INSTEEL INDUSTRIES, INC.
Notice of Grant of Restricted Stock Units
ID: 56-0674867
and Restricted Stock Unit Agreement
1373 BOGGS DRIVE
MOUNT AIRY,
NORTH CAROLINA 27030

     
Name
  Restricted Stock Unit Number:
Address
  Plan:

Effective ________, you have been granted an award of ________Restricted Stock
Units of INSTEEL INDUSTRIES, INC. (the “Corporation”).
Restricted Stock Units will become fully vested on the date shown.

             
Units
                Vesting Date    
 
         
 
         
 
         

Except as otherwise provided in the attached Restricted Stock Unit Agreement,
Restricted Stock Units that have not become or will be unable to become vested
by the date shown above shall expire and be forfeited.
By your signature and the Corporation’s signature below, you and the Corporation
agree that these Restricted Stock Units are granted under and governed by the
terms and conditions of the Corporation’s 2005 Equity Incentive Plan as amended
and the Restricted Stock Unit Agreement, all of which are attached and made a
part of this document.

     
 
   
 
   
 
   
INSTEEL INDUSTRIES, INC.
  Date
 
   
 
   
 
   
 
   
 
   
Participant Signature
  Date

 

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2005 EQUITY INCENTIVE PLAN
OF
INSTEEL INDUSTRIES, INC.

Restricted Stock Unit Agreement

R E C I T A L S:
     In furtherance of the purposes of the 2005 Equity Incentive Plan of Insteel
Industries, Inc., as amended (the “Plan”), and in consideration of the services
of the Participant and such other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Corporation and the
Participant hereby agree as follows:
     1. Incorporation of Plan. The rights and duties of the Corporation and the
Participant under this Agreement shall in all respects be subject to and
governed by the provisions of the Plan, the terms of which are expressly
incorporated herein by reference and made a part hereof. In the event of any
conflict between the provisions in the Agreement and those of the Plan, the
provisions of the Plan shall govern. Unless otherwise defined herein,
capitalized terms in this Agreement shall have the same definitions as set forth
in the Plan.
     2. Grant of Restricted Stock Units. The Corporation hereby grants to the
Participant pursuant to the Plan, as a matter of separate inducement and
agreement in connection with his employment or service to the Corporation, and
not in lieu of any salary or other compensation for his services, the number of
Restricted Stock Units (“RSU’s” or, if singular, “RSU”) subject to the
restrictions and other conditions set forth in the attached Notice of Grant of
Restricted Stock Units (the “Notice”) and in this Restricted Stock Unit
Agreement. Each RSU shall entitle the Participant to receive one share of the
Corporation’s common stock (the “Common Stock”) on the vesting date, subject to
the terms of the Plan and this Agreement. The RSU’s granted hereunder will be
reflected in a book account maintained by the Corporation, and prior to
distribution of shares of Common Stock upon vesting of the RSU’s, the RSU’s
shall represent an unsecured obligation of the Corporation.
     3. Vesting. Subject to Section 4 hereof, the RSU’s shall become vested and
nonforfeitable as of the date set forth in the Notice of Grant of Restricted
Stock Units (the “vesting date”). RSU’s shall be settled solely in shares of the
Corporation’s Common Stock. The Participant shall receive one share of Common
Stock for each RSU vesting on the vesting date as soon as practicable after such
date, but in no event later than the later of (a) the 15th day of the third
month following the Participant’s first taxable year in which the RSU is no
longer subject to a “substantial risk of forfeiture” within the meaning of
Section 409A of the Code, and Treasury Regulations thereunder (“Code
Section 409A”), or (b) the 15th day of the third month following the end of the
Corporation’s first taxable year in which the RSU is no longer subject to such a
substantial risk of forfeiture, or otherwise in accordance with Code
Section 409A.
     4. Termination of Employment; Change in Control. Except as otherwise
expressly provided in this Section 4 or as determined by the Administrator, all
rights of the Participant under the Plan with respect to the unvested portion of
the RSU shall terminate upon termination of the Participant’s employment with
the Corporation. RSU’s that have not vested as of the Participant’s termination
of

 

