Flexsteel Industries (FLXS) 10-K2021 FY Annual report

Issuance of Restricted Stock Units. Subject to the terms and conditions set forth below in this Notification of Award, the Company grants to the Employee <#> RSUs equal to ($) <spell dollar amount” with the number of Restricted Stock Units (“RSUs”) to be awarded based upon the average of the previous 10 trading days closing stock price to the Grant Date.  The number of RSUs shall vest as enumerated in Section 2, and shall be paid as provided in Section 6.

Vesting.  Except as otherwise provided in this Section, the Employee’s rights in and to the RSUs shall become vested upon the earliest occurrence of the dates or events and to the extent set forth below:

On June 30, 202_, if the Employee is employed and in good standing with the Company all of the RSUs shall vest;

On the date of the Employee’s death while employed with the Company all of the RSUs shall vest;

On the date the Employee is determined to be disabled under the Company’s long-term disability plan for entitlement to benefits thereunder all of the RSUs shall vest;

On the date of an Involuntary Termination within 30 days before or 12 months following a Change in Control of the Company all of the RSUs shall vest (See Section 3);

[On the date Employee’s employment with the Company is terminated, if termination for other than Cause (See Section 4) occurs on or after Employee reaches the age of 62 and is the result of other than death or disability, then Employee shall be entitled to receive a pro rata portion of the RSU Award based on the number of days employed by the Company during the period beginning on the Grant Date and ending June 30, 202__.]

Change in Control.  Change in Control means any of the following:

Any individual, entity or group becomes a “Beneficial Owner” (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of at least thirty percent (30%) but less than fifty percent (50%) of the voting

Any individual, entity or group becomes a Beneficial Owner, directly or indirectly, of at least fifty percent (50%) of the voting stock of the Company;

The persons who were directors of the Company immediately prior to any contested election or series of contested elections, tender offer, exchange offer, merger, consolidation, other business combination, or any combination of the foregoing cease to constitute a majority of the members of the Board of Directors of the Company immediately following such occurrence;

Any merger, consolidation, reorganization or other business combination where the individuals or entities who constituted the Company’s shareholders immediately prior to the combination will not immediately after the combination own at least fifty percent (50%) of the voting securities of the business resulting from the combination;

The sale, lease, exchange, or other transfer of all or substantially all the assets of the Company to any individual, entity or group not affiliated with the Company;

The liquidation or dissolution of the Company; or

The occurrence of any other event by which the Company no longer operates as an independent public company.

Cause. Cause means the following:

The willful and continued failure of the Employee to perform substantially the Employee’s duties as established from time to time by the Company’s management (other than any such failure resulting from a disability), after a written demand for substantial performance is delivered to the Employee by the Company’s management that specifically identifies the manner in which the management believes that the Employee has not substantially performed the Employee’s duties; or

Dishonesty, fraud, misappropriation of funds, theft relating to the Employee’s position, harassment, an act of violence, acts punishable by law, misconduct as described in the Flexsteel Employee Handbook, as amended from time to time, or such other serious misconduct as will be determined by the Company to constitute conduct that warrants forfeiture pursuant to the Plan and this Notification of Award.

Dividend Equivalents on RSUs.  During the period prior to vesting (as defined in Section 2 above), Dividend Equivalents will be credited quarterly as cash, accumulating until vesting and payout at the same time as the underlying RSU award.  Any credited Dividend Equivalents shall thereafter be subject to the terms of this Notification of Award to the same extent as the RSUs giving rise to the Dividend Equivalents.  Dividend Equivalents shall otherwise be considered a part of the award of RSUs.

Payment of RSUs.  Except as provided in the next sentence, the Company shall pay to the Employee the value as determined in this Section 6 of the RSUs credited to the Employee under this Award within fifteen (15) days after the vesting date (as defined in Section 2 above).  The amount to be paid shall be the number of whole RSUs credited to the Employee under this Agreement converted to shares and Dividend Equivalents shall be paid in cash.

Changes in Capital Structure of the Company.  The number of RSUs held by the Employee for which payment pursuant to Section 6 has not been made shall be adjusted equitably by the Company in the event of (i) a subdivision or combination of the shares of capital stock of the Company, (ii) a dividend payable in shares of capital stock of the Company (iii) a reclassification of any shares of capital stock of the Company or (iv) any other change in capital structure of the Company.  Such adjustment shall be made as if each RSU represented an issued and outstanding share of Common Stock of the Company as of the date of such adjustment.  Any additional RSUs credited to the Employee as a result of any of the foregoing events shall continue to be subject to the terms of this Notification of Award to the same extent as the RSUs giving rise to the right to receive such additional RSUs.

