expenditures		(47,443	)		(25,968	)
Proceeds from sale of property, plant and equip.		5,266			286
Capitalized software		(903	)		(2,264	)
Acquisition spending, net of cash acquired		(78,292	)		(25,678	)
Short-term investments - net		926			2,400
Purchase of long-term investments		(9,600	)		(31,495	)
Sales or maturities of long-term investments		6,100			30,205
Other - net		-			(68	)
Net cash flows from (to) investing activities		(123,946	)		(52,582	)
Net Cash Flows From (To) Financing Activities:
Proceeds from sales of HNI Corporation common stock		4,291			13,900
Purchase of HNI Corporation common stock		(170,309	)		(54,800	)
Excess tax benefits from stock compensation		742			-
Proceeds from long-term debt		497,531			59,000
Payments of note and long-term debt and other financing		(293,605	)		(35,601	)
Dividends paid		(27,409	)		(25,661	)
Net cash flows from (to) financing activities		11,241			(43,162	)
Net increase (decrease) in cash and cash equivalents		(41,556	)		6,850
Cash and cash equivalents at beginning of period		75,707			29,676
Cash and cash equivalents at end of period	$	34,151		$	36,526
See accompanying Notes to Condensed Consolidated Financial Statements.

HNI Corporation and SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

September 30, 2006

Note A.  Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The December 31, 2005 consolidated balance sheet included in this Form 10-Q was derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principles. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.  Operating results for the nine-month period ended September 30, 2006 are not necessarily indicative of the results that may be expected for the year ending December 30, 2006. For further information, refer to the consolidated financial statements and footnotes included in HNI Corporation's (the "Corporation") annual report on Form 10-K for the year ended December 31, 2005.

Note B. Stock-Based Compensation

Under the Corporation's 1995 Stock-Based Compensation Plan (the "Plan"), as amended and restated effective November 10, 2000, the Corporation may award options to purchase shares of the Corporation's common stock and grant other stock awards to executives, managers, and key personnel.  As of September 30, 2006 there are approximately 2.5 million shares available for future issuance under the Plan.  The Plan is administered by the Human Resources and Compensation Committee of the Board of Directors.  Restricted stock awarded under the Plan is expensed ratably over the vesting period of the awards.  Stock options awarded to employees under the Plan must be at exercise prices equal to or exceeding the fair market value of the Corporation's common stock on the date of grant. Stock options are generally subject to four-year cliff vesting and must be exercised within 10 years from the date of grant.

The Corporation also has a shareholder approved Members' Stock Purchase Plan (the "MSP Plan").  The price of the stock purchased under the MSP Plan is 85% of the closing price on the applicable purchase date.  During the nine months ended September 30, 2006, 86,503 shares of the Corporation's common stock were issued under the MSP Plan at an average price of $40.45.

The Corporation adopted the provisions of Statement of Financial Accounting Standards No. 123(R), "Share-Based Payment" ("SFAS 123(R)"), beginning January 1, 2006, using the modified prospective transition method.  This statement requires the Corporation to measure the cost of employee services in exchange for an award of equity instruments based on the grant-date fair value of the award and to recognize cost over the requisite service period.  Under the modified prospective transition method, financial statements for periods prior to the date of adoption are not adjusted for the change in accounting.

Prior to January 1, 2006, the Corporation used the intrinsic value method to account for stock-based employee compensation under Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," and therefore did not recognize compensation expense in association with options granted at or above the market price of common stock at the date of grant.

As a result of adopting the new standard, earnings before income taxes for the three months ended September 30, 2006 decreased by $0.8 million, and net earnings decreased by $0.5 million, or $.01 per basic share and $.01 per diluted share.  These results reflect stock compensation expense of $0.8 million and tax benefits of $0.3 million for the period.  Earnings before income taxes for the nine months ended September 30, 2006 decreased by $2.4 million, and net earnings decreased by $1.5 million, or $.03 per basic share and $.03 per diluted share. These results reflect stock compensation expense of $2.4 million and tax benefits of $0.9 million for the period.

Adoption of the new standard also affected the presentation of cash flows. The change is related to tax benefits associated with tax deductions that exceed the amount of compensation expense recognized in the financial statements.  For the nine months ended September 30, 2006, cash flow from operating activities was reduced by $0.7 million and cash flow from financing activities was increased by $0.7 million as a result of the new standard.

Concurrent with the adoption of the new statement, the Corporation began to use the non-substantive vesting period approach for attributing stock compensation to individual periods.  The nominal vesting period approach was used in determining the stock compensation expense for the Corporation's pro forma net earnings disclosure for the three and nine months ended October 1, 2005, as presented in the table below.  The change in the attribution method will not affect the ultimate amount of stock compensation expense recognized, but it has accelerated the recognition of such expense for non-substantive vesting conditions, such as retirement eligibility provisions.  Under both approaches, the Corporation elected to recognize stock compensation on a straight-line basis.

The following table presents a reconciliation of reported net earnings and per share information to pro forma net earnings and per share information that would have been reported if the fair value method had been used to account for stock-based employee compensation last year:

		Three Months Ended			Nine Months  Ended
(in thousands)		Oct. 1, 2005			Oct. 1, 2005
Net income, as reported	$	40,561		$	101,668
Deduct:  Total stock-based employee compensation expense determined under fair value based method for all      awards, net of related tax effects		(464	)		(1,354	)
Pro forma net income	$	40,097		$	100,314
Earnings per share:
Basic - as reported	$	0.74		$	1.84
Basic - pro forma	$	0.73		$	1.82
Diluted - as reported	$	0.73		$	1.83
Diluted - pro forma	$	0.72		$	1.81

The stock compensation expense for the nine months ended September 30, 2006 and the stock compensation expense used in the preceding disclosure of pro forma net earnings for the nine months ended October 1, 2005 was estimated on the date of grant using the Black-Scholes option-pricing model that used the following assumptions by grant year:

	Nine Months Ended	Year Ended
	Sep. 30, 2006	Dec. 31, 2005
Expected term	7 years	7 years
Expected volatility:
Range used	29.75% - 31.23%	31.77% - 33.49%
Weighted-average	31.21%	33.46%
Expected dividend yield:
Range used	1.24% - 1.43%	1.17% - 1.45%
Weighted-average	1.24%	1.45%
Risk-free interest rate:
Range used	4.62% - 5.08%	4.21% - 4.57%

Expected volatilities are based on historical volatility due to the fact that the Corporation did not feel that future volatility over the expected term of the options is likely to differ from the past.  The Corporation used a simple-average calculation method based on monthly frequency points for the prior seven years.  The Corporation used the current dividend yield as there are no plans to substantially increase or decrease its dividends. The Corporation elected to use the simplified method as allowed by Staff Accounting Bulletin No. 107 "Share Based Payment" ("SAB No. 107") to determine the expected term since the awards qualified as "plain vanilla" options as defined in SAB No. 107.  The risk-free interest rate was selected based on yields from U.S. Treasury zero-coupon issues with a remaining term equal to the expected term of the options being valued.

Changes in outstanding stock options for the nine months ended September 30, 2006 were as follows:

	Number			Weighted-Average Exercise Price
Balance at December 31, 2005	1,128,650		$	31.84
Options granted	135,946			58.06
Options exercised	(47,000	)		23.40
Options forfeited	(22,480	)		39.91
Balance at September 30, 2006	1,195,116		$	35.67

A summary of the Corporation's nonvested shares as of September 30, 2006 and changes during the nine-month period are presented below:

Nonvested Shares	Shares			Weighted-Average Grant-Date Fair Value
Nonvested at December 31, 2005	695,400		$	14.07
Granted	135,946			21.39
Vested	(142,900	)		11.91
Forfeited	(22,480	)		15.90
Nonvested at September 30, 2006	665,966		$	15.97

At September 30, 2006, there was $4.8 million of unrecognized compensation cost related to nonvested awards, which the Corporation expects to recognize over a weighted-average period of 1.4 years.  Information about stock options that are vested or expected to vest and that are exercisable at September 30, 2006, follows:

Options	Number	Weighted-Average Exercise Price	Weighted-Average Remaining Life in Years	Aggregate Intrinsic Value ($000s)
Vested or expected to vest	1,159,796	$34.68	5.5	$8,003
Exercisable	529,150	$28.24	2.9	$7,059

The weighted-average grant-date fair value of options granted was $21.39 for the nine months ended September 30, 2006.  Other information for the three and nine-month periods follows:

	Three months ended				Nine months ended
(In thousands)		Sep. 30, 2006		Oct. 1, 2005		Sep. 30, 2006		Oct. 1, 2005
Total fair value of shares vested	$	-	$	-	$	1,702	$	875
Total intrinsic value of options exercised		145		776		1,446		8,447
Cash received from exercise of stock options		207		801		1,100		8,334
Tax benefit realized from exercise of stock options		53		276		528		2,999

Note C. Inventories

The Corporation values its inventory at the lower of cost or market with approximately 87% valued by the last-in, first-out (LIFO) method.

(In thousands)		Sep. 30, 2006 (Unaudited)			Dec. 31, 2005
Finished products	$	78,220		$	61,027
Materials and work in process		63,490			46,398
LIFO allowance		(17,810	)		(16,315	)
	$	123,900		$	91,110

Note D. Comprehensive Income and Shareholders' Equity

The Corporation's comprehensive income for the first nine months of 2006 consisted of additional minimum pension liability and foreign currency adjustments.

For the nine months ended September 30, 2006, the Corporation repurchased 3,574,803 shares of its common stock at a cost of approximately $170.3 million.  As of September 30, 2006, $173.2 million of the Board of Director's current repurchase authorization remained unspent.

Note E. Earnings Per Share

The following table reconciles the numerators and denominators used in the calculation of basic and diluted earnings per share (EPS):

	Three Months Ended				Nine Months Ended
		Sep. 30, 2006		Oct. 1, 2005		Sep. 30, 2006		Oct. 1, 2005
Numerators: Numerator for both      basic and diluted EPS      net income (in thousands)	$	35,762	$	40,561	$	92,884	$	101,668
Denominators: Denominator for basic EPS      weighted-average common shares outstanding		49,323,698		55,011,758		50,722,997		55,106,182
Potentially dilutive shares from stock option plans		268,191		435,722		328,240		378,007
Denominator for diluted EPS		49,591,889		55,447,480		51,051,237		55,484,189
Earnings per share - basic	$	0.73	$	0.74	$	1.83	$	1.84
Earnings per share - diluted	$	0.72	$	0.73	$	1.82	$	1.83

Certain exercisable and non-exercisable stock options were not included in the computation of diluted EPS at September 30, 2006 because their inclusion would have been anti-dilutive. There were no stock options outstanding, which met this criterion for the three and nine months ended October 1, 2005.  The number of stock options outstanding, which met this criterion for the three and nine months ended September 30, 2006, was 300,466 and 290,366, respectively.

Note F. Restructuring Reserve and Plant Shutdowns

As a result of the Corporation's business simplification and cost reduction strategies, the Corporation began the shutdown of two office furniture manufacturing facilities in the third quarter of 2005.  The shutdowns are now complete.  The following is a summary of changes in restructuring accruals during the third quarter of 2006:

(In thousands)		Severance		Facility Exit Costs & Other			Total
Balance as of July 1, 2006	$	-	$	93		$	93
Restructuring charges		-		(27	)		(27	)
Cash payments		-		(66	)		(66	)
Balance as of September 30, 2006	$	-	$	-		$	-

Note G. Business Combinations

The Corporation completed the acquisition of Lamex, a privately held Chinese manufacturer and marketer of office furniture, as well as a small office furniture services company and a small manufacturer of fireplace facings during the first quarter ending April 1, 2006. The combined purchase price for these acquisitions less cash acquired totaled approximately $77.9 million.  The Corporation did increase its borrowings under its revolving credit facility to fund the acquisitions.  The Corporation is in the process of finalizing the allocation of the

purchase price, primarily with respect to deferred taxes and pension plans.  There are approximately $51.7 million of intangibles associated with these acquisitions.  Of these acquired intangible assets, $14 million was assigned to a trade name that is not subject to amortization.  The remaining $37.7 million have estimated useful lives ranging from two to fifteen years. There is approximately $10.2 million of goodwill associated with these acquisitions, of which $7.4 million was assigned to the furniture segment and $2.8 million was assigned to the hearth segment.  Approximately $7.2 million of the goodwill is not deductible for income tax purposes.

Note H. Goodwill and Other Intangible Assets

The table below summarizes amortizable definite-lived intangible assets as of September 30, 2006 and December 31, 2005, which are reflected in the "Other Assets" line item in the Corporation's condensed consolidated balance sheets:

(In thousands)		Sep. 30, 2006			Dec. 31, 2005
Patents	$	18,780		$	18,480
Customer relationships and other		106,171			67,211
Less: accumulated amortization		(37,182	)		(28,758	)
	$	87,769		$	56,933

Aggregate amortization expense for the three and nine months ended September 30, 2006 and October 1, 2005 was $2.9 million and $8.1 million, and $1.8 million and $5.4 million, respectively.  Amortization expense is estimated to range between $5.9 to $9.2 million per year over the next five years.

The Corporation also owns trademarks and trade names with a net carrying amount of $44.2 million.  The trademarks are deemed to have indefinite useful lives because they are expected to generate cash flows indefinitely.

The changes in the carrying amount of goodwill since December 31, 2005, are as follows by reporting segment:

(In thousands)		Office Furniture		Hearth Products		Total
Balance as of December 31, 2005	$	77,659	$	164,585	$	242,244
Goodwill increase during period		8,858		2,790		11,648
Balance as of September 30, 2006	$	86,517	$	167,375	$	253,892

In accordance with SFAS No. 142 "Goodwill and Other Intangible Assets," the Corporation evaluates its goodwill for impairment on an annual basis based on values at the end of the third quarter, or whenever indicators of impairment exist.  The Corporation has previously evaluated its goodwill for impairment and has determined that the fair value of the reporting unit exceeds their carrying value so no impairment of goodwill was recognized.  The increase in goodwill relates to the acquisitions completed during the first quarter and final purchase price adjustments related to prior acquisitions.  See Note G for further information.

Note I. Long-Term Debt

On April 6, 2006, the Corporation refinanced $150 million of borrowings outstanding under its revolving credit facility with 5.54 percent ten-year unsecured Senior Notes due in 2016 issued through the private placement debt market.  Interest payments are due biannually on April 1 and October 1 of each year and the principal is due in a lump sum in 2016.  The Corporation maintained the revolving credit facility with a maximum borrowing of $300 million.  Amounts borrowed under the revolving credit facility may be borrowed, repaid and reborrowed from time to time until January 28, 2011.  As of September 30, 2006, $184 million of the revolving credit facility was outstanding with $37 million classified as short-term as the Corporation expects to repay that portion of the borrowings within a year.

Certain of the Corporation's borrowing arrangements include covenants which limit the assumption of additional debt and lease obligations.  The Corporation has been and currently is in compliance with the covenants related to these debt agreements.

Note J. Product Warranties

The Corporation issues certain warranty policies on its furniture and hearth products that provide for repair or replacement of any covered product or component that fails during normal use because of a defect in design or workmanship.

A warranty reserve is determined by recording a specific reserve for known warranty issues and an additional reserve for unknown claims that are expected to be incurred based on historical claims experience.  Actual claims incurred could differ from the original estimates, requiring adjustments to the reserve.  Activity associated with warranty obligations was as follows during the period:

	Nine Months Ended
(In thousands)	Sep. 30, 2006		Oct. 1, 2005
Balance at beginning of period Accrual assumed from acquisition Accruals for warranties issued during the period Accrual related to pre-existing warranties Settlements made during the period	$10,157 125 8,642 366 (9,242	)	$10,794 - 6,948 1,405 (9,003	)
Balance at end of period	$10,048		$10,144

Note K. Postretirement Health Care

In accordance with the interim disclosure requirements of revised SFAS No. 132, "Employers' Disclosures about Pensions and other Postretirement Benefits," the following table sets forth the components of net periodic benefit cost included in the Corporation's income statement for:

	Nine Months Ended
(In thousands)		Sep. 30, 2006			Oct. 1, 2005
Service cost	$	245		$	228
Interest cost		789			792
Expected return on plan assets		(131	)		(153	)
Amortization of transition obligation		436			435
Amortization of prior service cost		173			173
Amortization of (gain)/loss		70			27
Net periodic benefit cost	$	1,582		$	1,502

In May 2004, The Financial Accounting Standards Board ("FASB") issued FASB Staff Position No. 106-2.  "Accounting and Disclosure Requirements Related to the Medicare Prescription Drug Improvement and Modernization Act of 2003" (the "Act").  The Corporation has determined that the benefits provided by the plan are not actuarially equivalent to the Medicare Part D benefit under the Act based on the percentage of the cost of the plan that the Corporation provides.

Note L. Commitments and Contingencies

During the second quarter ended June 28, 2003, the Corporation entered into a one-year financial agreement for the benefit of one of its distributor chain partners, which was subsequently extended through August 31, 2005.  During the third quarter of 2005, the Corporation paid $1.2 million associated with this guarantee.  As of September 30, 2006, the Corporation has recovered substantially all of this amount through liquidation of secured collateral and settlements.

The Corporation utilizes letters of credit in the amount of $25 million to back certain financing instruments, insurance policies and payment obligations.  The letters of credit reflect fair value as a condition of their underlying purpose and are subject to fees competitively determined.

The Corporation replaced a previously existing transportation service contract during the first quarter of 2006 with a new six-year contract.  The contract provides for minimum payments of approximately $10 million a year of which $3.3 million are related to the equipment portion of the contract which has been determined to be an operating lease.

The Corporation has contingent liabilities, which have arisen in the course of its business, including pending litigation, preferential payment claims in customer bankruptcies, environmental remediation, taxes, and other claims.

Note M. New Accounting Standards

In December 2004, the FASB issued SFAS No. 123(R) which replaces original SFAS No. 123 and supersedes Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25"). SFAS No. 123(R) requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values, beginning with the first annual fiscal period after June 15, 2005.  Under the original SFAS No. 123, this accounting treatment was optional with pro forma disclosures required.  The Corporation adopted SFAS No. 123(R) in the first quarter of fiscal 2006, beginning January 1, 2006.  See Note B, Stock Based Compensation for the impact of the adoption of SFAS No. 123(R) on net income and net income per share.

In July 2006, the FASB issued Interpretation No. 48, "Accounting for Uncertainty in Income Taxes" ("FIN 48").  FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements in accordance with SFAS No. 109, "Accounting for Income Taxes."  FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.  FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition.  This Interpretation is effective for fiscal years beginning after December 15, 2006.  The Corporation is currently reviewing the impact, if any, that FIN 48 will have on its consolidated financial statements.

In September 2006, the FASB issued SFAS No. 157 "Fair Value Measurements" ("SFAS 157") which provides enhanced guidance for using fair value to measure assets and liabilities. The standard also expands the amount of disclosure regarding the extent to which companies measure assets and liabilities at fair value, the information used to measure fair value, and the effect of fair value measurements on earnings.  The standard applies whenever other standards require (or permit) assets or liabilities to be measured at fair value but does not expand the use of fair value in any new circumstances.  This statement is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years.  The Corporation is currently reviewing the impact, if any, that SFAS 157 will have on its consolidated financial statements.

In September 2006, the FASB issued SFAS No. 158 "Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106, and 132(R) ("SFAS 158")."  This statement requires an employer that is a business entity to recognize in its statement of financial position the over funded or under funded status of a defined benefit postretirement plan measured as the difference between the fair value of plan assets and the benefit obligation.  The recognition of the net liability or asset will require an offsetting adjustment to accumulated other comprehensive income in shareholders' equity.  SFAS 158 does not change how pensions and other postretirement benefits are accounted for and reported in the income statement.  This statement is effective for fiscal years ending after December 15, 2006.  The Corporation will be required to apply the new standard for its 2006 year-end financial statements and recognize on the 2006 balance sheet the funded status of pension and other postretirement benefit plans.  The Corporation estimates that adoption of this statement will increase the Corporation's recorded liabilities by approximately $8 million with no impact to the income statement.

Note N. Business Segment Information

Management views the Corporation as operating in two business segments:  office furniture and hearth products with the former being the principal business segment.

The office furniture segment manufactures and markets a broad line of metal and wood commercial and home office furniture which includes file cabinets, desks, credenzas, chairs, storage cabinets, tables, bookcases, freestanding office partitions and panel systems, and other related products.  The hearth product segment manufactures and markets a broad line of manufactured gas-, pellet- and wood-burning fireplaces and stoves, fireplace inserts, and chimney systems principally for the home.

For purposes of segment reporting, intercompany sales transfers between segments are not material and operating profit is income before income taxes exclusive of certain unallocated corporate expenses. These unallocated corporate expenses include the net cost of the Corporation's corporate operations, interest income, and interest expense. The increase in unallocated corporate expenses compared to prior year is due to increased interest expense and stock-based compensation expense.  Management views interest income and expense as corporate financing costs rather than a business segment cost.  In addition, management applies one effective tax rate to its consolidated income before income taxes so income taxes are not reported or viewed internally on a segment basis.

The Corporation's primary market and capital investments are concentrated in the United States.

Reportable segment data reconciled to the consolidated financial statements for the three and nine month periods ended September 30, 2006, and October 1, 2005, is as follows:

	Three Months Ended						Nine Months Ended
(in thousands)		Sep. 30, 2006			Oct. 1, 2005			Sep. 30, 2006			Oct. 1, 2005
Net Sales:
Office Furniture	$	539,460		$	477,295		$	1,544,484		$	1,360,088
Hearth Products		148,272			154,985			463,196			428,621
	$	687,732		$	632,280		$	2,007,680		$	1,788,709
Operating Profit:
Office furniture (1)
Operations before restructuring charges	$	50,169		$	49,977		$	130,848		$	135,186
Restructuring and impairment charges		27			(1,071	)		(1,920	)		(1,071	)
Office Furniture - net		50,196			48,906			128,928			134,115
Hearth products		18,524			22,371			48,463			49,714
Total operating profit		68,720			71,277			177,391			183,829
Unallocated corporate expense		(12,402	)		(8,393	)		(31,119	)		(26,205	)
Income before income taxes	$	56,318		$	62,884		$	146,272		$	157,624
Depreciation & Amortization Expense:
Office furniture	$	12,149		$	10,814		$	36,276		$	32,742
Hearth products		3,992			3,799			12,689			11,852
General corporate		1,045			1,567			3,079			4,971
	$	17,186		$	16,180		$	52,044		$	49,565
Capital Expenditures (including capitalized software):
Office furniture	$	11,478		$	6,539		$	33,337		$	18,481
Hearth products		3,047			2,101			8,491			6,700
General corporate		648			2,097			6,518			3,051
	$	15,173		$	10,737		$	48,346		$	28,232
								As of Sept. 30, 2006			As of Oct. 1, 2005
Identifiable Assets:
Office furniture							$	746,007		$	631,672
Hearth products								396,733			370,620
General corporate								114,872			112,305
							$	1,257,612		$	1,114,597

(1) Includes minority interest.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Overview

The Corporation has two reportable core operating segments: office furniture and hearth products.  The Corporation is the second largest office furniture manufacturer in the world and the nation's leading manufacturer and marketer of gas- and wood-burning fireplaces.  The Corporation utilizes its split and focus, decentralized business model to deliver value to its customers with its various brands and selling models.  The Corporation is focused on growing its existing businesses while seeking out and developing new opportunities for growth.

Net sales for the third quarter of 2006 increased 8.8 percent over third quarter 2005.  The Corporation continued to experience solid growth in its office furniture business including acquisitions offset by a decline in its hearth business.  Gross margins for the quarter decreased from prior year levels due to broad based increases in material costs.  Selling and administrative expenses increased driven by higher transportation costs and the effect of acquisitions offset by a gain on the sale of a vacated facility and cost reduction initiatives.  As a result of the higher material and transportation costs and interest expense, net income decreased 11.8 percent for the quarter.

Critical Accounting Policies

The preparation of the financial statements requires the Corporation to make estimates and judgments that affect the reported amount of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. The Corporation continually evaluates its accounting policies and estimates.  The Corporation bases its estimates on historical experience and on a variety of other assumptions believed to be reasonable in order to make judgments about the carrying value of assets and liabilities.  Actual results may differ from these estimates under different assumptions or conditions.  A summary of the more significant accounting policies that require the use of estimates and judgments in preparing the financial statements is provided in the Corporation's Annual Report on Form 10-K for the year ended December 31, 2005.  As of January 1, 2006, the Corporation adopted FAS123(R) "Share-Based Payment" which requires the Corporation to measure the cost of employee services in exchange for an award of equity instruments based on the grant-date fair value of the award and to recognize cost of the requisite service period.  During the first nine months of 2006, there were no material changes in the accounting policies and assumptions previously disclosed, except for the Corporation's adoption of FAS123(R).

Results of Operations

The following table presents certain key highlights from the results of operations for the periods indicated:

	Three Months Ended								Nine Months Ended
(In thousands)		Sep. 30, 2006			Oct.1, 2005		Percent Change			Sep. 30, 2006			Oct. 1, 2005		Percent Change
Net sales	$	687,732		$	632,280		8.8		$	2,007,680		$	1,788,709		12.2
Cost of sales		450,309			396,042		13.7			1,306,134			1,142,338		14.3
Gross profit		237,423			236,238		0.5			701,546			646,371		8.5
Selling & administrative expenses		177,059			171,802		3.1			544,843			487,348		11.8
Restructuring & impairment charges		(27	)		1,071		NM			1,920			1,071		79.3
Operating income		60,391			63,365		(4.7	)		154.783			157,952		(2.0	)
Interest income(expense) net		(4,111	)		(498	)	(725.5	)		(8,644	)		(345	)	NM
Earnings before income taxes and minority interest		56,280			62,867		(10.5	)		146,139			157,607		(7.3	)
Income taxes		20,542			22,317		(8.0	)		53,341			55,950		(4.7	)
Minority interest in earnings of a subsidiary		(24	)		(11	)	NM			(86	)		(11	)	NM
Net income	$	35,762		$	40,561		(11.8	)	$	92,884		$	101,668		(8.6	)

Results of Operations

The Corporation experienced solid sales growth in the quarter, up 8.8 percent or $55.5 million compared to the same quarter last year.  Acquisitions completed during the first quarter, along with acquisitions completed during the fourth quarter of 2005, accounted for $33 million, or 5.2 percentage points, of the increase in sales.

Gross margins for the third quarter decreased to 34.5 percent compared to 37.4 percent for the same quarter last year.  The decrease was primarily due to broad based increases in material costs.

Total selling and administrative expenses for the quarter increased by $4.2 million compared to the same quarter last year.  However, total selling and administrative expenses decreased as a percent of sales to 25.7 percent compared to 27.3 percent in third quarter 2005.  Included in third quarter 2006 were increased freight and distribution costs of $9 million due to volume, rate increases, and fuel surcharges; additional selling and administrative costs of $11 million associated with new acquisitions; and $0.8 million of stock-based compensation expense due to the adoption of SFAS 123(R).  These increases were offset by a $3.4 million gain on the sale of a facility vacated due to the consolidation of production, which began in third quarter 2005.  The Corporation continued to implement cost reduction initiatives to adjust to a higher material cost environment and a declining housing market.  Third quarter 2005 included $1.1 million of restructuring costs.