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employment shall be forfeited by the Participant to the Corporation without
payment of any consideration by the Corporation, and neither the Participant,
nor any successor, heir, assign or personal representative of the Participant,
shall have any further right to or interest in the RSU’s. Notwithstanding the
foregoing:
     (a) If the employment of the Participant is terminated because of death or
Disability, the RSU’s shall immediately vest.
     (b) If the Participant becomes eligible to terminate employment because of
Retirement, the RSU’s shall immediately vest. For this purpose, Retirement means
the Participant’s voluntary termination of employment on or after attaining age
55 and completing 10 years of employment with the Corporation or a Related
Corporation. Notwithstanding such vesting upon eligibility to terminate
employment because of Retirement, the RSU’s shall be settled by distribution of
Company shares only at the time set forth below.
     (c) Upon a Change in Control, the RSUs shall immediately vest.
RSU’s that become vested pursuant to this Section 4 shall be settled by
distribution of one share for each vested RSU as soon as practical but no later
than 60 days following the first to occur of (i) the vesting date shown in the
Notice of Grant; (ii) the Participant’s disability (as defined under Code
Section 409A); (iii) a change in the ownership or effective control of the
Corporation, or in the ownership of a substantial portion of the assets of the
Corporation (as defined under Code Section 409A); (iv) the Participant’s death;
or (v) the Participant’s separation from service (as defined in Code
Section 409A). Notwithstanding the foregoing, if the Participant is or may be a
“specified employee” (as defined in Code Section 409A), a distribution due to
separation from service may not be made before the date that is six months after
the date of his separation from service, or, if earlier, the date of the
Participant’s death (with all such payments that otherwise would have been made
during such six-month period to be made during the seventh month following
separation from service), in each case except as may be otherwise permitted
under Code Section 409A. If a Participant’s employment is terminated for Cause
after RSU’s vest but prior to the distribution of shares on settlement of the
RSU’s, the RSU’s shall be forfeited by the Participant to the Corporation
without payment of any consideration by the Corporation, and neither the
Participant, nor any successor, heir, assign or personal representative of the
Participant, shall have any further right to or interest in the RSU’s
     5. No Right of Continued Employment. Nothing contained in this Agreement or
the Plan shall confer upon the Participant any right to continue in the
employment or service of the Corporation or a Related Corporation or interfere
with the right of the Corporation or a Related Corporation to terminate the
Participant’s employment or service at any time.
     6. Nontransferability of RSU’s. The RSU shall not be transferable.
     7. Dividend Equivalents. On the first regular payroll date of the
Corporation following each dividend payment date with respect to the
Corporation’s common stock, the Corporation will pay to the Participant a cash
amount per RSU equivalent to the cash dividend paid per share on the
Corporation’s Common Stock.

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     8. Fractional Shares. Fractional shares shall not be issuable hereunder,
and when any provision hereof may entitle the Participant to a fractional share,
such fractional share shall be disregarded.
     9. Superseding Agreement; Binding Effect. This Agreement supersedes any
statements, representations or agreements of the Corporation with respect to the
grant of the RSU’s or any related or similar rights, and the Participant hereby
waives any rights or claims related to any such statements, representations or
agreements. This Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective executors, administrators,
next-of-kin, successors and assigns.
     10. Governing Law. Except as otherwise provided in the Plan or herein, this
Agreement shall be construed and enforced according to the laws of the State of
North Carolina, without regard to the conflict of laws provisions of any state.
     11. Amendment and Termination; Waiver. Subject to the terms of the Plan,
this Agreement may be modified or amended only by the written agreement of the
parties hereto. The waiver by the Corporation of a breach of any provision of
the Agreement by the Participant shall not operate or be construed as a waiver
of any subsequent breach by the Participant.
     12. Withholding. The Participant acknowledges that the Corporation shall
require the Participant to pay the Corporation the amount of any federal, state,
local or other tax or other amount required by any governmental authority to be
withheld and paid over by the Corporation to such authority for the account of
the Participant, and the Participant agrees, as a condition to the grant of the
RSU’s, to satisfy such obligations.
     13. Section 409A of the Code. If any provision of the Plan or this
Agreement would result in the Participant becoming subject to any penalty under
Section 409(A) of the Code, any rights of the Participant or authority of the
Corporation with respect to the RSU’s shall be automatically modified and
limited to the extent necessary to avoid the imposition of such penalty.
     14. Administration. The authority to construe and interpret this Agreement
and the Plan and to administer all aspects of the Plan shall be vested in the
Administrator, and the Administrator shall have all powers with respect to this
Agreement as are provided in the Plan. Any interpretation of the Agreement by
the Administrator and any decision made by it with respect to the Agreement is
final and binding.
     15. Notices. Except as may be otherwise provided by the Plan, any written
notices provided for in this Agreement or the Plan shall be in writing and shall
be deemed sufficiently given if either hand delivered or if sent by fax or
overnight courier, or by postage paid first class mail. Notices sent by mail
shall be deemed received three business days after mailed but in no event later
than the date of actual receipt. Notices shall be directed, if to the
Participant, at the Participant’s address indicated by the Corporation’s
records, or if to the Corporation, at the Corporation’s principal office.
     16. Severability. The provisions of this Agreement are severable and if any
one or more provisions may be determined to be illegal or otherwise
unenforceable, in whole or in part, the remaining provisions shall nevertheless
be binding and enforceable.

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     17. Other Restrictions. The Corporation may impose such restrictions on the
vesting of the RSU’s as it may deem advisable, including without limitation
restrictions under the federal securities laws, the requirements of any stock
exchange or similar organization and any blue sky or state securities laws
applicable to such shares. Notwithstanding any other provision in the Plan or
the Agreement to the contrary, the Corporation shall not be obligated to vest
the RSU’s, to deliver the shares of Common Stock subject to the RSU’s, to make
any other distribution of benefits, or to take any other action, unless such
vesting, distribution or action is in compliance with all applicable laws, rules
and regulations (including but not limited to the requirements of the Securities
Act).

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