Withholding.  The Company has the right to deduct and withhold any taxes due as a result of this Award. The Company may, in its discretion, elect to withhold cash from other compensation payable to the Employee by the Company or withhold shares otherwise payable to you under this Notification of Award to satisfy applicable federal, state, and local withholding tax requirements with respect to the RSUs and Dividend Equivalents.  The Employee agrees to pay to the Company, when due, any amount necessary to satisfy applicable federal, state, and local withholding tax requirements with respect to the RSUs and Dividend Equivalents.  The Company will process payment of the amount determined under Section 6 through the Employee’s payroll along with applicable withholding taxes.

Forfeiture and Repayment.  If you receive or become entitled to receive a payment under this Notification of Award within six months before your Separation from Service with the Company, the Company, in its sole discretion, may require you to forfeit or return the Award, as the case may be, in the event you:  (a) engage in Competitive Activity at any time during your employment or within a two-year period after your Separation from Service or (b) engage in Improper Use of Confidential Information at any time.  (See Attachment A, “Definitions”.)  The Company also reserves the right to require you to pay back to the Company any amount received under the Award as described in Section 18 of the Plan.  Further, in no event will you be entitled to an Award under this Notification of Award if you have a termination for Cause at any time before the payment date of the Award.  Any repayment due under this Section 9 or Section 18 of the Plan will be made by you either in the Shares, or in a dollar amount equal to the Fair Market Value of the Shares determined on the date of repayment, you received under the Award.  The Committee, in its discretion, will determine which method of payment is acceptable.

Employment of Employee.  Nothing in this Notification of Award shall be construed as constituting a commitment, guaranty, agreement or understanding of any kind or nature that the Company shall continue to employ the Employee, and this Notification of Award shall not affect in any way the right of the Company or its subsidiaries to terminate the employment of the Employee at any time for any reason.  The Company shall have the right to reduce or recoup amounts due under the Notification of Award, but only to the extent such reduction or recoupment is specifically required by any federal or Minnesota law or regulation with respect to amounts due under this Notification of Award.

General Creditor.  The RSUs represent an unfunded promise to pay cash or cash equivalents in the future and the Employee shall not have any rights other than as a general creditor of the Company with respect to the payment of the value of the RSUs as provided in this Agreement.  The Employee shall not sell, transfer, pledge, assign or otherwise encumber any of the RSUs, whether voluntarily, involuntarily or by operation of law.  Any purported transfer, pledge or encumbrance of such RSUs shall be void and unenforceable against the Company, and no purported transferee shall acquire any right or interest with respect to the RSUs or the payment therefor as a result.

Rights of Stockholder.  The Employee shall not have any rights of a stockholder of the Company with respect to the RSUs, including the right to vote.

Governing Law.  This Agreement shall be construed and enforced in accordance with the laws of the State of Minnesota, without regard to the principles of rules of any jurisdiction with respect to conflict of laws.

Incorporation of Plan.  Except to the extent specifically provided in this Notification of Award, this grant shall be subject to and governed by the terms and conditions of the Plan, which shall be incorporated as though fully set forth herein.  Capitalized terms not otherwise defined in this Notification of Award shall have the meaning set forth in the Plan.

Entire Notification of Award; Modification.  This Notification of Award sets forth all of the promises, conditions, understandings, warranties and representations between the parties with respect to the RSUs, and there are no promises, agreements, conditions, understandings, warranties or representations, oral or written, express or implied, between the parties with respect to the RSUs other than as set forth in this Notification of Award, the Plan and referenced and related attachments to the Plan.  This Notification of Award is, and is intended by the parties to be, an integration of any and all prior agreements or understandings, oral or written, with respect to the RSUs.  Except as provided in Section 14, any change in, or modification of, this Agreement shall be valid only if in writing and signed by the parties to this Agreement.

Notices.  Any and all notices provided for in this Notification of Award shall be addressed: (i) if to the Company, to the principal executive office of the Company to the attention of Secretary, and (ii) if to the Employee, to the address of the Employee as reflected in the records of the Company.

Invalid or Unenforceable Provisions.  The invalidity or unenforceability of any particular provisions of this Notification of Award shall not affect the other provisions, and this Notification of Award shall be construed in all respects as if that invalid or unenforceable provision were omitted.

Acknowledgment. Your receipt of this Notification of Award constitutes your agreement to be bound by the terms and conditions of this Notification of Award and the Plan.