Net income decreased 11.8 percent and net income per diluted share decreased 1.4 percent compared to the same quarter in 2005.  Interest expense increased $3.8 million during the quarter on moderate debt levels, consistent with the Corporation's capital structure strategy.  Net income per share was positively impacted $0.08 per share as a result of the Corporation's share repurchase program.

The Corporation increased its annualized effective tax rate at the beginning of the year to 36.5 percent compared to 35.5 percent in 2005 due primarily to increased state taxes and the expiration of the research investment tax credit.

For the first nine months of 2006 consolidated net sales increased $219.0 million, or 12.2 percent, to $2.0 billion compared to $1.8 billion in 2005. Acquisitions accounted for approximately $89 million or 5.0 percentage points of the increase. Gross margins year-to-date decreased to 34.9 percent compared to 36.1 percent last year due to increased material costs.  Net income was $92.9 million compared to $101.7 million in 2005, a decrease of 8.6 percent.  Net income per share was $1.82 per diluted share compared to $1.83 per diluted share in 2005.  Net income per share was positively impacted $0.15 per share due to the Corporation's share repurchase program that reduced average shares outstanding by 4.4 million shares, or 8.0 percent, compared to 2005.

Office Furniture

Third quarter sales for the office furniture segment increased 13.0 percent or $62.2 million to $539.5 million from $477.3 million for the same quarter last year.  Sales from the Corporation's acquisitions since third quarter 2005 accounted for $27 million, or 5.7 percentage points, of the increase.  Operating profit prior to unallocated corporate expenses as a percent of sales decreased to 9.3 percent versus 10.2 percent in the same quarter last year.  Operating profit was negatively impacted by higher material, transportation and other input costs.  In addition, acquisitions negatively impacted profitability during the quarter as anticipated.  Operating profit was positively impacted by a $3.4 million gain on the sale of a vacated plant facility.

Net sales for the first nine months of 2006 increased $184.4 million, or 13.6 percent, to $1.5 billion compared to $1.4 billion in 2005.  Acquisitions accounted for $74 million, or 5.4 percentage points, of the increase in sales.  Operating profit as a percentage of sales decreased to 8.3 percent compared to 9.9 percent in the prior year.

Hearth Products

Third quarter net sales for the hearth products segment decreased 4.3 percent or $6.7 million to $148.3 million from $155.0 million for the same quarter last year.  The Corporation's acquisitions completed since the third quarter of 2005 contributed approximately $6 million of new sales.  The Corporation experienced a rapid and pronounced decline in the new construction related business in conjunction with a dramatic decline in housing starts.  The decline was partially offset by continued strong demand in its remodel/retrofit business. Operating profit prior to unallocated corporate expenses decreased to $18.5 million from $22.4 million in the same quarter last year.  Operating profit as a percent of net sales decreased to 12.5 percent compared to 14.4 percent in 2005 due to lower volume, increased freight and distribution costs, and a higher mix of lower margin remodel/retrofit business.

Net sales for the first nine months of 2006 increased 8.1 percent to $463.2 million compared to $428.6 million in 2005.  Acquisitions accounted for $15 million, or 3.6 percentage points, of the increase. Operating profit as a percentage of sales decreased to 10.5 percent compared to 11.6 percent in the prior year.

Liquidity and Capital Resources

As of September 30, 2006, cash and short-term investments were $42.9 million compared to $84.7 million at year-end 2005.  Cash flow from operations for the first nine months was $71.1 million compared to $102.6 million in 2005.  The decline in operating cash flow was primarily due to lower profits, increased inventory levels to achieve best total cost and seasonal build in the hearth stove business, and lower accruals for incentive costs and compensation.  Trade receivables increased from year-end due to seasonality particularly in the hearth segment, increased volume and acquisitions completed during the year. Inventory increased from year-end due to seasonality particularly in the hearth segment, increased volume, acquisitions completed during the year, and additional imported inventory with longer lead times.  Cash flow and working capital management continue to be a major focus of management to ensure the Corporation is poised for growth.  The Corporation has sufficient liquidity to manage its operations and as of September 30, 2006 maintained additional borrowing capacity of $91 million, net of amounts designated for letters of credit, through a $300 million revolving bank credit agreement.

Capital expenditures, including capitalized software, for the first nine months of 2006 were $48.3 million compared to $28.2 million in 2005 and were primarily for tooling and equipment for new products and efficiency initiatives.  For the full year 2006, capital expenditures are expected to be approximately 35 to 45 percent higher than 2005 due to new product introductions, process improvement, and increased investment in distribution.

The Corporation completed the acquisition of Lamex, a privately held Chinese manufacturer and marketer of office furniture, as well as a small office furniture services company and a small manufacturer of fireplace facings, for a total of $78.3 million in cash.  During the first nine months of 2006, net borrowings under the Corporation's revolving credit facility increased $194 million to fund acquisitions, share repurchases, and seasonal cash requirements.  In early April, the Corporation refinanced $150 million of borrowings outstanding under its revolving credit facility, with 5.54 percent ten-year Senior Notes due in 2016 issued through the private placement debt market.  As of September 30, 2006, $184 million of the revolving credit facility was outstanding with $37 million classified as short-term as the Corporation expects to repay that portion of the borrowings within a year.

The Board of Directors declared a regular quarterly cash dividend of $0.18 per share on its common stock on August 8, 2006, to shareholders of record at the close of business on August 18, 2006.  It was paid on September 1, 2006.  This was the 206th consecutive quarterly dividend paid by the Corporation.

For the nine months ended September 30, 2006, the Corporation repurchased 3,574,803 shares of its common stock at a cost of approximately $170.3 million, or an average price of $47.64. The Board of Directors authorized an additional $200 million on August 8, 2006 for repurchases of the Corporation's common stock.  As of September 30, 2006, $173.2 million of the Board of Directors' current repurchase authorization remained unspent.

Off-Balance Sheet Arrangements

The Corporation does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material.

Contractual Obligations

Contractual obligations associated with ongoing business and financing activities will result in cash payments in future periods.  A table summarizing the amounts and estimated timing of these future cash payments was provided in the Corporation's Annual Report on Form 10-K for the year ended December 31, 2005.  During the first nine months of fiscal 2006, with the exception of Senior Notes issued through the private placement debt market (as described in Note I), and a new transportation service contract (as described in Note L), there were no material changes outside the ordinary course of business in the Corporation's contractual obligations or the estimated timing of the future cash payments.

Commitments and Contingencies

The Corporation is involved in various kinds of disputes and legal proceedings that have arisen in the course of its business, including pending litigation, preferential payment claims in customer bankruptcies, environmental remediation, taxes and other claims.  It is the Corporation's opinion, after consultation with legal counsel, that additional liabilities, if any, resulting from these matters are not expected to have a material adverse effect on the Corporation's financial condition, although such matters could have a material effect on the Corporation's quarterly or annual operating results and cash flows when resolved in a future period.

Looking Ahead

Global Insight, the Business and Institutional Furniture Manufacturer's Association's forecasting consultant, estimates U.S. office furniture shipments to increase 9 percent in 2006 compared to 13 percent in 2005.  The outlook for the office furniture business continues to remain positive as core fundamentals are solid.  Management believes that its office furniture businesses are well positioned in their markets, are competing well and the strategic growth initiatives are on track for solid performance.  The Corporation expects to close the material cost gap and experience positive profit momentum as it begins to realize the benefit of price increases.

Housing starts, a key indicator for the hearth industry, have declined dramatically and market conditions remain uncertain. The Corporation's new construction business in its hearth segment will remain under stress in the mid-term.  The Corporation maintains a market leadership position and is aggressively resizing its cost structure to adjust to lower demand levels.

The Corporation continues to focus on creating long-term shareholder value by growing its business through investment in building brands, product solutions, and selling models, enhancing its strong member-owner culture and remaining focused on its long-standing continuous improvement programs to build best total cost and a lean enterprise.

Forward-Looking Statements

Statements in this report that are not strictly historical, including statements as to plans, objectives, and future financial performance, are "forward-looking" statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  Words, such as "anticipate," "believe," "could," "confident," "estimate," "expect,"  "forecast,""intend,""likely,""may,""plan,""possible," "potential,""predict,""project,""should," and variations of such words and similar expressions identify forward-looking statements.  Forward-looking statements involve known and unknown risks, which may cause the Corporation's actual results in the future to differ materially from expected results.  These risks include, without limitation:  the Corporation's ability to realize financial benefits from its (a) price increases, (b) cost containment and business simplification initiatives, (c) investments in strategic acquisitions, new products and brand building, (d) investments in distribution and rapid continuous improvement, (e) repurchases of common stock, and (f) ability to maintain its effective tax rate; uncertainty related to the availability of cash to fund future growth; lower than expected demand for the Corporation's products due to uncertain political and economic conditions; lower industry growth than expected; major disruptions at our key facilities or in the supply of any key raw materials, components or finished goods; uncertainty related to disruptions of business by terrorism, military action, acts of God or other Force Majeure events; competitive pricing pressure from foreign and domestic competitors; higher than expected costs and lower than expected supplies of materials (including steel and petroleum based materials); higher than expected costs for energy and fuel; changes in the mix of products sold and of customers purchasing; restrictions imposed by the terms of the Corporation's revolving credit facility and note purchase agreement; currency fluctuations and other factors described in the Corporation's annual and quarterly reports filed with the Securities and Exchange Commission on Forms 10-K and 10-Q.  The Corporation undertakes no obligation to update, amend, or clarify forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by applicable law.

Item 3. Quantitative and Qualitative Disclosure about Market Risk

As of September 30, 2006, there were no material changes to the financial market risks that affect the quantitative and qualitative disclosures presented in item 7A of the Corporation's Annual Report on Form 10-K for the year ended December 31, 2005.

Item 4. Controls and Procedures

Disclosure controls and procedures are designed to ensure that information required to be disclosed by the Corporation in the reports that it files or submits under the Securities Exchange Act of 1934 as amended, is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms.  Disclosure controls and procedures are also designed to ensure that information is accumulated and communicated to management, including the chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.

On March 1, 2006, the Corporation completed the acquisition of Lamex as discussed in Note G to the Corporation's condensed consolidated financial statements.  As of December 30, 2006, the Corporation's management will exclude Lamex from its assessment of the Corporation's internal control over financial reporting as it was acquired during the fiscal year.  The Corporation is in the process of assessing Lamex's internal control over financial reporting and will be implementing changes to better align its reporting and controls with those of the Corporation.  Lamex's results of operations and financial position for the fiscal quarter ended September 30, 2006, were insignificant to the Corporation's consolidated financial statements.  There have not been any changes in the Corporation's internal control over financial reporting, due to the Lamex acquisition or otherwise, during the fiscal quarter ended September 30, 2006, that have materially affected, or are reasonably likely to materially affect, the Corporation's internal control over financial reporting.

Under the supervision and with the participation of management, the chief executive officer and chief financial officer of the Corporation have evaluated the effectiveness of the design and operation of the Corporation's disclosure controls and procedures as of September 30, 2006, and, based on their evaluation, the chief executive officer and chief financial officer have concluded that these controls and procedures are effective.

PART II.     OTHER INFORMATION

Item 1. Legal Proceedings

There are no new legal proceedings or material developments to report.

Item 1A. Risk Factors

There have been no material changes from the risk factors disclosed in the "Risk Factors" section of the Corporation's Annual Report on Form 10-K for the year ended December 31, 2005 and the Corporation's Quarterly Report on Form 10-Q for the quarter ended April 1, 2006.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

The following is a summary of share repurchase activity during the third quarter ended September 30, 2006.

Period	(a) Total Number  of Shares       (or Units)       Purchased (1)	(b) Average   price Paid     per Share or   Unit	(c) Total Number of  Shares (or Units)   Purchased as Part of Publicly Announced Plans or Programs	(d) Maximum   Number (or  Approximate Dollar  Value) of Shares (or Units) that May Yet be Purchased Under the Plans or Programs
7/2/06 - 7/29/06	240,000	$45.11	240,000	$ 24,801,590
7/30/06 - 8/26/06	796,627	$40.72	796,627	$192,360,337
8/27/06 - 9/30/06	480,000	$39.96	480,000	$173,178,131
Total	1,516,627	$41.18	1,516,627	$173,178,131

(1) No shares were purchased outside of a publicly announced plan or program.

The Corporation repurchases shares under previously announced plans authorized by the Board of Directors as follows:

§     Plan announced August 8, 2006, providing share repurchase authorization of $200,000,000 with no specific expiration date.

§     Plan announced November 11, 2005, providing share repurchase authorization of $200,000,000 with no specified expiration date.

§     No repurchase plans expired or were terminated during the third quarter, nor do any plans exist under which the Corporation does not intend to make further purchases.

Item 6.     Exhibits

See Exhibit Index.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	HNI CORPORATION
Dated:  November 2, 2006	By:	/s/ Jerald K. Dittmer
		Jerald K. Dittmer
		Vice President and Chief Financial Officer

EXHIBIT INDEX
10.1	1995 Stock-Based Compensation Plan, as amended August 8, 2006
10.2	1997 Equity Plan for Non-Employee Directors, as amended August 8, 2006
10.3	HNI Corporation Long-Term Performance Plan, as amended August 8, 2006
10.4	HNI Corporation Executive Bonus Plan, as amended August 8, 2006
10.5	Executive Deferred Compensation Plan, as amended August 8, 2006
10.6	Directors Deferred Compensation Plan, as amended August 8, 2006
31.1	Certification of the CEO Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of the CFO Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of CEO and CFO Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

EXHIBIT 31.1              

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

Sarbanes-Oxley Act Section 302

I, Stan A. Askren, Chairman, President and Chief Executive Officer of HNI Corporation, certify that:

1.I have reviewed this quarterly report on Form 10-Q of HNI Corporation;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; and

3.Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; and

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d) - 15(f)) for the registrant and we have:

a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly, during the period in which this quarterly report is being prepared;

b.designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external  purposes in accordance with generally accepted accounting principles;

c.evaluated the effectiveness of the registrant's disclosure controls and procedures, and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5 The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors:

a.all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b.any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting.

Date:   November 2, 2006	By:	/s/ Stan A. Askren
		Name:   Stan A. Askren Title:     Chairman, President and Chief Executive Officer

EXHIBIT 31.2            

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

Sarbanes-Oxley Act Section 302

I, Jerald K. Dittmer, Vice President and Chief Financial Officer of HNI Corporation, certify that:

1.I have reviewed this quarterly report on Form 10-Q of HNI Corporation;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; and

3.Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; and

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d) - 15(f)) for the registrant and we have:

a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly, during the period in which this quarterly report is being prepared;

b.designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external  purposes in accordance with generally accepted accounting principles;

c.evaluated the effectiveness of the registrant's disclosure controls and procedures, and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5 The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors:

b.all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b.any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting.

Date:   November 2, 2006	By:	/s/ Jerald K. Dittmer
		Name:   Jerald K. Dittmer Title:     Vice President and Chief Financial Officer

EXHIBIT 32.1           

Certification of CEO and CFO Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report on Form 10-Q of HNI Corporation (the "Corporation") for the quarterly period ended September 30, 2006, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), Stan A. Askren, as Chairman, President and Chief Executive Officer of the Corporation, and Jerald K. Dittmer, as Vice President and Chief Financial Officer of the Corporation, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge: 1.  The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2.  The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation as of the dates and for the periods expressed in the Report.
	/s/ Stan A. Askren
	Name:  Stan A. Askren Title:    Chairman, President and Chief Executive Officer Date:    November 2, 2006
	/s/ Jerald K. Dittmer
	Name:  Jerald K. Dittmer Title:    Vice President and Chief Financial Officer Date:    November 2, 2006
This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Corporation for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

EX-10.1

EXHIBIT 10.1                    

HNI CORPORATION

STOCK-BASED COMPENSATION PLAN

(ADOPTED MAY 9, 1995. AMENDED AND RESTATED

MAY 13, 1997. AMENDED FEBRUARY 10, 1999,

NOVEMBER 10, 2000, DECEMBER 31, 2005, and AUGUST 8, 2006.)

I. INTRODUCTION

1.1Purposes. The purposes of the 1995 Stock-Based Compensation Plan (the "Plan") of HNI Corporation (the "Corporation"), and its subsidiaries from time to time (individually a "Subsidiary" and collectively the Subsidiaries") are (i) to align the interests of the Corporation's shareholders and the recipients of awards under this Plan by increasing the proprietary interest of such recipients in the Corporation's growth and success, (ii) to advance the interests of the Corporation by attracting and retaining officers and other key employees and well-qualified persons who are not officers or employees of the Corporation for service as directors of the Corporation and (iii) to motivate such employees and Non-Employee Directors to act in the long-term best interests of the Corporation's shareholders. For purposes of this Plan, references to employment by the Corporation shall also mean employment by a Subsidiary.

1.2Certain Definitions.

"Agreement" shall mean the written agreement evidencing an award hereunder between the Corporation and the recipient of such award.

"Board" shall mean the Board of Directors of the Corporation.

"Bonus Stock" shall mean shares of Common Stock which are not subject to a Restriction Period or Performance Measures.

"Bonus Stock Award" shall mean an award of Bonus Stock under this Plan.

"Change in Control" shall have the meaning set forth in Section 6.8(b).

"Code" shall mean the Internal Revenue Code of 1986, as amended.

"Committee" shall mean the Committee designated by the Board, consisting of three or more members of the Board, each of whom shall be (i) a "Non-Employee Director" within the meaning of Rule 16b-3 under the Exchange Act and (ii) an "outside director" within the meaning of Section 162(m) of the Code.

"Common Stock" shall mean the common stock, $1.00 par value, of the Corporation.

"Corporation" has the meaning specified in Section 1.1.

"Deferral Period" shall mean the period of time during which Deferred Shares are subject to deferral limitations under Section 3.4 of this Plan.

"Deferred Shares" shall mean an award made pursuant of Section 3.4 of this Plan of the right to receive Common Shares at the end of a specified Deferral Period.

"Deferred Share Award" shall mean an award of Deferred Shares under the Plan.

"Disability" shall mean the inability of the holder of an award to perform substantially such holder's duties and responsibilities for a continuous period of at least six months, as determined solely by the Committee.

"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended.

"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.

"Fair Market Value" shall mean the average of the high and low transaction prices] of a share of Common Stock as reported on the New York Stock Exchange on the date as of which such value is being determined, or, if there shall be no reported transactions for such date, on the next preceding date for which transactions were reported; provided, however, that if Fair Market Value for any date cannot be so determined, Fair Market Value shall be determined by the Committee by whatever means or method as the Committee, in the good faith exercise of its discretion, shall at such time deem appropriate.

"Free-Standing SAR" shall mean an SAR which is not issued in tandem with, or by reference to, an option, which entitles the holder thereof to receive, upon exercise, shares of Common Stock (which may be Restricted Stock), cash or a combination thereof with an aggregate value equal to the excess of the Fair Market Value of one share of Common Stock on the date of exercise over the base price of such SAR, multiplied by the number of such SARs which are exercised.

"Immediate Family" shall mean any spouse, child, stepchild, or adopted child.

"Incentive Stock Option" shall mean an option to purchase shares of Common Stock that meets the requirements of Section 422 of the Code, or any successor provision, which is intended by the Committee to constitute an incentive stock option.

"Incumbent Board" shall have the meaning set forth in Section 6.8(b)(2) hereof.

"Non-Employee Director" shall mean except as applied to the definition of Committee, any director of the Corporation who is not an officer or employee of the Corporation or any Subsidiary.

"Non-Statutory Stock Option" shall mean a stock option which is not an Incentive Stock Option.

"Performance Measures" shall mean the criteria and objectives established by the Committee, which shall be satisfied or met (i) as a condition to the exercisability of all or a portion of an option or SAR, (ii) as a condition to the grant of a Stock Award or (iii) during the applicable Restriction Period or Performance Period as a condition to the holder's receipt, in the case of a Restricted Stock Award, of the shares of Common Stock subject to such award, or, in the case of a Performance Share Award, of payment with respect to such award. Such criteria and objectives may include, but are not limited to, the attainment by a share of Common Stock of a specified Fair Market Value for a specified period of time, earnings per share, return to stockholders (including dividends), return on equity, earnings of the Corporation, revenues, market share, cash flow or cost reduction goals, or any combination of the foregoing and any other criteria and objectives established by the Committee. In the sole discretion of the Committee, the Committee may amend or adjust the Performance Measures or other terms and conditions of an outstanding award in recognition of unusual or nonrecurring events affecting the Corporation or its financial statements or changes in law or accounting principles.

"Performance Period" shall mean any period designated by the Committee during which the Performance Measures applicable to a Performance Share Award shall be measured.

"Performance Share" shall mean a right, contingent upon the attainment of specified Performance Measures within a specified Performance Period, to receive one share of Common Stock, which may be Restricted Stock, or in lieu of all or a portion thereof, the Fair Market Value of such Performance Share in cash.

"Performance Share Award" shall mean an award of Performance Shares under this Plan.

"Restricted Stock" shall mean shares of Common Stock which are subject to a Restriction Period.

"Restricted Stock Award" shall mean an award of Restricted Stock under this Plan.

"Restriction Period" shall mean any period designated by the Committee during which the Common Stock subject to a Restricted Stock Award may not be sold, transferred, assigned, pledged, hypothecated or otherwise encumbered or disposed of, except as provided in this Plan or the Agreement relating to such award.

"Retirement" or "Retires" shall mean a Participant's termination of employment with the Corporation on after the attainment of age 65, or age 55with ten years of service with the Corporation. The Chief Executive Officer of the Corporation, in his or her discretion, may waive or reduce the ten-year service requirement with respect a Participant.

"SAR" shall mean a stock appreciation right which may be a Free-Standing SAR or a Tandem SAR.

"Stock Award" shall mean a Restricted Stock Award or a Bonus Stock Award.

"Tandem SAR" shall mean an SAR which is granted in tandem with, or by reference to, an option (including a Non-Statutory Stock Option granted prior to the date of grant of the SAR), which entitles the holder thereof to receive, upon exercise of such SAR and surrender for cancellation of all or a portion of such option, shares of Common Stock (which may be Restricted Stock), cash or a combination thereof with an aggregate value equal to the excess of the Fair Market Value of one share of Common Stock on the date of exercise over the base price of such SAR, multiplied by the number of shares of Common Stock subject to such option, or portion thereof, which is surrendered.

"Tax Date" shall have the meaning set forth in Section 6.5.

"Ten Percent Holder" shall have the meaning set forth in Section 2.1(a).

1.3Administration. This Plan shall be administered by the Committee. Any one or a combination of the following awards may be made under this Plan to eligible officers and other key employees of the Corporation and its Subsidiaries: (i) options to purchase shares of Common Stock in the form of Incentive Stock Options or Non-Statutory Stock Options, (ii) SARs in the form of Tandem SARs or Free-Standing SARs, (iii) Stock Awards in the form of Restricted Stock or Bonus Stock and (iv) Performance Shares. The Committee shall, subject to the terms of this Plan, select eligible officers and other key employees for participation in this Plan and determine the form, amount and timing of each award to such persons and, if applicable, the number of shares of Common Stock, the number of SARs and the number of Performance Shares subject to such an award, the exercise price or base price associated with the award, the time and conditions of exercise or settlement of the award and all other terms and conditions of the award, including, without limitation, the form of the Agreement evidencing the award. The Committee shall, subject to the terms of this Plan, interpret this Plan and the application thereof, establish rules and regulations it deems necessary or desirable for the administration of this Plan and may impose, incidental to the grant of an award, conditions with respect to the award, such as limiting competitive employment or other activities. All such interpretations, rules, regulations and conditions shall be conclusive and binding on all parties.

The Committee may delegate some or all of its power and authority hereunder to the President and Chief Executive Officer or other executive officer of the Corporation as the Committee deems appropriate; provided, however, that the Committee may not delegate its power and authority with regard to (i) the grant of an award under this Plan to any person who is a "covered employee" within the meaning of Section 162(m) of the Code or who, in the Committee's judgment, is likely to be a covered employee at any time during the period an award hereunder to such employee would be outstanding or (ii) the selection for participation in this Plan of an officer or other person subject to Section 16 of the Exchange Act or decisions concerning the timing, pricing or amount of an award to such an officer or other person.

No member of the Board of Directors or Committee, and neither the President and Chief Executive Officer nor any other executive officer to whom the Committee delegates any of its power and authority hereunder, shall be liable for any act, omission, interpretation, construction or determination made in connection with this Plan in good faith, and the members of the Board of Directors and the Committee and the President and Chief Executive Officer or other executive officer shall be entitled to indemnification and reimbursement by the Corporation in respect of any claim, loss, damage or expense (including attorneys' fees) arising therefrom to the full extent permitted by law, except as otherwise may be provided in the Corporation's Articles of Incorporation, By-laws, and under any directors' and officers' liability insurance that may be in effect from time to time.

A majority of the Committee shall constitute a quorum. The acts of the Committee shall be either (i) acts of a majority of the members of the Committee present at any meeting at which a quorum is present or (ii) acts approved in writing by a majority of the members of the Committee without a meeting.

1.4Eligibility. Participants in this Plan shall consist of such officers and other key employees of the Corporation and its Subsidiaries as the Committee in its sole discretion may select from time to time. The Committee's selection of a person to participate in this Plan at any time shall not require the Committee to select such person to participate in this Plan at any other time. Non-Employee Directors shall be eligible to participate in this Plan in accordance with Article V.

1.5Shares Available. Subject to adjustment as provided in Section 6.7, the total number of shares of Common Stock available for all grants of awards under this Plan on any calendar year, shall be eighty-three hundredths of one percent (0.83%) of the outstanding and issued Common Stock as of January 1 of such year beginning January 1, 1997, plus the number of shares of Common Stock which shall have become available for grants of awards under this Plan in any and all prior calendar years, but which shall not have become subject to any award granted in any prior year.

Notwithstanding the foregoing, the maximum number of shares of Common Stock available for the grant of Incentive Stock Options shall be 2,000,000. The maximum number of shares of Common Stock with respect to which options or SARs or a combination thereof may be granted during any calendar year to any person shall be 250,000, subject to adjustment as provided in Section 6.7.

II. STOCK OPTIONS AND STOCK APPRECIATION RIGHTS

2.1Stock Options. The Committee may, in its discretion, grant options to purchase shares of Common Stock to such eligible persons as may be selected by the Committee. Each option, or portion thereof, that is not an Incentive Stock Option, shall be a Non-Statutory Stock Option. Each Incentive Stock Option shall be granted within ten years of the effective date of this Plan. To the extent that the aggregate Fair Market Value (determined as of the date of grant) of shares of Common Stock with respect to which options designated as Incentive Stock Options are exercisable for the first time by a participant during any calendar year (under this Plan or any other plan of the Corporation, or any parent or Subsidiary) exceeds the amount (currently $100,000) established by the Code, such options shall constitute Non-Statutory Stock Options.

Options shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of this Plan, as the Committee shall deem advisable:

(a)Number of Shares and Purchase Price. The number of shares of Common Stock subject to an option and the purchase price per share of Common Stock purchasable upon exercise of the option shall be determined by the Committee; provided, however, that the purchase price per share of Common Stock purchasable upon exercise of a Non-Statutory Stock Option shall not be less than 100% of the Fair Market Value of a share of Common Stock on the date of grant of such option and the purchase price per share of Common Stock purchasable upon exercise of an Incentive Stock Option shall not be less than 100% of the Fair Market Value of a share of Common Stock on the date of grant of such option; provided further, that if an Incentive Stock Option shall be granted to any person who, at the time such option is granted, owns capital stock possessing more than ten percent of the total combined voting power of all classes of capital stock of the Corporation (or of any parent or Subsidiary) (a "Ten Percent Holder"), the purchase price per share of Common Stock shall be the price (currently 110% of Fair Market Value) required by the Code in order to constitute an Incentive Stock Option.

(b)Option Period and Exercisability. The period during which an option may be exercised shall be determined by the Committee; provided, however, that no Incentive Stock Option shall be exercised later than ten years after its date of grant; provided further, that if an Incentive Stock Option shall be granted to a Ten Percent Holder, such option shall not be exercised later than five years after its date of grant. The Committee may, in its discretion, establish Performance Measures which shall be satisfied or met as a condition to the grant of an option or to the exercisability of all or a portion of an option. The Committee shall determine whether an option shall become exercisable in cumulative or non-cumulative installments and in part or in full at any time. An exercisable option, or portion thereof, may be exercised only with respect to whole shares of Common Stock.

(c)Method of Exercise. An option may be exercised (i) by giving written notice to the Corporation specifying the number of whole shares of Common Stock to be purchased and accompanied by payment therefor in full (or arrangement made for such payment to the Corporation's satisfaction) either (A) in cash, (B) by delivery of previously owned whole shares of Common Stock (which the optionee has held for at least six months prior to delivery of such shares and for which the optionee has good title, free and clear of all liens and encumbrances) having a Fair Market Value, determined as of the date of exercise, equal to the aggregate purchase price payable by reason of such exercise, (C) by authorizing the Corporation to withhold a number of whole shares of Common Stock which would otherwise be delivered upon exercise of the option having a Fair Market Value, determined as of the date of exercise, equal to the aggregate purchase price payable by reason of such exercise, provided that the optionee attests in a manner satisfactory to the Committee that the optionee at the time of such exercise holds and has held for at least six months prior to such exercise an equal number of whole shares of Common Stock and as to which the optionee has good title, free and clear of all liens and encumbrances, (D) in cash by a broker-dealer acceptable to the Corporation to whom the optionee has submitted an irrevocable notice of exercise or (E) a combination of (A), (B) and (C), in each case to the extent set forth in the Agreement relating to the option, (ii) if applicable, by surrendering to the Corporation any Tandem SARs which are cancelled by reason of the exercise of the option and (iii) by executing such documents as the Corporation may reasonably request. The Committee may require that the method of making such payment be in compliance with Section 16 and the rules and regulations thereunder. Any fraction of a share of Common Stock which would be required to pay such purchase price shall be disregarded and the remaining amount due shall be paid in cash by the optionee. No certificate representing Common Stock shall be delivered until the full purchase price therefor has been paid.

2.2Stock Appreciation Rights. The Committee may, in its discretion, grant SARs to such eligible persons as may be selected by the Committee. The Agreement relating to an SAR shall specify whether the SAR is a Tandem SAR or a Free-Standing SAR.

SARs shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of this Plan, as the Committee shall deem advisable:

(a) Number of SARs and Base Price. The number of SARs subject to an award shall be determined by the Committee. Any Tandem SAR related to an Incentive Stock Option shall be granted at the same time that such Incentive Stock Option is granted. The base price of a Tandem SAR shall be the purchase price per share of Common Stock of the related option. The base price of a Free-Standing SAR shall be determined by the Committee; provided, however, that such base price shall not be less than 100% of the Fair Market Value of a share of Common Stock on the date of grant of such SAR.

(b) Exercise Period and Exercisability. The Agreement relating to an award of SARs shall specify whether such award may be settled in shares of Common Stock (including shares of Restricted Stock) or cash or a combination thereof. The period for the exercise of an SAR shall be determined by the Committee; provided, however, that no Tandem SAR shall be exercised later than the expiration, cancellation, forfeiture or other termination of the related option. The Committee may, in its discretion, establish Performance Measures which shall be satisfied or met as a condition to the grant of an SAR or to the exercisability of all or a portion of an SAR. The Committee shall determine whether an SAR may be exercised in cumulative or non-cumulative installments and in part or in full at any time. An exercisable SAR, or portion thereof, may be exercised, in the case of a Tandem SAR, only with respect to whole shares of Common Stock and, in the case of a Free-Standing SAR, only with respect to a whole number of SARs. If an SAR is exercised for shares of Restricted Stock, a certificate or certificates representing such Restricted Stock shall be issued in accordance with Section 3.2(c) and the holder of such Restricted Stock shall have such rights of a stockholder of the Corporation as determined pursuant to Section 3.2(d). Prior to the exercise of an SAR for shares of Common Stock, including Restricted Stock, the holder of such SAR shall have no rights as a stockholder of the Corporation with respect to the shares of Common Stock subject to such SAR and shall have rights as a stockholder of the Corporation in accordance with Section 6.10.

(c) Method of Exercise. A Tandem SAR may be exercised (i) by giving written notice to the Corporation specifying the number of whole SARs which are being exercised, (ii) by surrendering to the Corporation any options which are cancelled by reason of the exercise of the Tandem SAR and (iii) by executing such documents as the Corporation may reasonably request. A Free-Standing SAR may be exercised (i) by giving written notice to the Corporation specifying the whole number of SARs which are being exercised and (ii) by executing such documents as the Corporation may reasonably request.

2.3Termination of Employment. Except as otherwise provided in this Section 2.3 and subject to Section 6.8, all of the terms relating to the exercise, cancellation or other disposition of an option or SAR upon a termination of employment with the Corporation of the holder of such option or SAR, as the case may be, whether by reason of retirement or other termination, shall be determined by the Committee. Such determination shall be made at the time of the grant of such option or SAR, as the case may be, and shall be specified in the Agreement relating to such option or SAR. Notwithstanding the foregoing, each option or SAR granted under the Plan shall become fully vested and nonforfeitable upon the death or Disability of the Participant awarded such option or SAR, provided such Participant is employed by the Corporation on the date of death or Disability.

III. STOCK AWARDS

3.1Stock Awards. The Committee may, in its discretion, grant Stock Awards to such eligible persons as may be selected by the Committee. The Agreement relating to a Stock Award shall specify whether the Stock Award is a Restricted Stock Award or Bonus Stock Award.

3.2Terms of Stock Awards. Stock Awards shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of this Plan, as the Committee shall deem advisable.

(a)Number of Shares and Other Terms. The number of shares of Common Stock subject to a Restricted Stock Award or Bonus Stock Award and the Performance Measures (if any) and Restriction Period applicable to a Restricted Stock Award shall be determined by the Committee.

(b) Vesting and Forfeiture. The Agreement relating to a Restricted Stock Award shall provide, in the manner determined by the Committee, in its discretion, and subject to the provisions of this Plan, for the vesting of the shares of Common Stock subject to such award (i) if specified Performance Measures are satisfied or met during the specified Restriction Period or (ii) if the holder of such award remains continuously in the employment of the Corporation during the specified Restriction Period and for the forfeiture of the shares of Common Stock subject to such award (x) if specified Performance Measures are not satisfied or met during the specified Restriction Period or (y) if the holder of such award does not remain continuously in the employment of the Corporation during the specified Restriction Period.

Bonus Stock Awards shall not be subject to any Performance Measures or Restriction Periods.

(c) Share Certificates. During the Restriction Period, a certificate or certificates representing a Restricted Stock Award may be registered in the holder's name and may bear a legend, in addition to any legend which may be required pursuant to Section 6.6, indicating that the ownership of the shares of Common Stock represented by such certificate is subject to the restrictions, terms and conditions of this Plan and the Agreement relating to the Restricted Stock Award. All such certificates shall be deposited with the Corporation, together with stock powers or other instruments of assignment (including a power of attorney), each endorsed in blank with a guarantee of signature if deemed necessary or appropriate by the Corporation, which would permit transfer to the Corporation of all or a portion of the shares of Common Stock subject to the Restricted Stock Award in the event such award is forfeited in whole or in part. Upon termination of any applicable Restriction Period (and the satisfaction or attainment of applicable Performance Measures), or upon the grant of a Bonus Stock Award, in each case subject to the Corporation's right to require payment of any taxes in accordance with Section 6.5, a certificate or certificates evidencing ownership of the requisite number of shares of Common Stock shall be delivered to the holder of such award.

(d) Rights with Respect to Restricted Stock Awards. Unless otherwise set forth in the Agreement relating to a Restricted Stock Award, and subject to the terms and conditions of a Restricted Stock Award, the holder of such award shall have all rights as a stockholder of the Corporation, including, but not limited to, voting rights, the right to receive dividends and the right to participate in any capital adjustment applicable to all holders of Common Stock; provided, however, that a distribution with respect to shares of Common Stock, other than a distribution in cash, shall be deposited with the Corporation and shall be subject to the same restrictions as the shares of Common Stock with respect to which such distribution was made.

3.3Termination of Employment. Except as otherwise provided in this Section 3.3 and subject to Section 6.8, all of the terms relating to the satisfaction of Performance Measures and the termination of the Restriction Period relating to a Restricted Stock Award, or cancellation of or forfeiture of such Restricted Stock Award upon a termination of employment with the Corporation of the holder of such Restricted Stock Award, whether by reason of retirement or other termination, shall be set forth in the Agreement relating to such Restricted Stock Award, except that, notwithstanding the foregoing, each Restricted Stock Award shall become fully vested and nonforfeitable upon the death or Disability of the Participant awarded such Restricted Stock Award, provided such Participant is employed by the Corporation on the date of death or Disability.

3.4Deferred Shares. The Committee may also authorize the granting or sale of Deferred Shares to Participants. Each such grant or sale may utilize any or all of the authorizations and shall be subject to all of the requirements contained in the following provisions:

(a)Each such grant or sale shall constitute the agreement by the Corporation to deliver Common Stock to the Participant in the future in consideration of the performance of services, but subject to the fulfillment of such conditions during the Deferral Period as the Board may specify.

(b)Each such grant or sale may be made without additional consideration or in consideration of a payment by such Participant that is less than the Fair Market Value per share of Common Stock at the date of grant.

(c)Each such grant or sale shall be subject to a Deferral Period of not less than 1 year, as determined by the Board at the date of grant, and may provide for the earlier lapse or other modification of such Deferral Period in the event of a Change in Control.

(d)During the Deferral Period, the Participant shall have no right to transfer any rights under his or her award and shall have no rights of ownership in the Deferred Shares and shall have no right to vote them, but the Committee may, at or after the date of grant, authorize the payment of dividend equivalents on such Shares on either a current or deferred or contingent basis, either in cash or in additional Common Stock.

(e)Each grant or sale of Deferred Shares shall be evidenced by an agreement executed on behalf of the Corporation by any officer and delivered to and accepted by the Participant and shall contain such terms and provisions, consistent with this Plan, as the Board may approve.

IV. PERFORMANCE SHARE AWARDS

4.1Performance Share Awards. The Committee may, in its discretion, grant Performance Share Awards to such eligible persons as may be selected by the Committee.

4.2Terms of Performance Share Awards. Performance Share Awards shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of this Plan, as the Committee shall deem advisable.

(a)Number of Performance Shares and Performance Measures. The number of Performance Shares subject to any award and the Performance Measures and Performance Period applicable to such award shall be determined by the Committee.

(b)Vesting and Forfeiture. The Agreement relating to a Performance Share Award shall provide, in the manner determined by the Committee, in its discretion, and subject to the provisions of this Plan, for the vesting of such award, if specified Performance Measures are satisfied or met during the specified Performance Period, and for the forfeiture of such award, if specified Performance Measures are not satisfied or met during the specified Performance Period.

(c)Settlement of Vested Performance Share Awards. The Agreement relating to a Performance Share Award (i) shall specify whether such award may be settled in shares of Common Stock (including shares of Restricted Stock) or cash or a combination thereof and (ii) may specify whether the holder thereof shall be entitled to receive, on a current or deferred basis, dividend equivalents, and, if determined by the Committee, interest on any deferred dividend equivalents, with respect to the number of shares of Common Stock subject to such award. If a Performance Share Award is settled in shares of Restricted Stock, a certificate or certificates representing such Restricted Stock shall be issued in accordance with Section 3.2(c) and the holder of such Restricted Stock shall have such rights of a stockholder of the Corporation as determined pursuant to Section 3.2(d). Prior to the settlement of a Performance Share Award in shares of Common Stock, including Restricted Stock, the holder of such award shall have no rights as a stockholder of the Corporation with respect to the shares of Common Stock subject to such award.

4.3Termination of Employment. Except as otherwise provided in this Section 4.3 and subject to Section 6.8, all of the terms relating to the satisfaction of Performance Measures and the termination of the Performance Period relating to a Performance Share Award, or cancellation of or forfeiture of such Performance Share Award upon a termination of employment with the Corporation of the holder of such Performance Share Award, whether by reason of retirement or other termination, shall be set forth in the Agreement relating to such Performance Share Award, except that, notwithstanding the foregoing, each Performance Share Award shall become fully vested and nonforfeitable upon the death or Disability of the Participant holding such Performance Share Award, provided such Participant is employed by the Corporation on the date of death or Disability.

V. PROVISIONS RELATING TO NON-EMPLOYEE DIRECTORS

5.1Eligibility. Each Non-Employee Director shall be eligible to elect to receive shares of Common Stock in accordance with this Article V.

5.2Time and Manner of Election. At least 6 (six) months prior to the date of any annual meeting of shareholders of the Corporation during the term of this Plan, Non-Employee Directors may file with the Committee or its designee a written election to receive shares of Common Stock in lieu of all or a portion of such Non-Employee Director's future annual retainer, paid quarterly, exclusive of meeting or committee fees. Notwithstanding the foregoing, an election made by (i) a Non-Employee Director in respect of the annual retainer payable for the period beginning on the date of the 1995 annual meeting of the shareholders of the Corporation or (ii) an individual who becomes a Non-Employee Director on a date less than six months prior to any annual meeting of shareholders, shall become effective on the first business day that is six months after the date ("Effective Date") such Non-Employee Director files such election, and such election shall be applicable only to the portion of such Non-Employee Director's annual retainer determined by multiplying such annual retainer by a fraction, the numerator of which is the number of calendar days from the Effective Date to and including the last day for which such Annual Retainer is payable and the denominator is 365. An election pursuant to this Section, once made, shall be irrevocable in respect to the annual retainer for which made.

The Shares to be issued pursuant to this Section shall be issued on each date on which an installment of the Non-Employee Director's annual retainer would otherwise be payable in cash. The number of such shares to be issued shall be determined by dividing the amount of the then payable installment of the annual retainer subject to an election under this Section by the Fair Market Value of a share of Common Stock on such date. Any fraction of a share shall be disregarded and the remaining amount of the annual retainer shall be paid in cash.

VI. GENERAL

6.1Effective Date and Term of Plan. This Plan shall be submitted to the stockholders of the Corporation for approval and, if approved by the affirmative vote of a majority of the shares of Common Stock present in person or represented by proxy at the 1997 annual meeting of stockholders, shall become effective on the date of such approval. This Plan shall terminate 10 years after its effective date unless terminated earlier by the Board. Termination of this Plan shall not affect the terms or conditions of any award granted prior to termination.

Awards hereunder may be made at any time prior to the termination of this Plan, provided that no award may be made later than 10 years after the effective date of this Plan. In the event that this Plan is not approved by the stockholders of the Corporation, this Plan and any awards hereunder shall be void and of no force or effect.

6.2Amendments. The Board may amend this Plan as it shall deem advisable, subject to any requirement of stockholder approval required by applicable law, rule or regulation including Section 162(m) of the Code; provided, however, that no amendment shall be made without stockholder approval if such amendment would (a) increase the maximum number of shares of Common Stock available under this Plan (subject to Section 6.7), or (b) extend the term of this Plan; provided further that, subject to Section 6.7, no amendment may impair the rights of a holder of an outstanding award without the consent of such holder. Notwithstanding the foregoing, the Board may condition the grant of any award or combination of awards authorized under the Plan on the surrender or deferral by the Participant of such Participant's right to an award hereunder, a cash bonus, or other compensation otherwise payable by the Corporation to the Participant.

6.3Agreement. Each award under this Plan shall be evidenced by an Agreement setting forth the terms and conditions applicable to such award. No award shall be valid until an Agreement is executed by the Corporation and the recipient of such award and, upon execution by each party and delivery of the Agreement to the Corporation, such award shall be effective as of the effective date set forth in the Agreement.

6.4 Transferability of Stock Options, SARs and Performance Shares.

    (a)Except as set forth in Section 6.4(b) or as otherwise determined by the Board, no option, SAR or Performance Share shall be transferable other than (i) by will, the laws of descent and distribution or pursuant to beneficiary designation procedures approved by the Committee or (ii) as otherwise permitted under Rule 16b-3 under the Exchange Act as set forth in the Agreement relating to such award. Except to the extent permitted by the foregoing sentence and Section 6.4(b), each option, SAR or Performance Share may be exercised or settled during the holder's lifetime only by the holder or the holder's legal representative or similar person. Except to the extent permitted by the second preceding sentence and Section 6.4(b), no option, SAR or Performance Share may be sold, transferred, assigned, pledged, hypothecated, encumbered or otherwise disposed of (whether by operation of law or otherwise) or be subject to execution, attachment or similar process. Except as provided in Section 6.4(b), upon any attempt to so sell, transfer, assign, pledge, hypothecate, encumber or otherwise dispose of any option, SAR or Performance Share, such award, and all rights thereunder shall immediately become null and void.

(b)Notwithstanding the provisions of Section 6.4(a), option rights (other than Incentive Stock Options) shall be transferable by a Participant, without payment of consideration therefor by the transferee, to any one or more members of the Participant's Immediate Family (or to one or more trusts established solely for the benefit of one or more members of the Participant's Immediate Family or to one or more partnerships in which the only partners are members of the Participant's Immediate Family); provided, however, that (i) no such transfer shall be effective unless reasonable prior notice thereof is delivered to the Corporation and such transfer is thereafter effected subject to the specific authorization of, and in accordance with any terms and conditions that shall have been made applicable thereto, by the Committee or by the Board and (ii) any such transferee shall be subject to the same terms and conditions hereunder as the Participant.

6.5Tax Withholding. The Corporation shall have the right to require, prior to the issuance or delivery of any shares of Common Stock or the payment of any cash pursuant to an award made hereunder, payment by the holder of such award of any Federal, state, local or other taxes which may be required to be withheld or paid in connection with such award. An Agreement may provide that (i) the Corporation shall withhold whole shares of Common Stock which would otherwise be delivered to a holder, having an aggregate Fair Market Value determined as of the date the obligation to withhold or pay taxes arises in connection with an award (the "Tax Date"), or withhold an amount of cash which would otherwise be payable to a holder, in the amount necessary to satisfy any such obligation or (ii) the holder may satisfy any such obligation by any of the following means: (A) a cash payment to the Corporation, (B) delivery to the Corporation of previously owned whole shares of Common Stock (which the holder has held for at least six months prior to the delivery of such shares and for which the holder has good title, free and clear of all liens and encumbrances) having an aggregate Fair Market Value, determined as of the Tax Date, equal to the amount necessary to satisfy any such obligation, (C) authorizing the Corporation to withhold whole shares of Common Stock which would otherwise be delivered having an aggregate Fair Market Value, determined as of the Tax Date, or withhold an amount of cash which would otherwise be payable to a holder, equal to the amount necessary to satisfy any such obligation, (D) in the case of the exercise of an option, a cash payment by a broker-dealer acceptable to the Corporation to whom the optionee has submitted an irrevocable notice of exercise or (E) any combination of (A), (B) and (C), in each case to the extent set forth in the Agreement relating to the award; provided, however, that the Committee shall have sole discretion to disapprove of an election pursuant to any of clauses (B), (E) and that in the case of a holder who is subject to Section 16 of the Exchange Act, the Corporation may require that the method of satisfying such an obligation be in compliance with Section 16 and the rules and regulations thereunder. An Agreement may provide for shares of Common Stock to be delivered or withheld having an aggregate Fair Market Value in excess of the minimum amount required to be withheld, but not in excess of the amount determined by applying the supplemental wage withholding rate. Any fraction of a share of Common Stock which would be required to satisfy such an obligation shall be disregarded and the remaining amount due shall be paid in cash by the holder.

6.6Restrictions on Shares. Each award made hereunder shall be subject to the requirement that if at any time the Corporation determines that the listing, registration or qualification of the shares of Common Stock subject to such award upon any securities exchange or under any law, or the consent or approval of any governmental body, or the taking of any other action is necessary or desirable as a condition of, or in connection with, the delivery of shares thereunder, such shares shall not be delivered unless such listing, registration, qualification, consent, approval or other action shall have been effected or obtained, free of any conditions not acceptable to the Corporation. The Corporation may require that certificates evidencing shares of Common Stock delivered pursuant to any award made hereunder bear a legend indicating that the sale, transfer or other disposition thereof by the holder is prohibited except in compliance with the Securities Act of 1933, as amended, and the rules and regulations thereunder.

6.7Adjustment. In the event of any stock split, stock dividend, recapitalization, reorganization, merger, consolidation, combination, exchange of shares, liquidation, spin-off or other similar change in capitalization or event, or any distribution to holders of Common Stock other than a regular cash dividend, the number and class of securities available under this Plan, the number and class of securities subject to each outstanding option and the purchase price per security, the terms of each outstanding SAR, the number and class of securities subject to each outstanding Stock Award or Deferred Share Award, and the terms of each outstanding Performance Share shall be appropriately adjusted by the Committee, such adjustments to be made in the case of outstanding options and SARs without an increase in the aggregate purchase price or base price. The decision of the Committee regarding any such adjustment shall be final, binding and conclusive. If any such adjustment would result in a fractional security being (i) available under this Plan, such fractional security shall be disregarded, or (ii) subject to an award under this Plan, the Corporation shall pay the holder of such award, in connection with the first vesting, exercise or settlement of such award, in whole or in part, occurring after such adjustment, an amount in cash determined by multiplying (i) the fraction of such security (rounded to the nearest hundredth) by (ii) the excess, if any, of (A) the Fair Market Value on the vesting, exercise or settlement date over (B) the exercise or base price, if any, of such award, provided that any such payment shall not result in an impermissible acceleration under Section 409A of the Code.

6.8Change in Control.

(a)         (1)Notwithstanding any provision in this Plan or any Agreement, in the event of a Change in Control pursuant to Section (b)(3) or (4) below in connection with which the holders of Common Stock receive shares of common stock that are registered under Section 12 of the Exchange Act, (i) all outstanding options and SARS shall immediately become exercisable in full, (ii) the Restriction Period applicable to any outstanding Restricted Stock Award shall lapse, (iii) the Performance Period applicable to any outstanding Performance Share shall lapse, (iv) the Performance Measures applicable to any outstanding Restricted Stock Award (if any) and to any outstanding Performance Share shall be deemed to be satisfied at the maximum level, (v) there shall be substituted for each share of Common Stock available under this Plan, whether or not then subject to an outstanding award, the number and class of shares into which each outstanding share of Common Stock shall be converted pursuant to such Change in Control, and (vi) the Deferral Period applicable to any Deferred Shares shall lapse. In the event of any such substitution, the purchase price per share in the case of an option and the base price in the case of an SAR shall be appropriately adjusted by the Committee, such adjustments to be made in the case of outstanding options and SARs without an increase in the aggregate purchase price or base price.

(2)Notwithstanding any provision in this Plan or any Agreement, in the event of a Change in Control pursuant to Section (b)(1) or (2) below, or in the event of a Change in Control pursuant to Section (b)(3) or (4) below in connection with which the holders of Common Stock receive consideration other than shares of common stock that are registered under Section 12 of the Exchange Act, the Committee in its discretion may require that each outstanding award shall be surrendered to the Corporation by the holder thereof, and each such award shall immediately be cancelled by the Corporation, and the holder shall receive, within ten days of the occurrence of a Change in Control pursuant to Section (b)(1) or (2) below or within ten days of the approval of the stockholders of the Corporation contemplated by Section (b)(3) or (4) below, a cash payment from the Corporation in an amount equal to (i) in the case of an option, the number of shares of Common Stock then subject to such option, multiplied by the excess, if any, of the greater of (A) the highest per share price offered to stockholders of the Corporation in any transaction whereby the Change in Control takes place or (B) the Fair Market Value of a share of Common Stock on the date of occurrence of the Change in Control, over the purchase price per share of Common Stock subject to the option, (ii) in the case of a Free-Standing SAR, the number of shares of Common Stock then subject to such SAR, multiplied by the excess, if any, of the greater of (A) the highest per share price offered to stockholders of the Corporation in any transaction whereby the Change in Control takes place or (B) the Fair Market Value of a share of Common Stock on the date of occurrence of the Change in Control, over the base price of the SAR, (iii) in the case of a Restricted Stock Award, Performance Share Award or Deferred Share Award, the number of shares of Common Stock or the number of Performance Shares, as the case may be, then subject to such award, multiplied by the greater of (A) the highest per share price offered to stockholders of the Corporation in any transaction whereby the Change in Control takes place or (B) the Fair Market Value of a share of Common Stock on the date of occurrence of the Change in Control. In the event of a Change in Control, each Tandem SAR shall be surrendered by the holder thereof and shall be cancelled simultaneously with the cancellation of the related option. The Corporation may, but is not required to, cooperate with any person who is subject to Section 16 of the Exchange Act to assure that any cash payment in accordance with the foregoing to such person is made in compliance with Section 16 and the rules and regulations thereunder.

(b)"Change in Control" shall mean:

(i) the acquisition by any individual, entity or group (with the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 35% or more of either: (A) the then outstanding shares of common stock of the Corporation (the "Outstanding Corporation Common Stock"); or (B) the combined voting power of the then outstanding voting securities of the Corporation entitled to vote generally in the election of Directors (the "Outstanding Corporation Voting Securities"); provided, however, that for purposes of this subsection (i), the following acquisitions shall not constitute a Change in Control: (I) any acquisition directly from the Corporation, (II) any acquisition by the Corporation, (III) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Corporation or any corporation controlled by the Corporation or (IV) any acquisition by any corporation pursuant to a transaction which complies with clauses (A), (B) and (C) of subsection (iii) of this paragraph; or

(ii) individuals who, as of the date hereof, constitute the Board (the "Incumbent Board") cease for any reason to constitute a majority of the Board; provided, however, that any individual becoming a Director subsequent to the date hereof whose election, or nomination for election by the Corporation's shareholders, was approved by a vote of a majority of the Directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of Directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

(iii) consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Corporation (a "Business Combination"), in each case, unless, following such Business Combination: (A) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Corporation Common Stock and Outstanding Corporation Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, 50% or more of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of Directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Corporation or all or substantially all of the Corporation's assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Corporation Common Stock and Outstanding Corporation Voting Securities, as the case may be; (B) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of the Corporation or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 35% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination; and (C) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination.

6.9No Right of Participation or Employment. No person shall have any right to participate in this Plan. Neither this Plan nor any award made hereunder shall confer upon any person any right to continued employment by the Corporation, any Subsidiary or any affiliate of the Corporation or affect in any manner the right of the Corporation, any Subsidiary or any affiliate of the Corporation to terminate the employment of any person at any time without liability hereunder.

6.10Rights as Stockholder. No person shall have any right as a stockholder of the Corporation with respect to any shares of Common Stock or other equity security of the Corporation which is subject to an award hereunder unless and until such person becomes a stockholder of record with respect to such shares of Common Stock or equity security.

6.11Governing Law. This Plan, each award hereunder and the related Agreement, and all determinations made and actions taken pursuant thereto, to the extent not otherwise governed by the Code or the laws of the United States, shall be governed by the laws of the State of Iowa and construed in accordance therewith without giving effect to principles of conflicts of laws.

6.12 Deferral Agreements. The Participants may enter into agreements which will defer the receipt of any shares of Common Stock to be received under an award. Any such agreement shall require that the deferred distribution be made in shares of Common Stock. Notwithstanding anything in this Section 6.12 to the contrary, any such deferral shall conform to the requirements of Section 409A of the Code, and no deferral shall be permitted if it would result in an award losing its exemption under Section 409A of the Code.

EX-10.2

EXHIBIT 10.2                              

AMENDED AND RESTATED 1997 EQUITY PLAN FOR NON-EMPLOYEE

DIRECTORS OF HNI CORPORATION

1.Establishment and Purpose. HNI Corporation, an Iowa corporation (the "Corporation"), previously established this 1997 Equity Plan for Non-Employee Directors of HNI Corporation (the "Plan"). The Corporation hereby restates the Plan effective as of August 8, 2006, as set forth herein.

The purposes of the Plan are to: (1) promote the growth and long-term success of HNI Corporation, an Iowa corporation (the "Corporation"), by offering Non-Employee Directors the ability to acquire Common Stock of the Corporation; (2) enable the Corporation to attract and retain qualified persons to serve as Non-Employee Directors, which services are considered essential to the long-term success of the Corporation, by offering them an opportunity to own Common Stock of the Corporation; and (3) provide Non-Employee Directors with the opportunity to invest certain amounts of their compensation payable for services as a Director in shares of Common Stock.

2.Definitions. In addition to the other terms defined elsewhere herein, wherever the following terms are used in this Plan with initial capital letters, they shall have the meanings specified below, unless the context clearly indicates otherwise.

"1995 Plan" shall mean the HNI Corporation Stock-Based Compensation Plan, as amended and restated effective February 11, 1998.

"Accounting Month" shall mean any calendar month during an Accounting Period in which Fees subject to payment hereunder as Mandatory Shares or Voluntary Shares are earned.

"Accounting Period" shall mean the calendar year.

"Award" shall mean an award of an Option Right, Restricted Stock or Common Stock Grant under this Plan.

"Board" shall mean the Board of Directors of the Corporation.

"Code" shall mean the Internal Revenue Code of 1986, as amended from time to time.

"Common Stock" shall mean the Common Stock, $1.00 par value, of the Corporation, and any security into which such Common Stock may be converted or for which such Common Stock may be exchanged by reason of any transaction or event of the type described in Section 8 of this Plan.

"Common Stock Grant" shall mean Common Stock, other than Restricted Stock, awarded pursuant to Section 5 of this Plan.

"Corporation" shall have the meaning set forth in Section 1, and shall include its successors.

"Date of Award" shall mean the date specified by the Board on which an Award shall become effective, which shall not be earlier than the date on which the Board takes action with respect thereto.

"Election Fees" shall mean: (i) prior to May 12, 1998, the Fees, less the Mandatory Retainer Amount for the applicable Accounting Period; and (ii) on or after May 12, 1998, the Fees.

"Employee" shall mean any officer or other employee of the Corporation or of any corporation which is then a Subsidiary.

"Fair Market Value" shall mean the average of the high and low transaction prices of a share of Common Stock as reported on the New York Stock Exchange on the date as of which such value is being determined, or, if there shall be no reported transactions for such date, on the next preceding date for which transactions were reported; provided, however, that if Fair Market Value for any date cannot be so determined, Fair Market Value shall be determined by the Board by whatever means or method as it, in the good faith exercise of its discretion, shall at such time deem appropriate.

"Fees" means the Retainer and other Non-Employee Director compensation payable in cash.

"Issuance Date" shall havethe meaning set forth in Section 6(a).

"Mandatory Retainer Amount" shall have the meaning set forth in Section 6(a).

"Mandatory Shares" shall have the meaning set forth in Section 6(a).

"Market Value per Share," as used in Sections 6(a) and 6(c) herein, shall have the meaning set forth in the Plan, as in effect prior to August 8, 2006.

"Non-Employee Director" shall mean a member of the Board who is not an Employee.

"Optionee" shall mean a Non-Employee Director to whom an Option Right is awarded under this Plan.

"Option Price" shall mean the purchase price payable upon the exercise of an Option Right.

"Option Right" shall mean the right to purchase shares of Common Stock from the Corporation upon the exercise of an option awarded hereunder.

"Participant" shall mean a Non-Employee Director (or a person who has agreed to commence serving in such capacity) who is selected by the Board to receive Awards or Mandatory Shares under this Plan or who has elected to receive Voluntary Shares.

"Participation Agreement" shall mean the agreement submitted by a Non-Employee Director to the Secretary of the Corporation pursuant to which the Non-Employee Director may elect to receive all or any portion of his or her Election Fees in the form of Voluntary Shares for a specified period in the future.

"Performance Objectives" shall mean the performance objectives that may be established by the Board pursuant to this Plan for Participants who have received Awards.

"Plan" shall mean the Amended and Restated 1997 Equity Plan for Non-Employee Directors of HNI Corporation as set forth herein, as the same may be amended or restated from time to time.

"Restricted Stock" shall mean Common Stock awarded pursuant to Section 5 of this Plan as to which neither the substantial risk of forfeiture nor the restrictions on transfer referred to in Section 5 hereof have expired.

"Restricted Stockholder" shall mean a Non-Employee Director to whom Restricted Stock has been awarded under this Plan.

"Retainer" shall mean the portion of a Non-Employee Director's annual compensation that is payable without regard to number of board or committee meetings attended or committee positions.

"Rule 16b-3" shall mean Rule 16b-3 under the Securities Exchange Act of 1934, or any successor rule.

"Subsidiary" shall mean any corporation, partnership, joint venture, limited liability Corporation, unincorporated association or other entity (each, an "Entity") in an unbroken chain of Entities beginning with the Corporation if each of the Entities other than the last Entity in the unbroken chain then owns stock or other interests possessing 50 percent or more of the total combined voting power of all classes of stock or other interests in one of the other Entities in such chain.

"Termination of Directorship" shall mean the time when a Participant ceases to be a Director for any reason, including, without limitation, a termination by resignation, removal, failure to be elected or reelected, death or retirement.

"Voluntary Shares" shall have the meaning set forth in Section 6(b).

3.Shares Available under the Plan. Subject to adjustment as provided in Section 8 of this Plan, the number of shares of Common Stock issued or transferred, plus the number of shares of Common Stock covered by outstanding Awards and not forfeited under this Plan, shall not in the aggregate exceed 400,000 shares, which may be shares of original issuance or shares held in treasury or a combination thereof. If an Option Right lapses or terminates before such Option is exercised or shares of Restricted Stock or Common Stock Grants are forfeited, for any reason, the shares covered thereby may again be made subject to Awards, Mandatory Shares or Voluntary Shares under this Plan.

4.Option Rights. The Board may from time to time authorize Awards to Participants of Options to purchase shares of Common Stock upon such terms and conditions as the Board may determine in accordance with the following provisions:

(a)Each Award shall specify the number of shares of Common Stock to which the Option Rights pertain.

(b)Each Award of Option Rights shall specify an Option Price per share of Common Stock, which shall be equal to or greater than the Fair Market Value on the Date of Award.

(c)Each Award of Option Rights shall specify the form of consideration to be paid in satisfaction of the Option Price and the manner of payment of such consideration, which may include: (i) cash in the form of currency or check or other cash equivalent acceptable to the Corporation; (ii) nonforfeitable, nonrestricted shares of Common Stock, which are already owned by the Optionee and have a value at the time of exercise that is equal to the Option Price; (iii) any other legal consideration that the Board may deem appropriate, including (without limitation) any form of consideration authorized under Section 4(d) below, on such basis as the Board may determine in accordance with this Plan; and (iv) any combination of the foregoing.

(d)On or after the Date of Award of any Option Right, the Board may determine that payment of the Option Price may also be made in whole or in part in the form of shares of Restricted Stock or other shares of Common Stock that are subject to risk of forfeiture or restrictions on transfer. Unless otherwise determined by the Board on or after the Date of Award, whenever any Option Price is paid in whole or in part by means of any of the forms of consideration specified in this Section 4(d), the shares of Common Stock received by the Optionee upon the exercise of the Option Right shall be subject to the same risks of forfeiture or restrictions on transfer as those that applied to the consideration surrendered by the Optionee; provided, however, that such risks of forfeiture and restrictions on transfer shall apply only to the same number of shares of Common Stock received by the Optionee as applied to the forfeitable or restricted shares of Common Stock surrendered by the Optionee.

(e)Any Award of Option Rights may provide for the deferred payment of the Option Price from the proceeds of sale through a broker of some or all of the shares of Common Stock to which the exercise relates.

(f)Successive Awards may be made to the same Participant regardless of whether any Option Rights previously awarded to the Participant remain unexercised.

(g)Each Award shall specify the period or periods of continuous service as a Non-Employee Director by the Optionee that are necessary or Performance Objectives that must be achieved before the Option Rights or installments thereof shall become exercisable, and any Award may provide for the earlier exercise of the Option Rights in the event of a change in control of the Corporation or other transaction or event.

(h)On or after the Date of Award of any Option Right, the Board may provide for the payment to the Optionee of dividend equivalents thereon in cash or shares of Common Stock on a current or contingent basis.

(i)The term of an Option Right shall be set by the Board; provided, however, that no Option Right awarded pursuant to this Section 4 may have a term of more than 10 years from the Date of Award.

(j)Each Award of an Option Right shall be evidenced by a written Stock Option Agreement, which shall be executed on behalf of the Corporation by any officer thereof and delivered to and accepted by the Optionee and shall contain such terms and provisions as the Board may determine consistent with this Plan.

5.Common Stock Grants and Restricted Stock. The Board may also authorize Awards to Participants of Common Stock Grants and Restricted Stock upon such terms and conditions as the Board may determine in accordance with the following provisions:

(a)A Common Stock Grant consists of the transfer by the Corporation to a Participant of shares of Common Stock in consideration and as additional compensation for services performed for the Corporation. Each Award of Common Stock Grants and Restricted Stock shall constitute an immediate transfer of the ownership of shares of Common Stock to the Participant in consideration of the performance of services, entitling such Participant to dividend, voting and other ownership rights, subject to, in the case of Awards of Restricted Stock, the substantial risk of forfeiture and restrictions on transfer hereinafter referred to.

(b)Each Award of Restricted Stock shall provide that the shares of Restricted Stock covered thereby shall be subject to a "substantial risk of forfeiture" within the meaning of Section 83 of the Code for a period to be determined by the Board on the Date of Award, and may provide for the termination of such risk of forfeiture upon the achievement of certain Performance Objectives, in the event of a change in control of the Corporation, or upon any other transaction or event.

(c)Each Award of Restricted Stock shall provide during the period for which such substantial risk of forfeiture is to continue, and any Award of Common Stock Grants may provide, that the transferability of the shares of Common Stock subject to such Awards shall be prohibited or restricted in the manner and to the extent prescribed by the Board on the Date of Award. Such restrictions may include, without limitations, rights of repurchase or first refusal in the Corporation or provisions subjecting the shares of Restricted Stock to a continuing substantial risk of forfeiture in the hands of any transferee.

(d)Any Award of a Common Stock Grant or Restricted Stock may be made in consideration of payment by the Participant of an amount that is less than the Fair Market Value per share on the Date of Award.

(e)Any Award of Restricted Stock may require that any or all dividends or other distributions paid on the shares of Restricted Stock during the period of such restrictions be automatically sequestered and reinvested on an immediate or deferred basis in additional shares of Common Stock, in which case such additional shares of Common Stock shall be subject to the same restrictions as the underlying Award or such other restrictions as the Board may determine.

(f)Each Award of a Common Stock Grant and Restricted Stock may be evidenced by a Stock Grant Agreement or Restricted Stock Agreement (as the case may be), executed on behalf of the Corporation by any officer thereof and delivered to and accepted by the Participant containing such terms and provisions as the Board may determine consistent with this Plan. Unless otherwise directed by the Board, all certificates representing shares of Restricted Stock, together with a stock power endorsed in blank by the Participant with respect to the shares of Restricted Stock, shall be held in custody by the Corporation until all restrictions thereon lapse.

(g)The Board may provide, at or after the Date of Award of any Common Stock Grant or Restricted Stock, for the payment of a cash award intended to offset the amount of tax that the Participant may incur in connection with such Common Stock Grant or Restricted Stock, including, without limitation, tax on the receipt of such cash award; provided, however, that any such payment shall be made no later than 2-1/2 months after the end of the calendar year: (i) in which the grant is made, in the case of a Common Stock Grant; or (ii) in which the forfeiture restrictions lapse, in the case of Restricted Stock.

(h)The Board may provide in any individual Stock Grant Agreement or Restricted Stock Agreement that the Corporation shall have the right to repurchase the Restricted Stock then subject to restrictions under the Restricted Stock Agreement, or the Common Stock subject to the Common Stock Grant, immediately upon a Termination of Directorship for any reason at a cash price per share equal to the cash price paid by the Participants for such Restricted Stock or Common Stock. In the discretion of the Board, provision may be made that no such right of repurchase shall exist in the event of a Termination of Directorship without cause or because of the Participant's retirement, death or permanent and total disability.

6.Mandatory Shares and Voluntary Shares.

(a)Mandatory Shares. Prior to May 12, 1998, each Non-Employee Director shall be paid, in the form of shares of Common Stock ("Mandatory Shares"), ten percent (10%) of his or her Retainer with respect to such Accounting Period or portions thereof as the Board shall designate (the "Mandatory Retainer Amount"). No later than ten (10) days following the date of each quarterly Board meeting (the "Issuance Date"), the Corporation shall issue to each Non-Employee Director a number of Mandatory Shares equal to: (i) the portion of such Director's Mandatory Retainer Amount earned during such Accounting Month; divided by (ii) the Market Value per Share on the first day of the Accounting Month during which such Mandatory Shares were earned (the "Valuation Date"). For purposes of this Section 6(a), the Mandatory Retainer Amount and the Mandatory Shares related thereto shall be deemed earned during the Accounting Month during which such Mandatory Retainer Amount would otherwise be payable by the Corporation if paid in cash. On and after May 12, 1998, Mandatory Shares shall no longer be payable to Non-Employee Directors under the Plan with respect to Fees earned on and after such date.

(b)Voluntary Shares. Each Non-Employee Director shall be eligible to elect to receive shares of Common Stock in accordance with the following provisions:

(i)Prior to the commencement of each Accounting Period (or by such other date as may be specified by the Board), a Participant may elect, by the filing of a Participation Agreement, to have up to 100 percent of his or her Election Fees paid by the Corporation in the form of shares of Common Stock in lieu of a cash payment (the "Voluntary Shares"). Such Participation Agreement must, except as the Board may otherwise provide, be filed as a one-time election for the applicable Accounting Period. Unless the Director revokes or changes such election by filing a new Participation Agreement by the due date therefor specified in this Section 6(b), such election shall apply to a Participant's Election Fees for the subsequent Accounting Period only. Once an election has been terminated, another election may not be made effective until the commencement of the next subsequent full Accounting Period unless the Board shall have otherwise provided.

(ii)No later than the Issuance Date, the Corporation shall issue to each Participant who has made an election under Section 6(b), a number of Voluntary Shares for the immediately preceding Accounting Month equal to: (i) the portion of such Director's Election Fees for such Accounting Month that such Director has elected to receive as Voluntary Shares; divided by (ii) the Fair Market Value per share of Common Stock on the date on which the Director would have been paid the Election Fees in cash (but for the election to receive Voluntary Shares).

(c)Transition Rule. No later than March 10, 1998, each Participant shall be issued, in addition to such number of Mandatory Shares and Voluntary Shares to which he or she is otherwise entitled pursuant to Sections 6(a) and (b) hereof for the Accounting Month ended February 28, 1998, (i) a number of Mandatory Shares equal to (x) $500 divided by the Market Value per Share on August 1, 1997, (y) $500 divided by the Market Value per Share on November 3, 1997, and (z) $500 divided by the Market Value per Share on February 2, 1998, and (ii) a number of Voluntary Shares for the period May 13, 1997 through January 31, 1998 (the "Transition Period") equal to (x) the portion of such Participant's Election Fees for the Transition Period that such Participant has elected to receive as Voluntary Shares, divided by (y) the Market Value per share on the first day of the Accounting Month during which such Voluntary Shares were earned, (collectively, the "Transition Shares"). For purposes of this Section 6(c), the above-referenced Mandatory Shares and Voluntary Shares shall be deemed earned during the Accounting Month during which such Mandatory Shares and Voluntary Shares (and the amounts underlying such Shares) would otherwise have been payable by the Corporation if paid in cash.

7.Transferability.

(a)Except as may be otherwise determined by the Board, Awards under this Plan may be transferred by a Participant only by will or the laws of descent and distribution and Option Rights may not be exercised during a Participant's lifetime except by the Participant or, in the event of the Participant's legal incapacity, by his or her guardian or legal representative acting in a fiduciary capacity on behalf of the Participant under state law and court supervision.

(b)Any Award made under this Plan may provide that all or any part of the shares of Common Stock that are to be issued or transferred by the Corporation upon the exercise of Option Rights, or are no longer subject to the substantial risk of forfeiture and restrictions on transfer referred to in Section 5 of this Plan, shall be subject to further restrictions upon transfer.

(c)To the extent required to satisfy any condition to exemption available pursuant to Rule 16b-3, Mandatory Shares and Voluntary Shares acquired by a Participant shall be held by the Participant for a period of at least six months following the date of such acquisition.

8.Adjustments. The Board may make or provide for such adjustments in the: (a) number of shares of Common Stock covered by outstanding Awards and Mandatory Shares or subject to elections to receive Voluntary Shares; (b) prices per share applicable to Option Rights, and (c) kind of shares (including, without limitation, shares of another issuer) covered thereby, as the Board in its sole discretion may in good faith determine to be equitably required in order to prevent dilution or enlargement of the rights of Participants that otherwise would result from (x) any stock dividend, stock split, combination of shares, recapitalization or other change in the capital structure of the Corporation, (y) any merger, consolidation, spin-off, split-off, split-up, reorganization, partial or complete liquidation or other distribution of assets, or issuance of rights or warrants to purchase securities, or (z) any other corporate transaction or event having an effect similar to any of the foregoing. In the event of any such transaction or event, the Board may provide in substitution for any or all outstanding Awards, Mandatory Shares or Voluntary Shares to be issued under this Plan such alternative consideration as it may in good faith determine to be equitable under the circumstances and may require in connection therewith the surrender of all Awards, Mandatory Shares or Voluntary Shares so replaced. The Board may also make or provide for such adjustments in the numbers and kind of shares specified in Section 3 of this Plan as the Board may in good faith determine to be appropriate in order to reflect any transaction or event described in this Section 8.

9.Fractional Shares. The Corporation shall not be required to issue any fractional shares of Common Stock pursuant to this Plan. The Board may provide for the elimination of fractions, for the settlement thereof in cash or for such other adjustments contemplated by Section 8 of this Plan.

10.Withholding Taxes. To the extent, if any, that the Corporation is required to withhold federal, state, local or foreign taxes in connection with any payment made or benefit realized by a Participant or other person under this Plan, and the amounts available to the Corporation for the withholding are insufficient, it shall be a condition to the receipt of any such payment or the realization of any such benefit that the Participant or such other person make arrangements satisfactory to the Corporation for payment of the balance of any taxes required to be withheld. At the discretion of the Board, any such arrangements may include relinquishment of a portion of any such payment or benefit. The Corporation and any Participant or such other person may also make similar arrangements with respect to the payment of any taxes with respect to which withholding is not required.

11.Certain Terminations of Directorships.

(a)Notwithstanding any other provision of this Plan to the contrary, in the event of Termination of Directorship by reason of death or disability, or in the event of hardship or other special circumstances, of a Participant who holds an Option Right that is not immediately and fully exercisable or any Award as to which the substantial risk of forfeiture or the prohibition or restriction on transfer has not lapsed, the Board may in its sole discretion take any action that it deems to be equitable under the circumstances or in the best interests of the Corporation, including, without limitation, waiving or modifying any limitation or requirement with respect to any Award under this Plan.

(b)If a Non-Employee Director becomes an Employee while continuing to serve as a Director, that fact alone shall not result in a Termination of Directorship or otherwise impair the rights such Director may have under this Plan, including, without limitation, the rights such Director may have under any Award outstanding under this Plan, but such Director shall no longer be eligible to receive any further Awards under this Plan.

12.Administration.

(a)Administration by the Board; Delegation. This Plan shall be administered by the Board, which may from time to time delegate all or any part of its authority under this Plan to a committee or subcommittee of not less than two Directors appointed by the Board who are "non-employee directors" within the meaning of that term as defined in Rule 16b-3. To the extent of any delegation by the Board under this Plan, references in this Plan to the Board shall also refer to the applicable committee or subcommittee. The majority of any such committee or subcommittee shall constitute a quorum, and the action of a majority of its members present at any meeting at which a quorum is present, or acts unanimously approved in writing, shall be the acts of such committee or subcommittee.

(b)Administrative Powers. The Board shall have the power to interpret this Plan, the Option Rights, the Common Stock Grants, the Restricted Stock, the Mandatory Shares and elections to receive Voluntary Shares, and the agreements pursuant to which the Option Rights, the Common Stock Grants, the Restricted Stock, the Mandatory Shares and Voluntary Shares are awarded and issued (including Participation Agreements), and to adopt such rules for the administration, interpretation and application of this Plan and such agreements as are consistent therewith and to interpret, amend or revoke any such rules. Any Award under this Plan need not be the same with respect to each Optionee or Restricted Stockholder.

(c)Professional Assistance; Good Faith Actions. All expenses and liabilities which members of the Board incur in connection with the administration of this Plan shall be borne by the Corporation. The Board may employ attorneys, consultants, accountants, appraisers, brokers or other persons. The Board, the Corporation and the Corporation's officers and Directors shall be entitled to rely upon the advice, opinions or valuations of any such persons. All actions taken and all interpretations and determinations made by the Board in good faith shall be final and binding upon all Participants, the Corporation and all other interested persons. No members of the Board shall be personally liable for any action, determination or interpretation made in good faith with respect to this Plan, or any Option, Common Stock Grant, Restricted Stock, Mandatory Shares or Voluntary Shares, and all members of the Board shall be fully protected by the Corporation in respect of any such action, determination or interpretation.

13.Amendment, Suspension, Termination and Other Matters.

(a)This Plan may be wholly or partially amended or otherwise modified, suspended or terminated at any time or from time to time by the Board. However, without further approval of the stockholders of the Corporation, no action of the Board may, except as provided in Section 8 of this Plan, increase the limits imposed in Section 3 on the maximum number of shares of Common Stock which may be issued under this Plan, and no action of the Board may be taken that would otherwise require stockholder approval as a matter of applicable law or the rules of any U.S. stock exchange, including the New York Stock Exchange, on which the Common Stock may be listed for trading or authorized for quotation. No amendment, suspension or termination of this Plan shall, without the consent of the holder of an Award, alter or impair any rights or obligations under any Award theretofore granted, unless the Award itself otherwise expressly so provides.

(b)The Board may make under this Plan any Award or combination of Awards authorized under this Plan in exchange for the cancellation of an Award that was not made under this Plan.

(c)Except as provided in Section 13(d) of this Plan, the making of one or more Awards to a Non-Employee Director under this Plan shall not preclude the making of Awards to such Non-Employee Director under any other stock option or incentive plan previously or subsequently adopted by the Board, nor shall the fact that a Non-Employee Director has received one or more awards under the 1995 Plan or under any other stock option or incentive plan of the Corporation preclude such Non-Employee Director from receiving awards under this Plan.

(d)Upon approval of this Plan by the shareholders of the Corporation, Article V of the 1995 Plan shall be discontinued, except that any amounts remaining payable to Non-Employee Directors pursuant to Article V of the 1995 Plan shall be paid in accordance with its terms.

14.Termination of the Plan. No further awards shall be made under this Plan after the passage of 10 years from the date on which this Plan is first approved by the shareholders of the Corporation.

15.Effective Date. The effective date of this Plan, as amended and restated, shall be the date set forth in Section 1, above.

EX-10.3

EXHIBIT 10.3                                      

HNI CORPORATION

  LONG-TERM PERFORMANCE PLAN

(Adopted February 16, 2000. Amended January 1, 2004 and August 8, 2006.)

HNI Corporation, an Iowa corporation (the "Corporation") hereby establishes this Long-Term Performance Plan (the "Performance Plan") effective as of January 1, 2003, and amended on January 1, 2004 and August 8, 2006.

1.Purpose. The purpose of this Performance Plan is to promote the attainment of the Corporation's performance goals by providing incentive compensation for certain designated key executives and employees of the Corporation and its Subsidiaries.

2.Definitions. The following terms have the following meanings when used in this Performance Plan with initial capital letters:

(a)"Board" means the Board of Directors of the Corporation or, pursuant to any delegation by the Board to the Committee pursuant to Section 13, the Committee.

(b)"Code" means the Internal Revenue Code of 1986, as amended from time to time.

(c)"Committee" means the Human Resources and Compensation Committee of the Board as constituted at the relevant time, which shall consist of two or more "outside directors" within the meaning of Section 162(m) of the Code who are not eligible for participation in the Plan.

(d)"Disability or Disabled," with respect to a Participant, means that the Participant satisfies the requirements to receive long-term disability benefits under the Corporation-sponsored group long-term disability plan in which the Participant participates without regard to any waiting periods, or that the Participant has been determined by the Social Security Administration to be eligible to receive Social Security disability benefits. A Participant shall not be considered to be Disabled unless the Participant furnishes proof of the Disability to the Corporation in such form and manner as the Corporation may require.

(e)"Earned Performance Award" means the award, if any, payable to a Participant at the end of the Performance Period.

(f)"162(m) Employee," for any calendar year, means an employee of the Corporation who, as of the close of the calendar year, is: (a) the CEO (or an individual acting in such capacity); or (b) among the four highest compensated officers of the Corporation (other than the CEO). Whether an employee is the CEO or one of the four highest compensated officers of the Corporation is determined pursuant to the executive compensation rules of the Securities Exchange Act of 1934.

(g) "Operating Unit" means either:  (i) the Corporation as a whole; (ii) an individual subsidiary, division, store, or other business unit of the Corporation; or (iii) a grouping of business units, that employs individuals that have been approved to participate in this Performance Plan by the Board.

(h)"Participant" means a person who is designated by the Board to receive benefits under this Performance Plan and who is at the time an officer, executive, or other employee of the Corporation or any one or more of its Subsidiaries, or who has agreed to commence serving in any such capacity.

(i)"Performance Measure" means the level of performance for the Operating Unit, a division or other business unit of an operating unit, or any of them, for each Performance Period, in each case as established pursuant to Section 6. A Performance Measure may take into account such criteria as the Board determines to be appropriate.

(j) "Performance Period" means a period of three consecutive fiscal years of the Corporation commencing on the first day of a fiscal year of the Corporation or other period as selected by the Board.

(k)"Retirement," of a Participant, means: (i) for Performance Periods commencing on or after January 1, 2007, the Participant's termination of employment with the Corporation and its Subsidiaries after the attainment of age 65, or age 55with ten years of service with the Corporation or a Subsidiary, provided, however, that the Chief Executive Officer of the Corporation, in his or her discretion, may waive or reduce the ten-year service requirement with respect a Participant; and (ii) for Performance Periods commencing prior to January 1, 2007, the Participant's voluntary termination of employment with the Corporation on or after attainment of age 65, or when the Participant is at least 55 years old and the sum of the Participant's age and service equals at least 65.

(l) "Target Performance Award" means the dollar award established for a Participant if the Performance Measures applicable to the Participant is achieved.

(m)"Subsidiary" has the meaning specified in Rule 405 promulgated under the Securities Act of 1933, as amended (or under any successor rule substantially to the same effect).

3.Eligibility.

(a)Except as otherwise provided in this Section 3, an employee of the Corporation or one of its Subsidiaries will become a Participant for a particular Performance Period to the extent designated by the Board, or by the Chief Executive Officer of the Corporation if the Board delegates such authority to Chief Executive Officer.

(b)An employee who first becomes eligible to participate after the beginning of a particular Performance Period will become a Participant for such Performance Period only in accordance with this Section 3(b). The Board, or the Chief Executive Officer of the Corporation if the Board delegates such authority to the Chief Executive Officer, may allow participation for a portion of such Performance Period for such employee on such terms and conditions as the Board (or the Chief Executive Officer) may determine.

4. Earned Performance Award.  Unless changed by the Board, each eligible Participant may earn an Earned Performance Award as hereinafter provided. The performance of the Operating Unit during a particular Performance Period will be measured using the Performance Measure established for that Performance Period by the Board in accordance with Section 6. In the event such performance for such Performance Period is below the minimum Performance Measure established therefor, no Earned Performance Award will be paid to Participants in respect thereof. In no event shall an Earned Performance Award exceed $3 million dollars.

5. Target Performance Award.  Each Participant shall be assigned a Target Performance Award at the beginning of the Performance Period, as determined by the Board. The Target Performance Award will be expressed as a percentage of the Participant's base pay at the time the Target Performance Award is assigned. The actual award payable to a Participant at the end of the Performance Period will be determined by applying the percentage achievement of the Performance Measure and multiplying that result against the Target Performance Award to determine the Earned Performance Award.  

6.Performance Measure.

(a)The Board will approve for each Performance Period the applicable Performance Measure. Such Performance Measure may be adjusted during a Performance Period to prevent dilution or enlargement of an award as a result of extraordinary events or circumstances as determined by the Board or to exclude the effects of extraordinary, unusual or nonrecurring events, changes in accounting principles, discontinued operations, acquisitions, divestitures and material restructuring charges.

(b)The Corporation will: (i) notify each eligible employee who has been selected to participate in this Performance Plan that he or she is a Participant under this Performance Plan for such Performance Period; and (ii) communicate in writing to each Participant the Target Performance Award granted to such Participant pursuant to Section 5 and the Performance Measure applicable to such Participant for such Performance Period.

(c)In the case of a Participant who is a 162(m) Employee, a Performance Measure must be pre-established by the Committee, must be objective, and must state, in terms of an objective formula or standard, the method for computing the amount of compensation payable if the Performance Measure is attained. A Performance Measure is considered "pre-established" for purposes of this paragraph if it is established in writing by the Committee no later than 90 days after the commencement of a Performance Period, provided that the outcome is substantially uncertain at the time the Committee actually establishes the Performance Measure. However, in no event will a Performance Measure be considered to be pre-established if it is established after 25% of a Performance Period has elapsed. A Performance Measure is considered "objective" if a third party having knowledge of the relevant facts could determine whether the Performance Measure is met. A formula or standard is considered "objective" if a third party having knowledge of the relevant performance results could calculate the amount to be paid to the Participant.

The Performance Measure may be based on one or more of the following criteria and may be based on attainment of a particular level of, or on a positive change in, a factor: revenue, revenue per employee, earnings before income tax (profit before taxes), earnings before interest and income tax, net earnings (profit after taxes), earnings per employee, tangible, controllable or total asset turnover, earnings per share, operating income, total shareholder return, market share, return on equity, return on invested capital, growth in earnings, before-tax return on net assets, after-tax return on net assets, distribution expense, inventory turnover, economic value added (economic profit).

7.Payment of Awards.

(a)Subject to Sections 8 and 9, the value of the Earned Performance Award with respect to a Performance Period will be paid on the 15th day of the Corporation's February fiscal month following the end of the Performance Period (or as soon thereafter as is administratively reasonable), provided the Participant is employed by the Operating Unit as of the last day of such Performance Period, and such payment, if any is earned, shall be made in the following form:  (i) 50% of the value thereof in the form of cash; and (ii) 50% of the value thereof in the form of common stock of HNI Corporation as Bonus Stock or deferred shares, as elected by the Participant, and as granted by the Board under the 1995 Stock-Based Compensation Plan or the 2007 Stock-Based Compensation Plan, if approved by the shareholders of the Corporation. For purposes hereof, an Earned Performance Award will be deemed to be paid as soon as administratively reasonable after the date specified above if it is paid within six months thereafter. All Earned Performance Awards that are paid in cash will be paid in U.S. dollars. The Corporation may deduct from any payment such amounts as may be required to be withheld under any federal, state, or local tax laws. In the case of a Participant who is a 162(m) Employee, the Committee shall certify the extent to which the Participant has satisfied each of his or her Performance Measure.

(b) All Earned Performance Awards paid to the Chief Executive Officer and Chief Financial Officer of the Corporation under this Plan are subject to forfeiture as provided in Section 304 of the Sarbanes-Oxley Act of 2002, and the implementing rules and regulations. Notwithstanding anything in the Plan to the contrary, the Board may reduce the amount of, or completely eliminate, an Earned Performance Award otherwise payable to a Participant for a Performance Period if the Board determines that due to the Participant's performance or behavior during or immediately following such Performance Period the Participant should not be entitled to the Earned Performance Award.

8.Termination of Employment.

(a) If a Participant terminates employment with the Corporation and its Subsidiaries due to death, Disability, or Retirement occurring before the last day of a Performance Period, the Participant's Earned Performance Award, if any, will be payable as soon as practicable after the end of such Performance Period, and the value of such Award shall be equal to a value, determined using the Performance Measure as of the end of the Performance Period, equal to the product of: (i) the number of the Target Performance Award; multiplied by (ii) a fraction, the numerator of which is the number of months in the Performance Period that occurred prior to such termination of employment, and the denominator of which is the total number of months in such Performance Period. For these purposes, a Participant will be credited with a month during a Performance Period only if he or she is employed for at least 15 days during the month.

(b) Except as provided in Section 9, if a Participant's employment with the Corporation and its Subsidiaries terminates for any reason other than death, Disability or Retirement before the last day of a Performance Period, the Participant will not be entitled to any payment or award under this Performance Plan unless otherwise determined by the Board.

9.Change in Control of the Corporation.

(a) In connection with a Change in Control of the Corporation, the value of each Target Performance Award shall be determined by the Board prior to the effective date of the Change in Control, and each Participant's Target Performance Award will become payable without proration within 30 days prior to such date.

(b)A "Change in Control of the Corporation" shall mean:

(i) the acquisition by any individual, entity or group (with the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 35% or more of either: (A) the then outstanding shares of common stock of the Corporation (the "Outstanding Corporation Common Stock"); or (B) the combined voting power of the then outstanding voting securities of the Corporation entitled to vote generally in the election of Directors (the "Outstanding Corporation Voting Securities"); provided, however, that for purposes of this subsection (i), the following acquisitions shall not constitute a Change in Control: (I) any acquisition directly from the Corporation; (II) any acquisition by the Corporation; (III) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Corporation or any corporation controlled by the Corporation; or (IV) any acquisition by any corporation pursuant to a transaction which complies with clauses (A), (B) and (C) of subsection (iii) of this paragraph; or

(ii) individuals who, as of the date hereof, constitute the Board (the "Incumbent Board") cease for any reason to constitute a majority of the Board; provided, however, that any individual becoming a Director subsequent to the date hereof whose election, or nomination for election by the Corporation's shareholders, was approved by a vote of a majority of the Directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of Directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

(iii) consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Corporation (a "Business Combination"), in each case, unless, following such Business Combination: (A) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Corporation Common Stock and Outstanding Corporation Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, 50% or more of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of Directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Corporation or all or substantially all of the Corporation's assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Corporation Common Stock and Outstanding Corporation Voting Securities, as the case may be; (B) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of the Corporation or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 35% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination; and (C) at least a majority of the members of the board of directors of the corporation resulting from such Business combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination.

10.Sale of Operating Unit. Except as provided in paragraph 9, in the event of the sale of substantially all of the stock or assets of an Operating Unit, with respect to each Participant employed by such Operating Unit on the date of such sale, the value of each Award shall be determined as of the date of such sale by the Board based on the percentage of the Performance Measure completed as of the date of sale, the number of months of the Performance Period completed at the time of sale, the actual purchase price of the Operating Unit and such other factors as the Board deems relevant in light of the circumstances of the sale. Payments pursuant to this Section 10 shall be made 60 days, or as soon thereafter as is administratively reasonable, following the date of the sale. For these purposes, a month will be considered to have been completed at the time of the sale only if the sale occurs later than the 14th day of the month.

11.Transfers and Changes in Responsibilities.

(a) If a Participant's responsibilities materially change or the Participant is transferred during a Performance Period to another Operating Unit or to a position that is not designated or eligible to participate in this Performance Plan, the Corporation may, as determined by the Board, either: (i) continue the Participant's participation in this Performance Plan and establish a new Target Performance Award and Performance Measure for the Participant with respect to his or her new position; or (ii) terminate the Participant's participation in this Performance Plan and, as of the date of such change or transfer, prorate the Participant's Target Performance Award on the basis of the ratio of the number of months of the Participant's participation during the Performance Period to which such Target Performance Award relates to the aggregate number of months in such Performance Period. For these purposes, a Participant will be considered to have participated for a month during a Performance Period only if he or she participated for at least 15 days during the month.

(b)If in the event of such a change or transfer and the Participant's participation in this Performance Plan is not terminated pursuant to Section 11(a)(ii), then the Participant's Earned Performance Award will be prorated on the basis of the number of months of service by the Participant at each Operating Unit during the Performance Period. For these purposes, a Participant will be credited with a month of service at an Operating Unit only if he or she was employed by the Operating Unit for at least 15 days during the month.

12.Security of Payment of Benefits. Unless otherwise determined by the Board, all Earned Performance Awards will be paid from the Corporation's general assets, and nothing contained in this Performance Plan will require the Corporation to set aside or hold in trust any funds for the benefit of any Participant, who will have the status of a general unsecured creditor of the Corporation.

13.Administration of the Plan.

(a)  This Performance Plan will be administered by the Board, which may from time to time delegate all or any part of its authority under this Performance Plan to the Committee. Notwithstanding the forgoing, in the case of any 162(m) Employee, the Committee shall have sole and exclusive authority to: (i) establish the Performance Measures for such employee; (ii) determine and certify the achievement of the Performance Measures for such employee, and (iii) make any other discretionary decision affecting such employee under the Plan.

(b)The Board will take such actions as are required to be taken by it hereunder, may take the actions permitted to be taken by it hereunder, and will have the authority from time to time to interpret this Performance Plan and to adopt, amend, and rescind rules and regulations for implementing and administering this Performance Plan. All such actions will be in the sole discretion of the Board and, when taken, will be final, conclusive, and binding. Without limiting the generality or effect of the foregoing, the interpretation and construction by the Board of any provision of this Performance Plan or of any agreement, notification, or document evidencing the grant of benefits payable to Participants and any determination by the Board in its sole discretion pursuant to any provision of this Performance Plan or any provision of such agreement, notification, or document will be final and conclusive.

(c)The existence of this Performance Plan or any right granted or other action taken pursuant hereto will not affect the authority of the Board or the Corporation to take any other action, including in respect of the grant or award of any annual or long-term incentive or other right or benefit, whether or not authorized by this Performance Plan, subject only to limitations imposed by other benefit plans of the Corporation and by applicable law.

14.Miscellaneous.

(a)  This Performance Plan will not confer upon any Participant any right with respect to continuance of employment or other service with the Corporation or any Subsidiary, nor will it interfere in any way with any right the Corporation or any Subsidiary would otherwise have to terminate or modify the terms of such Participant's employment or other service at any time.

(b)Except as otherwise provided in this Performance Plan, no right or benefit under this Performance Plan will be subject to anticipation, alienation, sale, assignment, pledge, encumbrance, or charge, and any attempt to anticipate, alienate, sell, assign, pledge, encumber, or charge such right or benefit will be void. No such right or benefit will in any manner be liable for or subject to the debts, liabilities, or torts of a Participant.

(c)This Performance Plan may be amended or terminated from time to time by the Board. In the event this Performance Plan is terminated before the last day of a Performance Period, the Earned Performance Award otherwise payable for such Performance Period will be prorated on the basis of the ratio of the number of months in such Performance Period prior to such termination to the aggregate number of months in such Performance Period and will be paid only after the end of such Performance Period, which will be deemed to continue until the expiration thereof as if this Performance Plan had not been terminated. For these purposes, a month will be considered to have been completed at the time of the amendment or termination only if the amendment or termination is effective later than the 14th day of the month. Any such termination shall comply with the requirements of Section 409A of the Code.

The Performance Plan will be terminated in the event the shareholders of the Corporation approve a complete liquidation or dissolution of the Corporation that will be taxed under Section 331 of the Code. In such case, the value of each Target Performance Award shall be determined by the Board prior to the effective date of the dissolution, and each Participant's Target Performance Award will become payable upon such dissolution.

(d)If any provision in this Performance Plan is held to be invalid or unenforceable, no other provision of this Performance Plan will be affected thereby.

(e)This Performance Plan will be governed by and construed in accordance with applicable United States federal law and, to the extent not preempted by such federal law, in accordance with the laws of the State of Iowa, without giving effect to the principles of conflict of laws thereof.

15.Effective Date. The amendment and restatement of this Performance Plan set forth herein will become effective as of August 8, 2006.

EX-10.4

EXHIBIT 10.4                        

HNI CORPORATION

EXECUTIVE BONUS PLAN

As adopted on May 1, 1974, and amended on

April 20, 1976, April 19, 1977, January 31, 1983,

February 5, 1985, November 4, 1986, July 7, 1988

May 4, 1992, November 2, 1992, February 8, 1993,

February 14, 1994, November 14, 1994, May 8, 1995,

November 11, 1996, January 1, 2000, January 1, 2004,

November 11, 2005, and August 8, 2006.

1.Purpose. The purpose of the Executive Bonus Plan (the "Plan") is to encourage a consistently high standard of excellence and continued employment by officers and selected other executives of the Corporation and any subsidiary, which elects to participate in the Plan (an "Electing Subsidiary").  The Plan shall be operated at all times in conformance with applicable government regulations.  (As amended January 31, 1983, May 4, 1992, November 11, 1996 and August 8, 2006.)

2.Participants. For any fiscal year, each person who is an officer as of the end of such fiscal year of HNI Corporation (the "Corporation") or any Electing Subsidiary, and each other executive of the Corporation or any Electing Subsidiary as is selected by the Board of Directors of the Corporation ("Board"), or by the Chief Executive Officer of the Corporation if the Board delegates such authority to Chief Executive Officer, as of the end of such fiscal year, shall be eligible to be Participants in the Plan.  (As amended April 20, 1976, April 19, 1977,November 11, 1996 and August 8, 2006.)

3.Payment. Upon final determination of bonus awards by the Board or, to the extent delegated by the Board for a fiscal year, the Human Resources and Compensation Committee of the Board ("Committee"), the bonus awards shall be paid in full in cash, subject to Section 3(c), as follows:

a.Any bonus award for a fiscal year ending prior to December 28, 1996, to the extent not already paid to the Participant, shall be paid to the Participant (or, as applicable, the Participant's estate) in a single sum payment not later than March 14, 1997, provided that (i) the Participant is employed by the Corporation or an Electing Subsidiary on the date of payment or (ii) the Participant's employment with the Corporation and each Electing Subsidiary terminated due to death, disability, retirement after age 55 pursuant to established retirement policies of the Corporation or for any other reason (except a termination for cause, as determined by the Committee) after a Change in Control (as defined below).  (As amended August 8, 2006.)

b.Effective for each fiscal year ending on or after December 28, 1996, each bonus award for such fiscal year shall be paid on the 15th day of the Corporation's February fiscal month following the end of the Corporation's fiscal year for which the bonus award is made (or as soon thereafter as is administratively reasonable), provided, subject to Section 4, that the Participant is employed by the Corporation or an Electing Subsidiary on the last day of the fiscal year for which a bonus, if any, is to be paid.  For purposes hereof, a bonus award will be deemed to be paid as soon as administratively reasonable after the date specified above if it is paid within six months thereafter.  (As amended January 1, 2004 and August 8, 2006).

c.The Committee may require payment of any bonus award (or portion thereof) for a fiscal year under Section 3(a) or 3(b) in the form of shares of Bonus Stock issued pursuant to (and as defined in) the Corporation's Stock-Based Compensation Plan (i) at the Participant's request, in the amount indicated by such Participant, subject to the Committee's approval, or (ii) in the amount of up to 50% of such bonus award in the event that the Committee determines, in its sole discretion, that the Participant's respective stock ownership level under the Executive Stock Ownership Policy does not reflect appropriate progress toward such Participant’s five-year goal thereunder.  The number of shares of Bonus Stock to be paid shall be determined by dividing the cash amount of the bonus award under the Plan (or, portion thereof, as elected by the Participant) for a fiscal year by the average of the high and low prices of a share of the Corporation's common stock on the date the award is paid.  All Federal, state and local income tax and other employment tax withholding shall be made pursuant to Section 5.5 of the Stock-Based Compensation Plan.  (As amended January 31, 1983, May 8, 1995, November 11, 1996, January 1, 2000, November 11, 2005, and August 8, 2006.)

d.As used in the Plan, "Change in Control" means:

(i) the acquisition by any individual, entity or group (with the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 35% or more of either:  (A) the then outstanding shares of common stock of the Corporation (the "Outstanding Corporation Common Stock"); or (B) the combined voting power of the then outstanding voting securities of the Corporation entitled to vote generally in the election of Directors (the "Outstanding Corporation Voting Securities"); provided, however, that for purposes of this subsection (i), the following acquisitions shall not constitute a Change in Control:  (I) any acquisition directly from the Corporation; (II) any acquisition by the Corporation; (III) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Corporation or any corporation controlled by the Corporation; or (IV) any acquisition by any corporation pursuant to a transaction which complies with clauses (A), (B) and (C) of subsection (iii) of this paragraph; or

(ii) individuals who, as of the date hereof, constitute the Board (the "Incumbent Board") cease for any reason to constitute a majority of the Board; provided, however, that any individual becoming a Director subsequent to the date hereof whose election, or nomination for election by the Corporation's shareholders, was approved by a vote of a majority of the Directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of Directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

(iii) consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Corporation (a "Business Combination"), in each case, unless, following such Business Combination:  (A) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Corporation Common Stock and Outstanding Corporation Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, 50% or more of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of Directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Corporation or all or substantially all of the Corporation's assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Corporation Common Stock and Outstanding Corporation Voting Securities, as the case may be; (B) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of the Corporation or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 35% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination; and (C) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination.

(As amended November 4, 1986, July 7, 1988, November 14, 1994, November 11, 1996 and August 8, 2006.)

4.Termination of Employment.  The following provisions shall apply for any fiscal year commencing after December 28, 1996:

a. If a Participant's employment with the Corporation and each Electing Subsidiary is terminated during a fiscal year by reason of death, Disability (as defined in the HNI Corporation Long-term Performance Plan), or Retirement, the Participant or the Participant's estate, shall receive a bonus award for such fiscal year, determined as if the Participant had remained employed for such entire fiscal year, prorated for the number of weeks during such fiscal year that have elapsed as of the Participant's termination, and subject to the first sentence of Section 4(b).  (As amended August 8, 2006.)

b. If a Participant's employment with the Corporation and each Electing Subsidiary is terminated during a fiscal year for any reason other than death, Disability (as defined in the HNI Corporation Long-term Performance Plan), or Retirement, the Participant's rights to any bonus award for such fiscal year will be forfeited.  However, the Committee may, in its discretion, determine to pay a prorated bonus award for the portion of such fiscal year during which the Participant was employed by the Corporation or an Electing Subsidiary, except that in no event shall any such prorated bonus award be paid in the event of termination for cause, as determined by the Committee.  (As amended November 11, 1996 and August 8, 2006.)

c. For purposes of this Section 4, "Retirement" means:  (i) for bonus awards granted for fiscal years commencing on or after January 1, 2007, the Participant's termination of employment with the Corporation and all Electing Subsidiaries after the attainment of age 65, or age 55with ten years of service with the Corporation or an Electing Subsidiary; provided, however, that the Chief Executive Officer of the Corporation, in his or her discretion, may waive or reduce the ten-year service requirement with respect a Participant; and (ii) for bonus awards granted for fiscal years commencing prior to January 1, 2007, the Participant's voluntary termination of employment with the Corporation and all Electing Subsidiaries on or after attainment of age 55. (As amended August 8, 2006.)

5.Change in Control.For fiscal years commencing after December 28, 1996, in the event of a Change in Control (as defined above), the maximum bonus award for the fiscal year then in progress, prorated for the number of weeks in such fiscal year that have elapsed as of the date of the Change in Control, shall be paid immediately in cash, without regard to Section 3(c).  Any adjustment or termination of a Participant's participation in the Plan that occurs at any time on or after the 90th day preceding a Change in Control shall be of no effect.  (As amended November 11, 1996 and August 8, 2006.)

6.Administration.  The Board shall have full power to interpret and administer this Plan from time to time in accordance with the By-laws of the Corporation, except to the extent provided in the Corporation's Stock-Based Compensation Plan or to the extent that the Board may have delegated its powers to the Committee.  Decisions of the Board or the Committee shall be final, conclusive and binding upon all parties.  The Committee shall consist of two or more "non-employee directors" within the meaning of Rule 16b-3 as promulgated pursuant to Section 16 of the Securities Exchange Act of 1934.  (As amended May 8, 1995, November 11, 1996 and August 8, 2006.)

7.Cost.  Each Electing Subsidiary shall reimburse the Corporation for the amount of such bonus awards, which shall be awarded and paid to Participants for services to such Electing Subsidiary, as determined by the Board.  (As amended August 8, 2006.)

8.Amount of Individual Bonus.  For fiscal years beginning after December 28, 1996, the bonus award for each fiscal year for any Participant shall be determined by the Board, or, to the extent delegated by the Board for a fiscal year, by the Committee, no later than the first meeting of the Board that occurs during the fiscal year following the year for which the bonus award is made.  (As amended April 20, 1976 and November 11, 1996.)

9.General Provisions.

a. The Corporation shall have the right to deduct any Federal, state or local taxes applicable to payments under the Plan.  The Committee may permit Participants to satisfy withholding obligations by electing to have shares of Bonus Stock withheld.

b. Except as otherwise determined by the Committee, no right or interest of any Participant in this Plan shall be assignable or transferable except by will or the laws of descent and distribution, nor shall any such right or interest be subject to any lien, directly, by operation of law or otherwise, including execution, levy, garnishment, attachment, pledge or bankruptcy.

c. Except as provided in Sections 4 and 5, the Board may terminate or amend the Plan at any time.

10.Special Provision for Qualifying Participants.

a.This Section 10 shall apply with respect to any bonus award made under the Plan with respect to the Chief Executive Officer of the Corporation and any other Participant designated by the Board from time to time (each a "Qualifying Participant").  Not later than the 90th day after the commencement of the fiscal year for which the bonus award is made, in addition to any other performance criteria established by the Committee, the Committee shall establish in writing Profit Achievement Factors and Personal Objective Achievement Factors (collectively, "Qualifying Factors") for each Qualifying Participant.  The maximum bonus award payable to a Qualifying Participant for such fiscal year based on the degree of attainment of such Qualifying Factors shall not exceed $2 million.  Subject to Sections 4 and 5, the Committee may adjust any Qualifying Factor that has been established for any fiscal year, provided that no such adjustment shall be permitted if it would cause the Award based on such Qualifying Factor to fail to satisfy the requirements for performance-based compensation under Code Section 162(m).  Subject to Sections 4 and 5, the Committee may adjust any other performance criteria established for any fiscal year, provided that no such adjustment may be based upon the failure, or the expected failure, to attain or exceed a Qualifying Factor.  In no event shall any bonus award relating to performance criteria other than Qualifying Factors be dependent upon the attainment of, or failure to obtain, a bonus award based on Qualifying Factors.

b.The administration of all aspects of the Plan applicable to bonus awards relating to Qualifying Factors is intended to comply with the exception from Section 162(m) of the Internal Revenue Code of 1986, as amended, for qualified performance-based compensation and shall be construed, applied and administered accordingly.

c.For purposes of this Section, (i) "Profit Achievement Factors" shall mean an objective performance goal based on one or more of the following: operating expense ratios, total stockholder return, return on sales, operating income, operating profit, return on equity, return on capital, return on assets, return on investment, net income, operating income, earnings per share, improved asset management, improved gross margins, generation of free cash, revenues, market share, stock price, cash flow, retained earnings, aggregate product price and other product price measures, and (ii) "Personal Objective Achievement Factors" shall mean an objective performance goal based on one or more of the following:  results of customer satisfaction surveys, results of employee surveys, employee turnover, safety record, management of acquisitions, increased inventory turns, product development and liability, research and development integration, proprietary protections, legal effectiveness, handling Federal securities law or environmental issues, manufacturing efficiencies, distribution efficiencies, member productivity, system review and improvement, service reliability, cost management.

d.This Section 10 shall become effective as of January 1, 2000; provided, however, that no bonus award relating to Qualifying Factors shall be paid under the Plan to any Qualifying Participant unless, prior to such payment, the provisions of this Section 10 are approved by the holders of a majority of the securities of the Corporation present, or represented, and entitled to vote at a meeting of stockholders duly held in accordance with the laws of the State of Iowa.

(Amended as of January 1, 2004 and August 8, 2006.)

EX-10.5

                   EXHIBIT 10.5

EXECUTIVE DEFERRED COMPENSATION PLAN

HNI Corporation

As Amended and Restated Effective January 1, 2005 to comply with Section 409A

of the Internal Revenue Code

TABLE OF CONTENTS

Page

 1. Amendment and Restatement          1

                   

1.1.	Amendment and Restatement	1
1.2.	Purpose	1
1.3.	Application of the Plan	1

 2. Definitions        1

              < /font>             

2.1.	Definitions	1
2.2.	Gender and Number	6

 3. Eligibility and Participation        6

3.1.	Eligibility	6
3.2.	Participation	6
3.3.	Missing Persons	6

 4. Establishment and Entries to Accounts       7

4.1.	Accounts	7
4.2	Deferral Election Agreement	7
4.3.	Adjustments to Accounts	9
4.4.	Commencement and Form of Distribution of Sub-Account	10
4.5.	Exceptions to Payment Terms	12
4.6.	Death Benefit	14
4.7.	Funding	14

 5. Administration    15

5.1.	Administration	15
5.2.	Actions of the Committee	15
5.3.	Delegation	15
5.4.	Expenses	15
5.5.	Reports and Records	15
5.6.	Valuation of Accounts and Account Statements	15
5.7.	Indemnification and Exculpation	16

 6. Beneficiary Designation     16

6.1.	Designation of Beneficiary	16
6.2.	Death of Beneficiary	16
6.3.	Ineffective Designation	16

 7. Withholding     16

 8. Change in Control, Amendment, and Termination    16

8.1.	Change in Control	17
8.2.	Plan Amendment and Termination	17

 9. Claims Procedure    17

 10. Miscellaneous    18

10.1.	Unfunded Plan	18
10.2.	Nontransferability	18
10.3.	Successors	18
10.4.	Severability	18
10.5.	Applicable Law	18
10.6.	No Other Agreements	19
10.7.	Incapacity	19
10.8.	Counterparts	19
10.9.	Electronic Media	19
10.10.	Administratively Reasonable	19
10.11.	Release	19
10.12.	Notices	19

HNI Corporation

Executive Deferred Compensation Plan

1.Amendment and Restatement

1.1.Amendment and Restatement.  HNI Corporation, an Iowa corporation (the "Corporation"), hereby amends and restates, effective as of January 1, 2005 (the "Restatement Date"), the HNI Corporation Executive Deferred Compensation Plan (the "Plan") to comply with Section 409A of the Internal Revenue Code and to effect certain other changes in its design and operation.  The Plan was most recently amended and restated, effective November 7, 2002.

1.2.Purpose.  The purpose of the Plan is to give eligible executive employees of the Corporation and certain of its Subsidiaries the opportunity to defer the receipt of compensation to supplement their retirement savings and to achieve their personal financial planning goals.

1.3.Application of the Plan.  The terms of the Plan, as amended and restated herein, apply to amounts deferred under the Plan on or after the Restatement Date. Amounts deferred under the Plan before the Restatement Date are subject to the terms of the Plan as in effect prior to the Restatement Date; provided, however, that Section 4.11 of the Plan (as in effect prior to the Restatement Date) is deleted in its entirety as of the Restatement Date, such that such section shall no longer apply to any amounts deferred under the Plan, whether before or after the Restatement Date.

2.Definitions

2.1.Definitions.  Whenever used in the Plan, the following terms shall have the meaning set forth below and, when the defined meaning is intended, the term is capitalized:

(a)   "Account" means the device used to measure and determine the amount of benefits payable to a Participant or Beneficiary under the Plan. The Corporation shall establish a Cash Account and Stock Account for each Participant under the Plan, and the term "Account," as used in the Plan, may refer to either such Account or the aggregate of the two Accounts. In addition, the Corporation shall establish a separate Sub-Account under each of the Participant's Cash Account and Stock Account for each Deferral Election Agreement entered into by the Participant pursuant to Section 4.2.

(b)   "Annual Bonus," of a Participant for a Plan Year, means the bonus awarded by the Employer to a Participant in cash or Stock for services performed by the Participant during the Plan Year, as provided in the HNI Corporation Executive Bonus Plan, or any successor plan thereto.

(c)   "Base Salary," of a Participant for a Plan Year, means the base salary, including all regular basic wages before reduction for any amounts deferred on a tax-qualified or nonqualified basis, payable in cash to the Participant for services rendered to an Employer during the Plan Year. Base Salary shall exclude bonuses, incentive compensation, special fees or awards, allowances, or any other form of premium or incentive pay, or amounts designated by an Employer as payment toward or reimbursement of expenses.

(d)   "Beneficiary" means the persons or entities designated by a Participant in writing pursuant to Article 6 of the Plan as being entitled to receive any benefit payable under the Plan by reason of the death of a Participant, or, in the absence of such designation, the Participant's estate (pursuant to the rules specified in Article 6).

(e)   "Board of Directors" means the board of directors of the Corporation.

(f)   "Change in Control" means:

(i)the acquisition by any individual, entity or group (with the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 35% or more of either (A) the then outstanding shares of common stock of the Corporation (the "Outstanding Corporation Common Stock") or (B) the combined voting power of the then outstanding voting securities of the Corporation entitled to vote generally in the election of Directors (the "Outstanding Corporation Voting Securities"); provided, however, that for purposes of this subsection (i), the following acquisitions shall not constitute a Change in Control: (I) any acquisition directly from the Corporation; (II) any acquisition by the Corporation; (III) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Corporation or any corporation controlled by the Corporation; or (IV) any acquisition by any corporation pursuant to a transaction which complies with clauses (A), (B) and (C) of subsection (iii) of this paragraph; or

(ii)individuals who, as of the date hereof, constitute the Board (the "Incumbent Board") cease for any reason to constitute a majority of the Board; provided, however, that any individual becoming a Director subsequent to the date hereof whose election, or nomination for election by the Corporation's shareholders, was approved by a vote of a majority of the Directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of Directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

(iii)consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Corporation (a "Business Combination"), in each case, unless, following such Business Combination: (A) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Corporation Common Stock and Outstanding Corporation Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, 50% or more of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of Directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Corporation or all or substantially all of the Corporation's assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Corporation Common Stock and Outstanding Corporation Voting Securities, as the case may be; (B) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of the Corporation or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 35% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination; and (C) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination.

(g)   "Code" means the Internal Revenue Code of 1986, as amended from time to time, or any successor thereto.

(h)   "Committee" means the Human Resources and Compensation Committee of the Board of Directors or a delegate of such Committee.

(i)   "Compensation" means the remuneration paid or awarded to the Participant by an Employer as Base Salary, Annual Bonus, or LTP Award.

(j)   "Corporation" means HNI Corporation, an Iowa corporation.

(k)   "Deferral Election Agreement" means the agreement described in Section 4.2 in which the Participant designates the amount of his or her Compensation, if any, that he or she wishes to contribute to the Plan and acknowledges and agrees to the terms of the Plan.

(l)   "Elective Deferral" means a contribution to the Plan made by a Participant pursuant to a Deferral Election Agreement that the Participant enters into with the Corporation. Elective Deferrals shall be made according to the terms of the Plan set forth in Section 4.2.

(m)   "Employer" means the Corporation, any Subsidiary that adopts the Plan, and any entity that continues the Plan as a successor under Section 10.3.

(n)   "Enrollment Period" means the period designated by the Corporation during which a Deferral Election Agreement may be entered into with respect to an eligible employee's future Compensation as described in Section 4.2. Generally, the Enrollment Period must end no later than the end of the calendar year before the calendar year in which the services giving rise to the Compensation to be deferred are performed. As described in Section 4.2, an exception may be made to this requirement for individuals who first become eligible to participate in the Plan and for Elective Deferrals from Compensation considered to be Performance-Based Compensation, as determined by the Committee or by the Vice-President, Member and Community Relations, from time to time.

(o)   "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, or any successor thereto.

(p)   "Fair Market Value," of a share of Stock, means the average of the high and low transaction prices of the share as reported on the New York Stock Exchange on the date as of which such value is being determined, or, if there shall be no reported transactions for such date, on the next preceding date for which transactions were reported; provided, however, that if Fair Market Value for any date cannot be so determined, Fair Market Value shall be determined by the Committee by whatever means or method as the Committee, in the good faith exercise of its discretion, shall at such time deem appropriate.

(q)   "LTP Award," of a Participant for a performance period, means the amount payable to the Participant in cash or Stock for the performance period pursuant to the HNI Corporation Long-Term Performance Plan. The performance period for an LTP Award shall be set forth in the HNI Corporation Long-Term Performance Plan.

(r)   "Participant" means an individual who satisfies the requirements of Section 3.1 and who has entered into a Deferral Election Agreement.

(s)   "Performance-Based Compensation," of a Participant for a period, means incentive compensation of the Participant for such period where the amount of, or entitlement to, the incentive compensation is contingent on the satisfaction of pre-established organizational or individual performance criteria relating to a performance period of at least 12 consecutive months in which the Participant performs services. Organizational or individual performance criteria are considered pre-established if established in writing by not later than 90 days after the commencement of the period of service to which the criteria relate, provided that the outcome is substantially uncertain at the time the criteria are established. Performance-based compensation may include payment based on performance criteria that are not approved by the Board of Directors or the Committee or by the stockholders of the Corporation.

(t)   "Plan Year" means the consecutive 12-month period beginning each January 1 and ending December 31.

(u)   "Prime Rate" means the interest rate charged by the Northern Trust Corporation, Chicago, Illinois, on corporate loans made to their best customers as of the first business day coincident with or immediately following the first day of each Plan Year.

(v)   "Qualified Domestic Relations Order" has the same meaning as in Section 414(p) of the Code.

(w)   "Restatement Date" means January 1, 2005.

(x)   "Retirement," of a Participant, means the Participant's Separation from Service with the Corporation and its Subsidiaries on or after the attainment of age 65, or age 55with ten years of service with an Employer. The Chief Executive Officer of the Corporation, in his or her discretion, may waive or reduce the ten-year service requirement with respect a Participant; provided that the waiver or reduction does not cause an impermissible change in the timing of a Participant's payments under the Plan and otherwise complies with the requirements Section 409A of the Code.

(y)   "Separation from Service," of a Participant, means the Participant's separation from service with the Corporation and all of its affiliates, within the meaning of Section 409A(a)(2)(A)(i) of the Code and the regulations thereunder. Solely for these purposes, a Participant will be considered to have a Separation from Service when the Participant dies, retires, or otherwise has a termination of employment with all affiliates. The employment relationship is treated as continuing intact while the Participant is on military leave, sick leave, or other bona fide leave of absence (such as temporary employment by the government) if the period of such leave does not exceed six months, or if longer, so long as the individual's rights to reemployment with the Corporation or any affiliate is provided either by statute or by contract. If the period of leave exceeds six months and the individual's right to re-employment is not provided either by statute or contract, the employment relationship is deemed to terminate on the first date immediately following such six-month period. Whether a termination of employment has occurred is based on the facts and circumstances.

(z)   "Specified Employee" means a "key employee" (as defined in Section 416(i) of the Code without regard to Section 416(i)(5)) of the Corporation. For purposes hereof, an employee is a key employee if the employee meets the requirements of Section 416(1)(A)(i), (ii) or (iii) (applied in accordance with the regulations thereunder and disregarding Section 416(i)(5)) at any time during the 12-month period ending on December 31. If a person is a key employee as of such date, the person is treated as a Specified Employee for the 12-month period beginning on the first day of the fourth month following such date

(aa)   "Subsidiary" means a corporation which is wholly owned by the Corporation.

(bb)   "Stock" means the Corporation's common stock, $1.00 par value.

(cc)   "Stock Unit" means the notational unit representing the right to receive one share of Stock.

2.2.Gender and Number.  Except when otherwise indicated by the context, any masculine term used in the Plan also shall include the feminine gender; and the definition of any plural shall include the singular and the singular shall include the plural.

3.Eligibility and Participation

3.1.Eligibility.  Participation in the Plan shall be limited to those executive employees of an Employer who are eligible to participate in the HNI Corporation Executive Bonus Plan.

3.2.Participation. An eligible executive employee shall be notified of his or her eligibility to make an Elective Deferral under the Plan for a Plan Year prior to the beginning of the Plan Year, or as soon as administratively possible thereafter. Unless so notified, an employee shall not have the right to make Elective Deferrals for a Plan Year, whether or not he or she has been permitted to make Elective Deferral for any prior Plan Year. Further, nothing in the Plan shall interfere with or limit in any way the right of an Employer to terminate any Participant's employment at any time, nor confer upon any Participant a right to continue in the employ of an Employer, and all Participants shall remain subject to change of salary and other terms of employment, transfer, change of job, discipline, layoff, discharge, or any other change of status.

3.3.Missing Persons. Each Participant and Beneficiary entitled to receive benefits under the Plan shall be obligated to keep the Corporation informed of his or her current address until all Plan benefits that are due to be paid to the Participant or Beneficiary have been paid to him or her. If the Corporation is unable to locate the Participant or his or her Beneficiary for purposes of making a distribution, the amount of a Participant's benefit under the Plan that would otherwise be considered as non-forfeitable shall be forfeited effective one year after: (a) the last date a payment of said benefit was made, if at least one such payment was made; or (b) the first date a payment of said benefit was due to be made pursuant to the terms of the Plan, if no payments have been made. If such person is located after the date of such forfeiture, the benefits for such Participant or Beneficiary shall not be reinstated hereunder.

4.Establishment and Entries to Accounts

4.1.Accounts. The Committee shall establish two Accounts for each Participant under the Plan as follows:

(a)Cash Account. A Participant's Cash Account, as of any date, shall consist of the Compensation that the Participant has elected to allocate to that Account under his or her various Deferral Election Agreements pursuant to Section 4.2, increased by earnings thereon pursuant to Section 4.3(a), and adjusted to reflect transfers to and from the Account pursuant to Section 4.3(c) and distributions from the Account pursuant to Sections 4.4, 4.5 and 4.6.

(b)Stock Account. A Participant's Stock Account, as of any date, shall consist of the Compensation that the Participant has elected to allocate to that Account pursuant to Section 4.2, increased with earnings (including dividend equivalents) thereon and converted to Stock Units pursuant to Section 4.3(b), and adjusted to reflect transfers to and from the Account pursuant to Section 4.3(c) and distributions from the Account pursuant to Sections 4.4, 4.5 and 4.6.

The Committee shall establish a separate Sub-Account under each of these Accounts for each Deferral Election Agreement entered into by the Participant pursuant to Section 4.2. As specified in Section 4.2, as part of a Participant's Deferral Election Agreement, the Participant shall elect how amounts deferred under each Deferral Election Agreement are to be distributed to him or her from among the available distribution options described in Section 4.4. The separate Sub-accounts are established to account for the different distribution terms that may apply to each Sub-account. The Corporation may combine Sub-accounts that have identical distribution terms, or may establish other Sub-accounts for a Participant under the Plan from time to time in its discretion, as it deems appropriate or advisable. A Participant shall have a full and immediate nonforfeitable interest in his or her Accounts at all times.

4.2Deferral Election Agreement. A Participant wishing to make an Elective Deferral under the Plan for a Plan Year shall enter into a Deferral Election Agreement during the Enrollment Period immediately preceding the beginning of the Plan Year. A separate Deferral Election Agreement must be entered into for each Plan Year that a Participant wishes to make Elective Deferrals under the Plan. In order to be effective, the Deferral Election Agreement must be completed and submitted to the Committee at the time and in the manner specified by the Committee, which may be no later than the last day of the Enrollment Period. The Committee shall not accept Deferral Election Agreements entered into after the end of the Enrollment Period. The Committee may require that a Participant enter into a separate Deferral Election Agreement for each component of the Participant's Compensation, i.e., Base Compensation, Annual Bonus and LTP Award, that he or she wishes to defer for a Plan Year. Except as specified in the following two paragraphs, a Deferral Election Agreement will be effective to defer Compensation earned after the Deferral Election Agreement is entered into, and not before.

For the Plan Year in which an employee first becomes eligible to participate in the Plan, the Committee may, in its discretion, allow the employee to enter into a Deferral Election Agreement within 30 days after he or she first becomes eligible. In order to be effective, the Deferral Election Agreement must be completed and submitted to the Committee on or before the 30-day period has elapsed. The Committee shall not accept Deferral Election Agreements entered into after the 30-day period has elapsed. If the employee fails to complete a Deferral Election Agreement by such time, he or she may enter into a Deferral Election Agreement during any succeeding Enrollment Period in accordance with the rules described in the preceding paragraph. For Compensation that is earned based upon a specified performance period (for example, the Annual Bonus) where a Deferral Election Agreement is entered into in the first year of eligibility but after the beginning of the performance period, the Deferral Election Agreement will be deemed to apply to Compensation paid for services performed subsequent to the date the Deferral Election Agreement is entered into if the Deferral Election Agreement applies to the portion of the Compensation equal to the total amount of the Compensation for the performance period multiplied by the ratio of the number of days remaining in the performance period after the election over the total number of days in the performance period. For purposes of the exception described in this paragraph, the term "Plan" shall mean the Plan and any other plan required to be aggregated with the Plan pursuant to Code Section 409A, and the regulations and other guidance thereunder. Accordingly, if an employee has previously been eligible to participate in a plan required to be aggregated with the Plan, then the 30-day exception described in this paragraph shall not apply to him or her.

Deferral Election Agreements for Base Salary and incentive compensation other than Performance-Based Compensation shall be completed and submitted to the Corporation at the time described above that is ordinarily applicable to Deferral Election Agreements (subject to the exception for employees who are newly eligible to participate). Deferral Election Agreements for Compensation that is Performance-Based Compensation shall be completed and submitted to the Corporation no later than six months before the end of the performance period for such Compensation. The Committee shall determine from time to time whether an item of Incentive Compensation is considered Performance-Based Compensation for these purposes.

For each Deferral Election Agreement the Participant enters into, the Participant shall specify:

(a)The component of Compensation, i.e., Base Salary, Annual Bonus or LTP Award, that the Participant wishes to contribute as a Deferral Election, and for each such component, the amount, by dollar amount or percentage, of Compensation otherwise payable to the Participant in cash that the Participant wishes to contribute as and Elective Deferral, and the amount, by number of shares or percentage, of Compensation otherwise payable to the Participant in Stock that the Participant wishes to contribute as and Elective Deferral;

(b)The manner in which the amount in (a), above, is to be allocated between the Participant's Cash Account and Stock Account, by dollar amount or percentage; provided, however, that in the case of Compensation otherwise payable to the Participant in Stock, the Compensation shall automatically be allocated to the Stock Account; and

(c)The time and manner of distribution (consistent with the requirements of Section 4.4) of the Sub-account established with respect to the Deferral Election Agreement.

The Committee may from time to time establish a minimum amount that may be deferred by a Participant pursuant to this Section 4.2 for any Plan Year. Notwithstanding anything in this Section 4.2 to the contrary, in all events a Participant's remaining Compensation, after all Elective Deferrals, must be sufficient to enable the Corporation to withhold from the Participant's Compensation: (a) any amounts necessary to satisfy withholding requirements under applicable tax law; and (b) the amount of any contributions that the Participant may be required to make or may have elected to make under the Corporation's various benefit plans.

Elective Deferrals shall be credited to the Participant's Cash Account or Stock Account, as the case may be, as soon as administratively reasonable after the Compensation would have been paid to the Participant had the Participant not elected to defer it under the Plan.

In general, a Deferral Election Agreement shall become irrevocable as of the last day of the Enrollment Period applicable to it. However, if a Participant incurs an "unforeseeable emergency," as defined in Section 4.5(c)(ii), or becomes entitled to receive a hardship distribution pursuant to Treas. Reg. Section 1.401(k)-1(d)(3) after the Deferral Election Agreement otherwise becomes irrevocable, the Deferral Election Agreement shall be cancelled as of the date on which the Participant is determined to have incurred the unforeseeable emergency or becomes eligible to receive the hardship distribution and no further Elective Deferrals will be made under it.

4.3.Adjustments to Accounts.

(a)The Participant's Cash Account shall be credited with earnings as of the last day of each month. The amount so credited shall be the product of: (i) the Cash Account balance as of such date (less any contributions credited to the Account during the month); and (ii) 1/12 of the sum of (A) the Prime Rate (in effect for the Plan Year) and (B) one percentage point.

(b)The Elective Deferrals allocable to a Participant's Stock Account under a Deferral Election Agreement shall be converted to Stock Units. In the case of Elective Deferrals of Compensation otherwise payable to the Participant in cash, the conversion shall occur on the last day of the month (the "conversion date") coincident with or next following the date on which the Elective Deferrals are credited to the Stock Account. On the conversion date, the Elective Deferrals shall be converted to a number of whole and fractional Stock Units determined by dividing the Elective Deferrals (plus earnings) by the Fair Market Value of a share of Stock on the conversion date. In the case of Elective Deferrals of Compensation otherwise payable to the Participant in Stock, the conversion shall occur at the time the Elective Deferrals are credited to the Stock Account pursuant to Section 4.2, with the number of Stock Units so credited equal to the number of shares of Stock that the Participant has elected to defer pursuant to the Deferral Election Agreement. On each date on which the Corporation pays a cash dividend (the "dividend date"), the Stock Account shall be credited with an additional number of Stock Units determined by dividing the dollar amount that the Corporation would have paid as a dividend if the Stock Units held in the Participant's Stock Account as of the record date for the dividend were actual shares of Stock divided by the Fair Market Value of a share of Stock on the dividend date. Appropriate adjustments in the Stock Account shall be made as equitably required to prevent dilution or enlargement of the Account from any Stock dividend, Stock split, reorganization or other such corporate transaction or event.

(c)A Participant may transfer amounts from a Cash Sub-account to a Stock Sub-account and from a Stock Sub-account to a Cash Sub-account pursuant to this Section 4.3(c). Once each calendar quarter, during the trading window selected by management for Section 16 officers of the Corporation, each Participant may enter into an election to:

(i)Convert all or any portion of the Stock Units credited to a Stock Sub-account to an equivalent hypothetical cash amount, by multiplying the Fair Market Value of a share of Stock on the date the election is received by the Corporation by the number to Stock Units to be converted, and credit such hypothetical cash amount to a Cash Sub-account; or

(ii)Convert all or any portion of the amount credited to a Cash Sub-account to an equivalent number of Stock Units, by dividing the dollar amount to be converted by the Fair Market Value of a share of Stock on the date the election is received by the Corporation, and credit such Stock Units to a Stock Sub-account.

All transfers described in this Section 4.3(c) must be made between Sub-accounts that have identical distribution terms, that is, a Participant may transfer an amount from a Cash Sub-Account to a Stock Sub-Account and visa versa only if the Sub-accounts provide for distribution in the same manner and at the same time as one another.

4.4.Commencement and Form of Distribution of Sub-Account. As stated in Section 4.2(c), above, as part of his or her Deferral Election Agreement, a Participant shall elect: (a) the date on which distribution of each Sub-Account established for him or her under the Plan is to commence, which date may be no earlier than one year following the end of the Plan Year in which the Compensation deferred under the Deferral Election Agreement would otherwise have been paid to the Participant; and (b) the form of distribution of each such Sub-Account from the available distribution forms set forth below:

(a)a single sum payment; or

(b)monthly, quarterly or annual installment payments:

(i) in the case of a Cash Sub-account,

(A) of a specified dollar amount, or

(B) over a specified period; or

(ii) in the case of a Stock Sub-account,

(A) of a number of shares of Stock equal to a specified dollar amount;

(B) of a specified number of shares of Stock; or

(C) over a specified period.

All distributions from Cash Sub-accounts shall be paid in the form of cash. All distributions from Stock Sub-accounts shall be paid in the form of Stock (with each Stock Unit converted to one share of Stock at the time of distribution).

In the case of a Participant who elects to receive a Sub-Account in the form of installments, earnings and dividends shall be credited to the Participant's Sub-account in the manner provided in Section 4.3(a) and (b) during the payment period.

If the Participant elects to receive payment of a Sub-Account in the form of annual installments, the initial installment payment shall be made on January 15 (or as soon thereafter as is administratively reasonable) of the Plan Year selected by the Participant. The remaining annual installment payments shall be made on January 15 (or as soon thereafter as is administratively reasonable) of each year thereafter until the Participant's entire Sub-account has been paid.

If the Participant elects to receive payment in the form of monthly or quarterly installments, the installment payments shall commence on the first day (or as soon thereafter as is administratively reasonable) of the first month or quarter (as the case may be) of the Plan Year selected by the Participant and will continue to be made on the first day (or as soon thereafter as is administratively reasonable) of each month or quarter (as the case may be) thereafter until the Participant's entire Sub-account has been paid.

In the case of a Participant who elects to receive installment payments of a specified dollar amount from a Cash Sub-Account, the amount of each installment payment will equal such specified dollar amount until the Sub-Account is exhausted, with the last installment consisting of the balance in the Sub-account. In the case of a Participant who elects to receive installment payments of a number of shares of Stock equal to a specified dollar amount, the number of shares to be distributed in each installment payment shall be determined by dividing such specified dollar amount by the Fair Market Value of a share of Stock on the distribution date, with the last installment consisting of the balance in the Sub-account.

In the case of a Participant who elects to receive installment payments over a specified period from a Cash Sub-Account or Stock Sub-Account, the amount of each installment payment shall be equal to the cash balance or number of Stock Units (as the case may be) in the Participant's Sub-account immediately prior to the installment payment, multiplied by a fraction, the numerator of which is one, and the denominator of which is the number of installment payments remaining, with the last installment consisting of the balance of the Participant's Sub-account.

In the case of a Participant who elects to receive installment payments from a Stock-Sub-account equal to a specified number of shares, each installment payment shall consist of such specified number, with the last installment consisting of the balance of the Participant's Sub-account.

Notwithstanding anything in this Section 4.4 to the contrary, a Participant who elects to receive a Sub-account in installments must elect a payment amount that results in a total annual Plan payment from all Sub-accounts (of cash, Stock or both) that equals at least $25,000. If, on January 15 of a Plan Year, the balance of a Participant's Sub-account then being distributed in the form of monthly or quarterly installments is less than $25,000, the entire balance will be paid to the Participant in a single sum as soon as administratively reasonable after such date. In any event, the remaining balance of a Participant's Account shall be paid on the 25^th anniversary of the first payment.

A Participant may modify an election for payment of a Sub-account to postpone the commencement date and change the form of payment to another form permitted under the Plan. In order to be effective, the requested modification must: (a) be in writing and be submitted to the Corporation at the time and in the manner specified by the Committee; (b) not take effect for at least 12 months from the date on which it is submitted to the Corporation; (c) be submitted to the Corporation at least 12 months prior to the then scheduled distribution commencement date ("original distribution date"); and (d) specify a new distribution commencement date that is no earlier than five years after the original distribution date. For purposes hereof, if the original distribution date is a Plan Year rather than a specified date within a Plan Year, the original distribution date shall be deemed to be the first day of the Plan Year.

4.5.Exceptions to Payment Terms.  Notwithstanding anything in this Article 4 or a Participant's Deferral Election Agreement (as may be modified pursuant to Section 4.4) to the contrary, the following terms, if applicable, shall apply to the payment of a Participant's Sub-accounts.

(a)Separation from Service for Reasons Other than Retirement or Death.  If a Participant has a Separation from Service for reasons other than Retirement or death, all of the Participant's Sub-accounts (or the remaining balances thereof if distribution has already commenced) will be distributed to him or her in a single sum (regardless of the form otherwise elected by the Participant) as soon as administratively reasonable following the Participant's Separation from Service.

(b)Delay in Distributions.

(i)If the Participant is a Specified Employee, any Plan distributions that are otherwise to commence on the Participant's Separation from Service shall commence as soon as administratively reasonable after the six month anniversary of the Participant's Separation from Service, or if earlier, the Participant's death. In this case, the first payment following the period of delay required by this Section 4.5(b)(i) shall be increased by any amount that would otherwise have been payable to the Participant under the Plan during the delay period.

(ii)The Corporation shall delay the distribution of any amount otherwise required to be distributed under the Plan if, and to the extent that, the Corporation reasonably anticipates that the Corporation's deduction with respect to such distribution otherwise would be limited or eliminated by application of Section 162(m) of the Code. In such event, the distribution will be made at the earliest date on which the Corporation reasonably anticipates that the deduction of the distribution will not be limited or eliminated by Section 162(m) of the Code.

(iii)The Corporation shall delay the distribution of any amount otherwise required to be distributed under the Plan if, and to the extent that, the Corporation reasonably anticipates that the making of the distribution would violate Federal securities laws or other applicable law. In such event, the distribution will be made at the earliest date on which the Corporation reasonably anticipates that the making of the distribution will not cause such a violation.

(c)Acceleration of Distributions.  All or a portion of a Participant's Sub-accounts may be distributed at an earlier time and in a different form than specified in this Article 4:

(i)As may be necessary to fulfill a Qualified Domestic Relations Order or a certificate of divestiture (as defined in Code Section 1043(b)(2)).

(ii)If the Participant or Beneficiary has an unforeseeable emergency. For these purposes an "unforeseeable emergency" is a severe financial hardship of the Participant or Beneficiary resulting from an illness or accident of the Participant or Beneficiary, the Participant's or Beneficiary's spouse, or the Participant's or Beneficiary's dependent (as defined in Section 152(a) of the Code), loss of the Participant's or Beneficiary's property due to casualty (including the need to rebuild a home following damage to a home not otherwise covered by insurance, for example, not as a result of a natural disaster); or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant or Beneficiary. For example, the imminent foreclosure of or eviction from the Participant's or Beneficiary's primary residence may constitute an unforeseeable emergency. In addition, the need to pay for medical expenses, including non-refundable deductibles, as well as for the cost of prescription drug medication, may constitute an unforeseeable emergency. Finally, the need to pay for funeral expenses of a spouse or a dependent (as defined in Section 152(a) of the Code) may also constitute an unforeseeable emergency. Except as otherwise provided in this paragraph (c)(ii), the purchase of a home and the payment of college tuition are not unforeseeable emergencies. Whether a Participant or Beneficiary is faced with an unforeseeable emergency permitting a distribution under this paragraph (c)(ii) is to be determined based on the relevant facts and circumstances of each case, but, in any case a distribution on account of an unforeseeable emergency may not be made to the extent that such emergency is or may be relieved through reimbursement or compensation from insurance or otherwise, by liquidation of the Participant's assets, to the extent the liquidation of such assets would not cause severe financial hardship, or by cessation of Elective Deferrals.

Distributions 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, or local income taxes or penalties reasonably anticipated to result from the distribution). Determinations of the amounts reasonably necessary to satisfy the emergency need must take into account any additional compensation that is available due to the Participant's cancellation of a Deferral Election Agreement due to an unforeseeable emergency pursuant to Section 4.2.

(iii)Due to a failure of the Plan to satisfy Section 409A with respect to the Participant, but only to the extent an amount is required to be included in the Participant's income as a result of such failure.

4.6.Death Benefit.  If a Participant dies with all or a portion of his or her Account unpaid, the remaining amount shall be paid to his or her Beneficiary, as designated in accordance with Article 7, in the form (single sum or installments) and time elected by the Participant under Sections 4.2 and 4.4.

4.7.Funding.  An Employer's obligations under the Plan shall in every case be an unfunded and unsecured promise to pay. Each Participant's or Beneficiary's rights under the Plan shall be no greater than those of a general, unsecured creditor of an Employer.  The amount of each Participant's Account shall be reflected on the accounting records of the Corporation but shall not be construed to create, or require the creation of, a trust, custodial or escrow account.  No Participant shall have any right, title, or interest whatsoever in or to any investment reserves, accounts, or funds that an Employer may purchase, establish, or accumulate, and, except as provided in Section 8.1, no Plan provision or action taken pursuant to the Plan shall create or be construed to create a trust or a fiduciary relationship of any kind between an Employer and a Participant or any other person.  All amounts paid under the Plan shall be paid in cash or Stock from the general assets of an Employer, and an Employer shall not be obligated under any circumstances to fund its financial obligations under the Plan.

5.Administration

5.1.Administration. The Plan shall be administered by the Committee. In addition to the other powers granted under the Plan, the Committee shall have all powers necessary to administer the Plan, including, without limitation, powers:

(a)to interpret the provisions of the Plan;

(b)to establish and revise the method of accounting for the Plan and to maintain the Accounts; and

(c)to establish rules for the administration of the Plan and to prescribe any forms required to administer the Plan.

5.2.Actions of the Committee.  The Committee (including any person or entity to whom the Committee has delegated duties, responsibilities or authority, to the extent of such delegation) has total and complete discretionary authority to determine conclusively for all parties all questions arising in the administration of the Plan, to interpret and construe the terms of the Plan, and to determine all questions of eligibility and status of employees, Participants and Beneficiaries under the Plan and their respective interests. Subject to the claims procedures of Article 9, all determinations, interpretations, rules and decisions of the Committee (including those made or established by any person or entity to whom the Committee has delegated duties, responsibilities or authority, if made or established pursuant to such delegation) are conclusive and binding upon all persons having or claiming to have any interest or right under the Plan.

5.3.Delegation.  The Committee, or any officer or other employee of the Corporation designated by the Committee, shall have the power to delegate specific duties and responsibilities to officers or other employees of the Corporation or other individuals or entities. Any delegation may be rescinded by the Committee at any time.  Each person or entity to whom a duty or responsibility has been delegated shall be responsible for the exercise of such duty or responsibility and shall not be responsible for any act or failure to act of any other person or entity.

5.4.Expenses.  The expenses of administering the Plan shall be borne by the Corporation.

5.5.Reports and Records.  The Committee, and those to whom the Committee has delegated duties under the Plan, shall keep records of all their proceedings and actions and shall maintain books of account, records, and other data as shall be necessary for the proper administration of the Plan and for compliance with applicable law.

5.6.Valuation of Accounts and Account Statements.  As of each valuation date, the Committee shall adjust the previous Account balances of each Participant for Elective Deferrals, distributions, and investment gains and losses. A "valuation date," for these purposes, is the last day of each calendar quarter, and such other dates as the Committee may designate from time to time in its discretion. The Committee shall provide each Participant with a statement of his or her Account balances on a quarterly basis.

5.7.Indemnification and Exculpation.  The agents, officers, directors, and employees of the Corporation and its Subsidiaries and the Committee shall be indemnified and held harmless by the Corporation against and from any and all loss, cost, liability, or expense that may be imposed upon or reasonably incurred by them in connection with or resulting from any claim, action, suit, or proceeding to which they may be a party or in which they may be involved by reason of any action taken or failure to act under the Plan and against and from any and all amounts paid by them in settlement (with the Corporation's written approval) or paid by them in satisfaction of a judgment in any such action, suit or proceeding. The foregoing provision shall not be applicable to any person if the loss, cost, liability, or expense is due to such person's gross negligence or willful misconduct.

6.Beneficiary Designation

6.1.Designation of Beneficiary.  Each Participant shall be entitled to designate a Beneficiary or Beneficiaries who, upon the Participant's death, will receive the amounts that otherwise would have been paid to the Participant under the Plan. All designations shall be signed by the Participant and shall be in a form prescribed by the Committee. The Participant may change his or her designation of Beneficiary at any time, on a form prescribed by the Committee. The filing of a new Beneficiary designation form by a Participant shall automatically revoke all prior designations by that Participant.

6.2.Death of Beneficiary.  In the event that all the Beneficiaries named by a Participant pursuant to Section 6.1 predecease the Participant the amounts that would have been paid to the Participant under the Plan shall be paid to the Participant's estate.

6.3.Ineffective Designation.  In the event the Participant does not designate a Beneficiary, or for any reason such designation is ineffective in whole or in part, the ineffectively designated amounts shall be paid to the Participant's estate.

7.Withholding

The Corporation shall reduce the amount of any cash payment under the Plan and an Employer may reduce the amount of any other compensation payable to a Participant to the extent the Corporation or Employer deems appropriate for Federal, state or local tax withholding or other purposes required by law. The Corporation shall reduce the amount of any Stock payment under the Plan to the extent the Corporation deems appropriate for Federal, state or local tax withholding, based upon the supplemental wage withholding rate, or for other purposes required by law.

8.Change in Control, Amendment, and Termination

8.1.Change in Control.

(a)Retention of Plan Benefits.  A Participant shall retain rights to payment of all amounts credited to his or her Accounts under the Plan, including earnings pursuant to Section 4.3, in the event of a Change in Control.

(b)Contributions to Trust.  Notwithstanding anything in Section 4.7 to the contrary, the Corporation shall be obligated not later than upon the occurrence of a Change in Control, to transfer assets to one or more irrevocable grantor trusts established by the Corporation in an amount at least sufficient to provide for the obligations of the Employers under the Plan as of the date of such transfer. The assets of any such trust shall at all times be subject to the claims of the general unsecured creditors of the Employers and not be subject to the prior claim of any Participant or Beneficiary under the Plan. Any such trust so established and the rights and obligations of any individual, the Employers, and the trustee in such trust shall be governed exclusively by such trust; provided that the provisions of the Plan shall govern exclusively the rights of a Participant or Beneficiary to benefits under the Plan

8.2.Plan Amendment and Termination. The Board of Directors or the Committee has the authority to amend, modify, and/or terminate the Plan at any time. No amendment or termination of the Plan shall in any manner reduce the Account balance any Participant without the consent of the Participant (or if the Participant has died, his or her Beneficiary). Without limiting the foregoing, the Board of Directors may, in its sole discretion: (a) freeze the Plan by precluding any further Elective Deferrals and/or other credits, but otherwise maintain the balance of the provisions of the Plan; or (b) terminate the Plan in its entirety and distribute the Participant's Accounts at an earlier date and in a different form than otherwise provided under the Plan, provided that such termination and distribution comply with the requirements of Section 409A of the Code.

9.Claims Procedure

The Committee shall notify a Participant in writing within 90 days of the Participant's written application for benefits of the Participant's eligibility or non-eligibility for benefits under the Plan, provided, however, that benefit distribution shall not be contingent upon a Participant's application for benefits. If the Committee determines that a Participant is not eligible for benefits or full benefits, the notice shall set forth: (a) the specific reasons for such denial; (b) a specific reference to the provision of the Plan on which the denial is based; (c) a description of any additional information or material necessary for the Participant to perfect the claim, and a description of why it is needed; and (d) an explanation of the Plan's claims review procedure and other appropriate information as to the steps to be taken if the Participant wishes to have the claim reviewed. If the Committee determines that there are special circumstances requiring additional time to make a decision, the Committee shall notify the Participant of the special circumstances and the date by which a decision is expected to be made, and may extend the time for up to an additional 90-day period. If a Participant is determined by the Committee to be not eligible for benefits, or if a Participant believes that he or she is entitled to greater or different benefits, the Participant shall have the opportunity to have the Participant's claim reviewed by the Committee by filing a petition for review with the Committee within 60 days after receipt by the Participant of the notice issued by the Committee. The petition shall state the specific reasons the Participant believes the Participant is entitled to benefits or greater or different benefits. Within 60 days after receipt by the Committee of the petition, the Committee shall afford the Participant (and the Participant's counsel, if any) an opportunity to present the Participant's position to the Committee orally or in writing, and the Participant (or counsel) shall have the right to review the pertinent documents, and the Committee shall notify the Participant of its decision in writing within the 60-day period, stating specifically the basis of the decision written in a manner calculated to be understood by the Participant and the specific provisions of the Plan on which the decision is based. If, because of the need for a hearing, the 60-day period is not sufficient, the decision may be deferred for up to another 60-day period at the election of the Committee, but notice of this deferral shall be given to the Participant. If a Participant does not appeal on time, the Participant will lose the right to appeal the denial and the right to file suit under ERISA, and the Participant will have failed to exhaust the Plan's internal administrative appeal process, which is generally a prerequisite to bringing suit. In the event an appeal of a denial of a claim for benefits is denied, any lawsuit to challenge the denial of such claim must be brought within one year of the date the Committee has rendered a final decision on the appeal.

10.Miscellaneous

10.1.Unfunded Plan.  The Plan is intended to be an unfunded plan maintained primarily to provide deferred compensation benefits for "a select group of management or highly compensated employees" within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1)of ERISA, and therefore is further intended to be exempt from the provisions of Parts 2, 3, and 4 of Title I of ERISA.

10.2.Nontransferability.  No benefit payable at any time under the Plan will be subject in any manner to alienation, sale, transfer, assignment, pledge, levy, attachment, or encumbrance of any kind, except with respect to a domestic relations order that the Committee determines to be a Qualified Domestic Relations Order.

10.3.Successors.  All obligations of the Corporation under the Plan shall be binding upon and inure to the benefit of any successor to the Corporation, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Corporation.

10.4.Severability.  In the event any provision of the Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included. The Plan is intended to comply in form and operation with Section 409A of the Code, and shall be construed accordingly. If any provision of the Plan does not conform to the requirements of Section 409A, such that the inclusion of the provision would result in loss of the Plan's intended tax deferral, the Plan shall be construed and enforced as if such provision had not been included.

10.5.Applicable Law.  To the extent not preempted by Federal law, the Plan shall be governed and construed in accordance with the laws of the state of Iowa.

10.6.No Other Agreements. The terms and conditions set forth herein, together with the Deferral Election Agreements entered into by Participants, constitute the entire understanding of the Corporation and any Employer and the Participants with respect to the matters addressed herein.

10.7.Incapacity.  In the event that any Participant or Beneficiary is unable to care for his or her affairs because of illness or accident, any payment due may be paid to the Participant's or Beneficiary's spouse, parent, brother, sister or other person deemed by the Committee to have incurred expenses for the care of such Participant or Beneficiary, unless a duly qualified guardian or other legal representative has been appointed.

10.8.Counterparts. This Plan may be executed in any number of counterparts, each of which when duly executed by the Corporation shall be deemed to be an original, but all of which shall together constitute but one instrument, which may be evidenced by any counterpart.

10.9.Electronic Media. Notwithstanding anything in the Plan to the contrary, but subject to the requirements of ERISA, the Code, or other applicable law, any action or communication otherwise required to be taken or made in writing by a Participant or Beneficiary or by the Corporation, an Employer or the Committee shall be effective if accomplished by another method or methods required or made available by the Corporation or Committee, or their agent, with respect to that action or communication, including e-mail, telephone response systems, intranet systems, or the Internet.

10.10.Administratively Reasonable .  A payment under the Plan will be deemed to be made as soon as administratively reasonable after a date if it is made within the same calendar year as such date, or, if later, by the 15^th day of the third calendar month following such date.

10.11.Release.  Any payment of benefits to or for the benefit of a Participant or a Participant's Beneficiaries that is made in good faith by the Corporation in accordance with the Corporation's interpretation of its obligations hereunder, shall be in full satisfaction of all claims against the Corporation for benefits under the Plan to the extent of such payment.

10.12.Notices.  Any notice permitted or required under the Plan shall be in writing and shall be hand-delivered or sent, postage prepaid, by first class mail, or by certified or registered mail with return receipt requested, to the Committee, if to the Corporation, or to the address last shown on the records of the Corporation, if to a Participant or Beneficiary. Any such notice shall be effective as of the date of hand-delivery or mailing.

(The Plan, as restated hereinabove, was adopted by the Board on August 8, 2006.)

EX-10.6

                    EXHIBIT 10.6

HNI CORPORATION

DIRECTORS DEFERRED COMPENSATION PLAN

As Amended and Restated Effective January 1, 2005 to comply with Section 409A

of the Internal Revenue Code

TABLE OF CONTENTS

Page

 1. Amendment and Restatement       1

1.1.	Amendment and Restatement	1
1.2.	Purpose	1
1.3.	Application of the Plan	1

 2. Definitions       1

2.1.	Definitions	1
2.2.	Gender and Number	5

 3. Eligibility and Participation      5

3.1.	Eligibility	5
3.2.	Missing Persons	5

 4. Establishment and Entries to Accounts      5

4.1.	Accounts	5
4.2.	Deferral Election Agreement	6
4.3.	Adjustments to Accounts	7
4.4.	Commencement of Distribution of Sub-Account	7
4.5.	Exceptions to Payment Terms	8
4.6.	Death Benefit	11
4.7.	Funding	11

 5. Administration    11

5.1.	Administration	11
5.2.	Actions of the Committee	11
5.3.	Delegation	12
5.4.	Expenses	12
5.5.	Reports and Records	12
5.6.	Valuation of Accounts and Account Statements	12
5.7.	Indemnification and Exculpation	12

 6.Beneficiary Designation    12

6.1.	Designation of Beneficiary	12
6.2.	Death of Beneficiary	13
6.3.	Ineffective Designation	13

 7.Amendment and Termination    13

 8.Claims Procedure    13

 9.Miscellaneous    14

9.1.	Unfunded, Non-ERISA Plan	14
9.2.	Nontransferability	14
9.3.	Successors	14
9.4.	Severability	14
9.5.	Applicable Law	15
9.6.	No Other Agreements	15
9.7.	Incapacity	15
9.8.	Counterparts	15
9.9.	Electronic Media	15
9.10.	Administratively Reasonable	15
9.11.	Release	15
9.12.	Notices	15
9.13.	No Guaranty of Board Position	15

HNI Corporation

Directors Deferred Compensation Plan

1.Amendment and Restatement

1.1.Amendment and Restatement. HNI Corporation, an Iowa corporation (the "Corporation"), hereby amends and restates, effective as of January 1, 2005 (the "Restatement Date"), the HNI Corporation Directors Deferred Compensation Plan (the "Plan") to comply with Section 409A of the Internal Revenue Code. The Plan first became effective on August 9, 1999.

1.2.Purpose. The purpose of the Plan is to give Outside Directors the opportunity to defer the fees payable to them by the Corporation to achieve their personal financial planning goals.

1.3.Application of the Plan. The terms of the Plan, as set forth in this restatement, shall apply to amounts deferred under the Plan on or after January 1, 2005, and to the payment of amounts deferred under the Plan prior to, but not yet distributed as of, January 1, 2005. Accordingly, amounts deferred under the Plan prior to January 1, 2005, the effective date of Code Section 409A, are not intended to be grandfathered under Section 409A.

2.Definitions

2.1.Definitions. Whenever used in the Plan, the following terms shall have the meaning set forth below and, when the defined meaning is intended, the term is capitalized:

(a)   "Account" means the device used to measure and determine the amount of benefits payable to a Participant or Beneficiary under the Plan. The Corporation shall establish a Cash Account and Stock Account for each Participant under the Plan, and the term "Account," as used in the Plan, may refer to either such Account or the aggregate of the two Accounts. In addition, the Corporation shall establish a separate Sub-Account under each of the Participant's Cash Account and Stock Account for each Deferral Election Agreement entered into by the Participant pursuant to Section 4.2.

(b)   "Beneficiary" means the persons or entities designated by a Participant in writing pursuant to Article 6 of the Plan as being entitled to receive any benefit payable under the Plan by reason of the death of the Participant, or, in the absence of such designation, the Participant's estate pursuant to the rules specified in Article 6.

(c)   "Board of Directors" or "Board" means the Board of Directors of the Corporation.

(d)   "Change in Control" means:

(i)the acquisition by any individual, entity or group (with the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 35% or more of either (A) the then outstanding shares of common stock of the Corporation (the "Outstanding Corporation Common Stock") or (B) the combined voting power of the then outstanding voting securities of the Corporation entitled to vote generally in the election of Directors (the "Outstanding Corporation Voting Securities"); provided, however, that for purposes of this subsection (i), the following acquisitions shall not constitute a Change in Control: (I) any acquisition directly from the Corporation; (II) any acquisition by the Corporation; (III) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Corporation or any corporation controlled by the Corporation; or (IV) any acquisition by any corporation pursuant to a transaction which complies with clauses (A), (B) and (C) of subsection (iii) of this paragraph; or

(ii)individuals who, as of the date hereof, constitute the Board (the "Incumbent Board") cease for any reason to constitute a majority of the Board; provided, however, that any individual becoming a Director subsequent to the date hereof whose election, or nomination for election by the Corporation's shareholders, was approved by a vote of a majority of the Directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of Directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

(iii)consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Corporation (a "Business Combination"), in each case, unless, following such Business Combination: (A) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Corporation Common Stock and Outstanding Corporation Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, 50% or more of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of Directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Corporation or all or substantially all of the Corporation's assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Corporation Common Stock and Outstanding Corporation Voting Securities, as the case may be; (B) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of the Corporation or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 35% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination; and (C) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination.

(e)   "Code" means the Internal Revenue Code of 1986, as amended from time to time, or any successor thereto.

(f)   "Committee" means the Committee established by the Chairman of the Board to administer the Plan.

(g)   "Corporation" means HNI Corporation, an Iowa corporation.

(h)   "Compensation," of a Participant, means the Participant's annual retainer, meeting fees, and any other amounts payable to the Participant by the Corporation for services performed as an Outside Director, in cash or Stock, excluding any amounts distributable under the Plan.

(i)   "Deferral Election Agreement" means the agreement described in Section 4.2 and attached hereto as Exhibit A in which the Participant designates the amount of his or her Compensation, if any, that he or she wishes to contribute to the Plan and acknowledges and agrees to the terms of the Plan.

(j)   "Elective Deferral" means a contribution to the Plan made by a Participant pursuant to a Deferral Election Agreement that the Participant enters into with the Corporation. Elective Deferrals shall be made according to the terms of the Plan set forth in Section 4.2.

(k)   "Enrollment Period" means the period designated by the Corporation during which a Deferral Election Agreement may be entered into with respect to a Participant's future Compensation as described in Section 4.2. Generally, the Enrollment Period must end no later than the end of the calendar year before the calendar year in which the services giving rise to the Compensation to be deferred are performed. As described in Section 4.2, an exception may be made to this requirement for individuals who first become eligible to participate in the Plan.

(l)   "Fair Market Value" means the average of the high and low transaction prices of a share of Stock on the New York Stock Exchange on the date as of which such value is being determined, or, if there shall be no reported transactions for such date, on the next preceding date for which transactions were reported; provided, however, that if Fair Market Value for any date cannot be so determined, Fair Market Value shall be determined by the Committee by whatever means or method as the Committee, in the good faith exercise of its discretion, shall at such time deem appropriate.

(m)   "Outside Director" means a non-employee member of the Board of Directors.

(n)   "Participant" means an Outside Director who has entered into a Deferral Election Agreement.

(o)   "Plan Year" means the consecutive 12-month period beginning each January 1 and ending December 31.

(p)   "Qualified Domestic Relations Order" has the same meaning as in Section 414(p) of the Code.

(q)   "Separation from Service," of a Participant, means the Participant's cessation of services for the Corporation as an Outside Director, provided that the Corporation does not then anticipate that the Outside Director will perform future services for the Corporation as an Outside Director (or other independent contractor) or an employee. In the event a Participant becomes an employee while participating in the Plan, "Separation from Service," with respect to that Participant, means the Participant's separation from service with the Corporation and all of its affiliates, within the meaning of Section 409A(a)(2)(A)(i) of the Code and the regulations thereunder. Solely for these purposes, a Participant will be considered to have a Separation from Service when the Participant dies, retires, or otherwise has a termination of employment with all affiliates. The employment relationship is treated as continuing intact while the Participant is on military leave, sick leave, or other bona fide leave of absence (such as temporary employment by the government) if the period of such leave does not exceed six months, or if longer, so long as the individual's rights to reemployment with the Corporation or any affiliate is provided either by statute or by contract. If the period of leave exceeds six months and the individual's right to reemployment is not provided either by statute or contract, the employment relationship is deemed to terminate on the first date immediately following such six-month period. Whether a termination of employment has occurred is based on the facts and circumstances.

(r)   "Specified Employee" means a "key employee" (as defined in Section 416(i) of the Code without regard to Section 416(i)(5)) of the Corporation. For purposes hereof, an employee is a key employee if the employee meets the requirements of Section 416(1)(A)(i), (ii) or (iii) (applied in accordance with the regulations thereunder and disregarding Section 416(i)(5)) at any time during the 12-month period ending on December 31. If a person is a key employee as of such date, the person is treated as a Specified Employee for the 12-month period beginning on the first day of the fourth month following such date.

(s)   "Stock" means the Corporation's common stock, $1.00 par value.

(t)   "Stock Unit" means the notational unit representing the right to receive one share of Stock.

(u)   "Subsidiary" means any corporation, joint venture, partnership, unincorporated association or other entity in which the Corporation has a direct or indirect ownership or other equity interest and directly or indirectly owns or controls more than 50 percent of the total combined voting or other decision-making power.

2.2.Gender and Number. Except when otherwise indicated by the context, any masculine term used in the Plan also shall include the feminine gender; and the definition of any plural shall include the singular and the singular shall include the plural.

3.Eligibility and Participation

3.1.Eligibility. Participation in the Plan shall be limited to Outside Directors.

3.2.Missing Persons. Each Participant and Beneficiary entitled to receive benefits under the Plan shall be obligated to keep the Corporation informed of his or her current address until all Plan benefits that are due to be paid to the Participant or Beneficiary have been paid to him or her. If the Corporation is unable to locate the Participant or his or her Beneficiary for purposes of making a distribution, the amount of a Participant's benefit under the Plan that would otherwise be considered as non-forfeitable shall be forfeited effective one year after: (a) the last date a payment of said benefit was made, if at least one such payment was made; or (b) the first date a payment of said benefit was due to be made pursuant to the terms of the Plan, if no payments have been made. If such person is located after the date of such forfeiture, the benefits for such Participant or Beneficiary shall not be reinstated hereunder.

4.Establishment and Entries to Accounts

4.1.Accounts. The Committee shall establish a Cash Account, Stock Account or both for a Participant under the Plan as follows:

(a)Cash Account. A Participant's Cash Account, as of any date, shall consist of the Compensation that the Participant has elected to allocate to that Account under his or her Deferral Election Agreement(s) pursuant to Section 4.2, increased by earning thereon pursuant to Section 4.3(a), and adjusted to reflect distributions from the Account pursuant to Sections 4.4, 4.5 and 4.6.

(b)Stock Account. A Participant's Stock Account, as of any date, shall consist of the Compensation that the Participant has elected to allocate to that Account pursuant to Section 4.2, increased with earnings (including dividend equivalents) thereon and converted to Stock Units pursuant to Section 4.3(b), and adjusted to reflect distributions from the Account pursuant to Sections 4.4, 4.5 and 4.6.

The Committee shall establish a separate Sub-Account under each of these Accounts for each Deferral Election Agreement entered into by the Participant pursuant to Section 4.2. As specified in Section 4.2, as part of a Participant's Deferral Election Agreement, the Participant shall elect how amounts deferred under each Deferral Election Agreement are to be distributed to him or her from among the available distribution options described in Section 4.4. The separate Sub-Accounts are established to account for the different distribution terms that may apply to each Sub-Account. The Corporation may combine Sub-Accounts that have identical distribution terms, or may establish other Sub-Accounts for a Participant under the Plan from time to time in its discretion, as it deems appropriate or advisable. A Participant shall have a full and immediate nonforfeitable interest in his or her Accounts at all times.

4.2Deferral Election Agreement. A Participant wishing to make an Elective Deferral under the Plan for a Plan Year shall enter into a Deferral Election Agreement during the Enrollment Period immediately preceding the beginning of the Plan Year. A separate Deferral Election Agreement must be entered into for each Plan Year that a Participant wishes to make Elective Deferrals under the Plan. In order to be effective, the Deferral Election Agreement must be completed and submitted to the Corporation at the time and in the manner specified by the Committee, which may be no later than the last day of the Enrollment Period. The Corporation shall not accept Deferral Election Agreements entered into after the end of the Enrollment Period.

For the Plan Year in which an individual first becomes a Director, the Committee may, in its discretion, allow the Director to enter into a Deferral Election Agreement within 30 days after the date on which he or she becomes a Director. In order to be effective, the Deferral Election Agreement must be completed and submitted to the Committee on or before the 30-day period has elapsed. The Committee will not accept Deferral Election Agreements entered into after the 30-day period has elapsed. If the Director fails to complete a Deferral Election Agreement by such time, he or she may enter into a Deferral Election Agreement during any succeeding Enrollment Period in accordance with the rules described in the preceding paragraph. For purposes of the exception described in this paragraph, the term "Plan" means the Plan and any other plan required to be aggregated with the Plan pursuant to Code Section 409A, and the regulations and other guidance thereunder. Accordingly, if an Outside Director has previously been eligible to participate in a plan required to be aggregated with the Plan, then the 30-day exception described in this paragraph shall not apply to him or her.

For each Deferral Election Agreement the Participant enters into, the Participant shall specify:

(a)The amount, by dollar amount or percentage, of Compensation otherwise payable to the Participant in cash to be deferred under the Plan, and the amount, by number of shares or percentage, of Compensation otherwise payable to the Participant in Stock to be deferred under the Plan;

(b)The manner in which the amount in (a), above, is to be allocated between the Participant's Cash Account and Stock Account, by dollar amount or percentage; provided, however, that in the case of Compensation otherwise payable to the Participant in Stock, the Compensation shall automatically be allocated to the Stock Account; and

(c)The time and manner of distribution (consistent with the requirements of Section 4.4) of the Sub-Accounts established with respect to the Deferral Election Agreement.

The Committee may from time to time establish a minimum amount that may be deferred by a Participant pursuant to this Section 4.2 for any Plan Year.

Elective Deferrals shall be credited to the Participant's Cash Account or Stock Account, as the case may be, on, or as soon as administratively reasonable after, the Compensation would have been paid to the Participant had the Participant not elected to defer it under the Plan.

In general, a Deferral Election Agreement shall become irrevocable as of the last day of the Enrollment Period applicable to it. However, if a Participant incurs an "unforeseeable emergency," as defined in Section 4.5(d)(ii) after the Deferral Election Agreement otherwise becomes irrevocable, the Deferral Election Agreement shall be cancelled as of the date on which the Participant is determined to have incurred the unforeseeable emergency and no further Elective Deferrals will be made under it.

4.3.Adjustments to Accounts.

(a)A Participant's Cash Account shall be credited with earnings on a calendar monthly basis in an amount equal to the product of: (1) the lowest Cash Account balance during the month; and (2) the rate specified by the Committee for the month, which rate may be changed by the Committee from time to time in its discretion as it deems appropriate. The interest so computed for a month shall be credited to the Cash Account as of the first day of the immediately succeeding month.

(b)The Elective Deferrals allocable to a Participant's Stock Account under a Deferral Election Agreement shall be converted to Stock Units on the date they are credited to the Account. In the case of Elective Deferrals of Compensation otherwise payable to the Participant in cash, the number of whole and fractional Stock Units so credited shall be equal to the dollar amount of the Elective Deferrals allocated to the Stock Account as of such date divided by the Fair Market Value per share of Stock on such date. In the case of Elective Deferrals of Compensation otherwise payable to the Participant in Stock, the number of Stock Units so credited shall be equal to the number of shares of Stock that the Participant has elected to defer pursuant to the Deferral Election Agreement. On each date on which the Corporation pays a cash dividend (the "dividend date"), the Stock Account shall be credited with an additional number of Stock Units determined by dividing the dollar amount that the Corporation would have paid as a dividend if the Stock Units held in the Participant's Stock Account as of the record date for the dividend were actual shares of Stock divided by the Fair Market Value of a share of Stock on the dividend date. Appropriate adjustments in the Stock Account shall be made as equitably required to prevent dilution or enlargement of the Account from any Stock dividend, Stock split, reorganization or other such corporate transaction or event.

4.4.Commencement and Form of Distribution of Sub-Account. As stated in Section 4.2(c), above, as part of his or her Deferral Election Agreement, a Participant shall elect: (a) the date on which distribution of the Compensation deferred under the Deferral Election Agreement (as adjusted pursuant to Section 4.3) is to commence, which date may be no earlier than one year following the end of the Plan Year in which such Compensation would otherwise have been paid to the Participant; and (b) the form of distribution of such deferred Compensation from the available distribution forms set forth below:

(a)a single sum payment, or

(b)annual installments over a number, not to exceed 15, of years specified by the Participant.

All distributions from Cash Sub-Accounts shall be paid in the form of cash. All distributions from Stock Sub-Accounts shall be paid in the form of Stock (with each Stock Unit converted to one share of Stock at the time of distribution), except that fractional shares shall be distributed in the form of cash.

If a Participant elects payment in the form of a lump sum, distribution shall be made to the Participant in a lump sum on, or as soon as administratively reasonable after, the commencement date elected by the Participant.

If the Participant elects payment in the form of annual installments, the initial installment payment shall be made on, or as soon as administratively reasonable after, the commencement date elected by the Participant. The remaining annual installment payments shall be made on, or as soon as administratively reasonable after, each anniversary of the commencement date during the payment period elected by the Participant. During the installment payment period, earnings and dividends shall be credited to the Participant's Sub-Account in the manner provided in Section 4.3(a) and (b). The amount of each installment payment shall be equal to the balance of the Participant's Sub-Account immediately prior to the installment payment, multiplied by a fraction, the numerator of which is one, and the denominator of which is the number of installment payments remaining, with the last installment consisting of the balance of the Participant's Sub-Account.

A Participant may modify an election for payment of a Sub-Account to postpone the commencement date and change the form of payment to another form permitted under the Plan. In order to be effective, the requested modification must: (a) be in writing and be submitted to the Corporation at the time and in the manner specified by the Committee; (b) not take effect for at least 12 months from the date on which it is submitted to the Corporation; (c) be submitted to the Corporation at least 12 months prior to then scheduled distribution commencement date ("original distribution date"); and (d) specify a new distribution commencement date that is no earlier than five years after the original distribution date. For purposes hereof, if the original distribution date is a Plan Year rather than a specified date within a Plan Year, the original distribution date shall be deemed to be the first day of the Plan Year.

4.5.Exceptions to Payment Terms. Notwithstanding anything in this Article 4 or a Participant's Deferral Election Agreement (as may be modified pursuant to the last paragraph of Section 4.4) to the contrary, the following terms, if applicable, shall apply to the payment of a Participant's Sub-Accounts.

(a)Separation from Service before Scheduled Distribution Commencement Date. If a Participant has a Separation from Service for any reason, including death or disability, before the date on which distribution of a Sub-Account is scheduled to commence, distribution of the Sub-Account will commence as soon as administratively reasonable after the date on which the Separation from Service occurs. Except as specified in Article 6 and paragraph (b) of this Section 4.5, distribution will be made in the same form (i.e., lump sum or installments, and if installments, over the same period) as elected by the Participant in his or her Deferral Election Agreement (as may be modified pursuant to the last paragraph of Section 4.4).

(b)Small Payments. If the aggregate value of all of a Participant's Sub-Accounts as of the date on which he or she has a Separation from Service is $5,000 or less, the Sub-Accounts shall be distributed to the Participant (or his or her Beneficiary, as the case may be) in a lump sum as soon as administratively reasonable following the Separation from Service.

(c)Delay in Distributions.

(i)If the Participant is a Specified Employee, any Plan distributions that are otherwise to commence on the Participant's Separation from Service shall commence as soon as administratively reasonable after the six-month anniversary of the Participant's Separation from Service, or if earlier, the Participant's death. In this case, the first payment following the period of delay required by this Section 4.5(c)(i) shall be increased by any amount that would otherwise have been payable to the Participant under the Plan during the delay period.

(ii)The Corporation shall delay the distribution of any amount otherwise required to be distributed under the Plan if, and to the extent that, the Corporation reasonably anticipates that the Corporation's deduction with respect to such distribution otherwise would be limited or eliminated by application of Section 162(m) of the Code. In such event, the distribution will be made at the earliest date on which the Corporation reasonably anticipates that the deduction of the distribution will not be limited or eliminated by Section 162(m) of the Code.

(iii)The Corporation shall delay the distribution of any amount otherwise required to be distributed under the Plan if, and to the extent that, the Corporation reasonably anticipates that the making of the distribution would violate Federal securities laws or other applicable law. In such event, the distribution will be made at the earliest date on which the Corporation reasonably anticipates that the making of the distribution will not cause such a violation.

(d)Acceleration of Distributions. All or a portion of a Participant's Sub-Accounts shall be distributed at an earlier time and in a different form than specified in this Article 4:

(i)As may be necessary to fulfill a Qualified Domestic Relations Order or a certificate of divestiture (as defined in Code Section 1043(b)(2)).

(ii)If the Participant or Beneficiary has an unforeseeable emergency. For these purposes an "unforeseeable emergency" is a severe financial hardship of the Participant or Beneficiary resulting from an illness or accident of the Participant or Beneficiary, the Participant's or Beneficiary's spouse, or the Participant's or Beneficiary's dependent (as defined in Section 152(a) of the Code), loss of the Participant's or Beneficiary's property due to casualty (including the need to rebuild a home following damage to a home not otherwise covered by insurance, for example, not as a result of a natural disaster); or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant or Beneficiary. For example, the imminent foreclosure of or eviction from the Participant's or Beneficiary's primary residence may constitute an unforeseeable emergency. In addition, the need to pay for medical expenses, including non-refundable deductibles, as well as for the cost of prescription drug medication, may constitute an unforeseeable emergency. Finally, the need to pay for funeral expenses of a spouse or a dependent (as defined in Section 152(a) of the Code) may also constitute an unforeseeable emergency. Except as otherwise provided in this paragraph (d)(ii), the purchase of a home and the payment of college tuition are not unforeseeable emergencies. Whether a Participant or Beneficiary is faced with an unforeseeable emergency permitting a distribution under this paragraph (d)(ii) is to be determined based on the relevant facts and circumstances of each case, but, in any case a distribution on account of an unforeseeable emergency may not be made to the extent that such emergency is or may be relieved through reimbursement or compensation from insurance or otherwise, by liquidation of the Participant's assets, to the extent the liquidation of such assets would not cause severe financial hardship, or by cessation of Elective Deferrals.

Distributions 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, or local income taxes or penalties reasonably anticipated to result from the distribution). Determinations of the amounts reasonably necessary to satisfy the emergency need must take into account any additional compensation that is available due to the Participant's cancellation of a Deferral Election Agreement due to unforeseeable emergency pursuant to Section 4.2.

(iii)Due to a failure of the Plan to satisfy Section 409A with respect to the Participant, but only to the extent an amount is required to be included in the Participant's income as a result of such failure.

(iv)In the event of a Change in Control, in which case the Participant's Account shall be distributed to him or her in a lump sum as soon as administratively reasonable after the date on which the Change in Control occurs.

4.6.Death Benefit. If a Participant dies with all or a portion of his or her Account unpaid, the Participant's Account (or the remaining balance of his or her Account as the case may be) shall be paid to the Beneficiary designated in accordance with Article 6, in the form (single sum or installments) elected by the Participant under Sections 4.2 and 4.4, subject to Section 4.5(b) and Article 6, with distribution commencing to the Beneficiary as soon as administratively reasonable following the date of the Participant's death.

4.7.Funding. The Corporation's obligations under the Plan shall in every case be an unfunded and unsecured promise to pay. Each Participant's or Beneficiary's rights under the Plan shall be no greater than those of a general, unsecured creditor of the Corporation. The amount of each Participant's Account shall be reflected on the accounting records of the Corporation but shall not be construed to create, or require the creation of, a trust, custodial or escrow account. No Participant shall have any right, title, or interest whatever in or to any investment reserves, accounts, or funds that the Corporation may purchase, establish, or accumulate, and no Plan provision or action taken pursuant to the Plan shall create or be construed to create a trust or a fiduciary relationship of any kind between the Corporation and a Participant or any other person. All amounts paid under the Plan shall be paid in cash or Stock from the general assets of the Corporation, and the Corporation shall not be obligated under any circumstances to fund its financial obligations under the Plan. The Corporation may create a trust to hold funds or securities to be used in payment of its obligation under the Plan, and may fund such trust; provided, however, that any funds contained therein shall remain liable to the claims of the Corporation's general creditors.

5.Administration

5.1.Administration. The Plan shall be administered by the Committee. In addition to the other powers granted under the Plan, the Committee shall have all powers necessary to administer the Plan, including, without limitation, powers:

(a)to interpret the provisions of the Plan;

(b)to establish and revise the method of accounting for the Plan and to maintain the Accounts; and

(c)to establish rules for the administration of the Plan and to prescribe any forms required to administer the Plan.

5.2.Actions of the Committee. The Committee (including any person or entity to whom the Committee has delegated duties, responsibilities or authority, to the extent of such delegation) has total and complete discretionary authority to determine conclusively for all parties all questions arising in the administration of the Plan, to interpret and construe the terms of the Plan, and to determine all questions of eligibility and status of Participants and Beneficiaries under the Plan and their respective interests. Subject to the claims procedures of Article 8, all determinations, interpretations, rules and decisions of the Committee (including those made or established by any person or entity to whom the Committee has delegated duties, responsibilities or authority, if made or established pursuant to such delegation) are conclusive and binding upon all persons having or claiming to have any interest or right under the Plan.

5.3Delegation. The Corporation, or any officer or other employee of the Corporation, shall have the power to delegate specific duties and responsibilities to officers or other employees of the Corporation or other individuals or entities. Any delegation may be rescinded by the Corporation at any time. Each person or entity to whom a duty or responsibility has been delegated shall be responsible for the exercise of such duty or responsibility and shall not be responsible for any act or failure to act of any other person or entity.

5.4.Expenses. The expenses of administering the Plan shall be borne by the Corporation.

5.5Reports and Records. The Committee, and those to whom the Committee has delegated duties under the Plan, shall keep records of all their proceedings and actions and shall maintain books of account, records, and other data as shall be necessary for the proper administration of the Plan and for compliance with applicable law.

5.6Valuation of Accounts and Account Statements. As of each valuation date, the Committee shall adjust the previous Account balances of each Participant for Elective Deferrals, distributions, and investment gains and losses. A "valuation date," for these purposes, is the last day of each calendar quarter, and such other dates as the Committee may designate from time to time in its discretion. The Committee shall provide each Participant with a statement of his or her Account balances on a quarterly basis.

5.7.Indemnification and Exculpation. The agents, officers, directors, and employees of the Corporation and its Subsidiaries and the Committee shall be indemnified and held harmless by the Corporation against and from any and all loss, cost, liability, or expense that may be imposed upon or reasonably incurred by them in connection with or resulting from any claim, action, suit, or proceeding to which they may be a party or in which they may be involved by reason of any action taken or failure to act under the Plan and against and from any and all amounts paid by them in settlement (with the Corporation's written approval) or paid by them in satisfaction of a judgment in any such action, suit or proceeding. The foregoing provision shall not be applicable to any person if the loss, cost, liability, or expense is due to such person's gross negligence or willful misconduct.

6.Beneficiary Designation

6.1.Designation of Beneficiary. Each Participant shall be entitled to designate a Beneficiary or Beneficiaries who, upon the Participant's death, will receive the amounts that otherwise would have been paid to the Participant under the Plan. All designations shall be signed by the Participant and shall be in the form prescribed by the Committee and attached hereto as Exhibit B. The Participant may change his or her designation of Beneficiary at any time, on a form prescribed by the Committee. The filing of a new Beneficiary designation form by a Participant shall automatically revoke all prior designations by that Participant.

6.2.Death of Beneficiary. In the event that all the Beneficiaries named by a Participant pursuant to Section 6.1 predecease the Participant, the Participant's Account shall be paid to the Participant's estate in a lump sum as soon as administratively reasonable after the date of the Participant's death. In the event of the death of the Beneficiary or Beneficiaries after the death of the Participant, the remaining amount of the Account shall be paid in a lump sum to the estate of the last surviving Beneficiary to receive payments as soon as administratively practicable after the death of the Beneficiary.

6.3.Ineffective Designation. In the event the Participant does not designate a Beneficiary, or for any reason such designation is ineffective in whole or in part, the ineffectively designated amounts shall be paid to the Participant's estate in a lump sum as soon as administratively reasonable after the date of the Participant's death.

7.Amendment and Termination

The Board of Directors has the authority to amend or terminate the Plan at any time. No amendment or termination of the Plan shall in any manner reduce the Account balance of any Participant without the consent of the Participant (or if the Participant has died, his or her Beneficiary). Without limiting the foregoing, the Board of Directors may, in its sole discretion: (a) freeze the Plan by precluding any further Elective Deferrals and/or other credits, but otherwise maintain the balance of the provisions of the Plan; or (b) terminate the Plan in its entirety and distribute the Participant's Accounts at an earlier date and in a different form than otherwise provided under the Plan. In order for any such freeze, termination or distribution to be effective, it must comply with the requirements of Section 409A of the Code.

8.Claims Procedure

The Committee shall notify a Participant in writing within 90 days of the Participant's written application for benefits of the Participant's eligibility or non-eligibility for benefits under the Plan, provided, however, that benefit distribution shall not be contingent upon a Participant's application for benefits. If the Committee determines that a Participant is not eligible for benefits or full benefits, the notice shall set forth: (a) the specific reasons for such denial; (b) a specific reference to the provision of the Plan on which the denial is based; (c) a description of any additional information or material necessary for the Participant to perfect the claim, and a description of why it is needed; and (d) an explanation of the Plan's claims review procedure and other appropriate information as to the steps to be taken if the Participant wishes to have the claim reviewed. If the Committee determines that there are special circumstances requiring additional time to make a decision, the Committee shall notify the Participant of the special circumstances and the date by which a decision is expected to be made, and may extend the time for up to an additional 90-day period. If a Participant is determined by the Committee to be not eligible for benefits, or if a Participant believes that he or she is entitled to greater or different benefits, the Participant shall have the opportunity to have the Participant's claim reviewed by the Committee by filing a petition for review with the Committee within 60 days after receipt by the Participant of the notice issued by the Committee. The petition shall state the specific reasons the Participant believes the Participant is entitled to benefits or greater or different benefits. Within 60 days after receipt by the Committee of the petition, the Committee shall afford the Participant (and the Participant's counsel, if any) an opportunity to present the Participant's position to the Committee orally or in writing, and the Participant (or counsel) shall have the right to review the pertinent documents, and the Committee shall notify the Participant of its decision in writing within the 60-day period, stating specifically the basis of the decision written in a manner calculated to be understood by the Participant and the specific provisions of the Plan on which the decision is based. If, because of the need for a hearing, the 60-day period is not sufficient, the decision may be deferred for up to another 60-day period at the election of the Committee, but notice of this deferral shall be given to the Participant. If a Participant does not appeal on time, the Participant will have failed to exhaust the Plan's internal administrative appeal process, which is generally a prerequisite to bringing suit. In the event an appeal of a denial of a claim for benefits is denied, any lawsuit to challenge the denial of such claim must be brought within one year of the date the Committee has rendered a final decision on the appeal.

9.Miscellaneous

9.1.Unfunded, Non-ERISA Plan. The Plan is intended to be unfunded for tax purposes. Since participation in the Plan is generally limited to non-employees, it is not subject to the Employee Retirement Income Security Act of 1974. However, in the event a Participant should become an employee while participating in the Plan, the Plan shall be considered to be an unfunded plan maintained primarily to provide deferred compensation benefits for "a select group of management or highly compensated employees" within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1)of ERISA, and therefore is intended to be exempt from the provisions of Parts 2, 3, and 4 of Title I of ERISA.

9.2.Nontransferability. No benefit payable at any time under the Plan will be subject in any manner to alienation, sale, transfer, assignment, pledge, levy, attachment, or encumbrance of any kind, except with respect to a domestic relations order that the Committee determines to be a Qualified Domestic Relations Order.

9.3.Successors. All obligations of the Corporation under the Plan shall be binding upon and inure to the benefit of any successor to the Corporation, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Corporation.

9.4.Severability. In the event any provision of the Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included. The Plan is intended to comply in form and operation with Section 409A of the Code, and shall be construed accordingly. If any provision of the Plan does not conform to the requirements of Section 409A, such that the inclusion of the provision would result in loss of the Plan's intended tax deferral, the Plan shall be construed and enforced as if such provision had not been included.

9.5.Applicable Law. To the extent not preempted by Federal law, the Plan shall be governed and construed in accordance with the laws of the state of Iowa.

9.6.No Other Agreements. The terms and conditions set forth herein, together with the Deferral Election Agreements entered into by Participants, constitute the entire understanding of the Corporation and the Participants with respect to the matters addressed herein.

9.7.Incapacity. In the event that any Participant or Beneficiary is unable to care for his or her affairs because of illness or accident, any payment due may be paid to the Participant's or Beneficiary's spouse, parent, brother, sister or other person deemed by the Committee to have incurred expenses for the care of such Participant or Beneficiary, unless a duly qualified guardian or other legal representative has been appointed.

9.8Counterparts. This Plan may be executed in any number of counterparts, each of which when duly executed by the Corporation shall be deemed to be an original, but all of which shall together constitute but one instrument, which may be evidenced by any counterpart.

9.9Electronic Media. Notwithstanding anything in the Plan to the contrary, but subject to the requirements of the Code or other applicable law, any action or communication otherwise required to be taken or made in writing by a Participant or Beneficiary or by the Corporation or the Committee shall be effective if accomplished by another method or methods required or made available by the Corporation or Committee, or their agent, with respect to that action or communication, including e-mail, telephone response systems, intranet systems, or the Internet.

9.10Administratively Reasonable . A payment under the Plan will be deemed to be made as soon as administratively reasonable after a date if it is made within the same calendar year as such date, or, if later, by the 15th day of the third calendar month following such date.

9.11Release. Any payment of benefits to or for the benefit of a Participant or a Participant's Beneficiaries that is made in good faith by the Corporation in accordance with the Corporation's interpretation of its obligations hereunder, shall be in full satisfaction of all claims against the Corporation or any of its Subsidiaries for benefits under the Plan to the extent of such payment.

9.12Notices. Any notice permitted or required under the Plan shall be in writing and shall be hand-delivered or sent, postage prepaid, by first class mail, or by certified or registered mail with return receipt requested, to the Committee, if to the Corporation, or to the address last shown on the records of the Corporation, if to a Participant or Beneficiary. Any such notice shall be effective as of the date of hand-delivery or mailing.

9.13No Guaranty of Board Position. Nothing in the Plan shall be construed as guaranteeing a right to future membership on the Board.

(The Plan, as restated hereinabove, was adopted by the Board on August 8, 2006.)

EXHIBIT A

HNI CORPORATION

DIRECTORS DEFERRED COMPENSATION PLAN

DEFERRAL ELECTION AGREEMENT

I, ___________________________, hereby elect to participate in the Directors Deferred Compensation Plan (the "Plan") with respect to my annual Board retainer and Committee retainer (collectively, "Fees") and grants or awards of stock that I may receive beginning January 1, 20__.

1. Cash Compensation. I hereby elect to defer payment of the Fees which I otherwise would be entitled to receive in cash as follows:

Cash Fees to be Deferred
Cash Account	Stock Account
$_______ or _____ % of my Fees	$_______ or _____ % of my Fees

2. Common Stock Compensation.I hereby elect to defer payment of the Fees, which I otherwise would be entitled to receive as common stock of the Corporation, other than compensation I elected to receive as Voluntary Shares under the Equity Plan, to my Stock Account as follows:

(Choose One)

________%, or

________ shares per grant

3. Payment Deferral. Please defer payment of the Fees specified in this election until the following date:

o      Until the date I cease to be a Director

o      Until _____________(specify date), or if earlier, the date I cease to be a Director

4. Type of Payment. Please make payment of the Fees deferred by this election, together with all amounts reflected on my Account attributable there to, in accordance with Section 4.4 of the Plan as follows:

o     Pay in a lump sum

o     Pay in _______ equal annual installments (may not be more than 15)

I acknowledge that I have reviewed the Plan and understand that my participation will be subject to the terms and conditions contained in the Plan. Words and phrases used in this Deferral Election Agreement shall have the meaning assigned by the Plan.

I acknowledge that I have been advised to consult with my own tax and estate planning advisors before making this election to defer in order to determine the tax effect of my participation in the Plan.

Dated this ______ day of _______________, 20__.

                                                   (Signature)

_______________________________________________________

                                              (Print or type name)

NOTE: Keep one copy for your personal records. Return the original to the attention of: Corporate Secretary, HNI Corporation, 408 East Second Street, P.O. Box 1109, Muscatine, IA 52761-0071.

EXHIBIT B

HNI CORPORATION

DIRECTORS DEFERRED COMPENSATION PLAN

BENEFICIARY DESIGNATION

In accordance with the terms and conditions of the Directors Deferred Compensation Plan (the "Plan"), I hereby designate the person(s) indicated below as my beneficiary(ies) to receive the amounts payable under said Plan:

Name(s)__________________________________________________________________________

Address(es)_______________________________________________________________________

______________________________________________________________________

Social Security No(s) of Beneficiary(ies)__________________________________________________

Relationship(s)_____________________________________________________________________

Date(s) of Birth_____________________________________________________________________

In the event that the above-named beneficiary(ies) predecease(s) me, I hereby designate the following person(s) as beneficiary(ies):

Name(s)__________________________________________________________________________

Address(es)_______________________________________________________________________

_________________________________________________________________________________

Social Security No(s) of Beneficiary(ies)___________________________________________________

Relationship(s)______________________________________________________________________

Date(s) of Birth______________________________________________________________________

I hereby expressly revoke all prior designations of beneficiary(ies), reserve the right to change the beneficiary(ies) herein designated and agree that the rights of said beneficiary(ies) shall be subject to the terms of the Plan. In the event that there is no beneficiary living at the time of my death, I understand that the amounts payable under the Plan will be paid to my estate.

Dated: _________________________________
	(Signature)
	________________________________________________                                                (Print or type name)