Document:

Exhibit
10.3

 

NOTIFICATION
OF RESTRICTED STOCK AWARD 

UNDER
THE FLEXSTEEL INDUSTRIES, INC. OMNIBUS STOCK PLAN

 

	 Name
    of Grantee: Jerald K. Dittmer
	 Restricted
    Stock Award: 3,186 Shares	 Grant
    Date: December 28, 2018

 

		1.	Notification
                                         of Award. Flexsteel Industries, Inc. (the “Company”), hereby grants
                                         to you (“Employee”) a Restricted Stock Award under this Notification
                                         of Award (the “Notification of Award”). The Restricted Stock Award
                                         represents the right to receive shares of common stock of the Company (the “Shares”)
                                         under the terms and conditions described in this Notification of Award and in the Company’s
                                         2013 Omnibus Stock Plan (the “Plan”), provided upon request.

		2.	Vesting.
                                         The Employee’s rights in and to the number of Shares so indicated shall become
                                         vested upon the earliest of the following dates or events to occur:

		a.	On
                                         July 1, 2019, 531 shares shall vest if the Employee is employed and in good standing
                                         with the Company on such date;

		b.	On
                                         July 1, 2020, 1,062 shares shall vest if the Employee is employed and in good standing
                                         with the Company on such date;

		c.	On
                                         July 1, 2021, 1,062 shares shall vest if the Employee is employed and in good standing
                                         with the Company on such date;

		d.	On
                                         July 1, 2022, 531 shares shall vest if the Employee is employed and in good standing
                                         with the Company on such date;

		e.	On
                                         the date of the Employee’s death while employed with the Company all unvested Shares
                                         shall vest;

		f.	On
                                         the date the Employee is determined to be disabled under the Company’s long-term
                                         disability plan for entitlement to benefits thereunder (“Disability”)
                                         all unvested Shares shall vest; or

		g.	On
                                         the date of a Change in Control of the Company (See Attachment A “Change in
                                         Control”), if the Employee is employed and in good standing with the Company
                                         on that date all unvested Shares shall vest.

		3.	Dividends.
                                         During the period prior to vesting (as defined in Section 2 above), dividends will be
                                         paid quarterly on the unvested Shares unless such Shares have been forfeited hereunder.
                                         Dividends shall otherwise be considered a part of the Restricted Stock Award.

    
	Restricted Stock Award	1	 
	Flexsteel Industries, Inc.	 	 

     

    

 

		4.	Forfeiture
                                         Restriction. In the event of Employee’s cessation of employment with or service
                                         to the Company for any reason, except as a result of Employee’s death, Disability,
                                         or a Change in Control, all of the Shares which have not vested pursuant to the vesting
                                         schedule set forth in Section 2 above shall thereupon be forfeited immediately and without
                                         any further action by the Company (the “Forfeiture Restriction”).
                                         Upon occurrence of such a forfeiture, the Company shall become the legal and beneficial
                                         owner of the unvested Shares and all rights and interests therein or relating thereto,
                                         and the Company shall have the right to retain and transfer to its own name the number
                                         of unvested Shares being forfeited by Employee. The unvested Shares and Employee’s
                                         executed stock assignment (See Attachment B “Stock Assignment”) to
                                         this Notification of Award shall be held by the Company in accordance with in accordance
                                         with Section 6 until the Shares are forfeited as provided in this Section 4, until such
                                         unvested Shares are fully released from the Forfeiture Restriction, or until such time
                                         as this Notification of Award is no longer in effect. Employee hereby authorizes and
                                         directs the Secretary of the Company, or such other person designated by the Company,
                                         to transfer the unvested Shares which have been forfeited pursuant to this Section 4
                                         from Employee to the Company. The Company will provide to the Employee a separate Stock
                                         Assignment for each certificate of Shares.

		5.	Release
                                         of Shares from Forfeiture Restriction. The Shares shall be released from the Forfeiture
                                         Restriction in accordance with the vesting schedule set forth in Section 2 of this Notification
                                         of Award. Any of the Shares which, from time to time, have not yet been released from
                                         the Forfeiture Restriction are referred to herein as “Unreleased Shares.”
                                         As soon as administratively practicable following the release of any Shares from the
                                         Forfeiture Restriction, the Company shall, as applicable, either deliver to the Employee
                                         the certificate or certificates representing such Shares in the Company’s possession
                                         belonging to the Employee, or, if the Shares are held in book entry form, then the Company
                                         shall remove the notations on the book form. The Employee (or the beneficiary or personal
                                         representative of the Employee in the event of the Employee’s death or incapacity,
                                         as the case may be) shall deliver to the Company any representations or other documents
                                         or assurances as the Company or its representatives deem necessary or advisable in connection
                                         with any such delivery.

		6.	Escrow.
                                         The Unreleased Shares and Employee’s executed Stock Assignment shall be held by
                                         the Company until the Shares are forfeited as provided in Section 4, until such Unreleased
                                         Shares are fully released from the Forfeiture Restriction, or until such time as this
                                         Notification of Award no longer is in effect. In such event, Employee shall not retain
                                         physical custody of any certificates representing Unreleased Shares issued to Employee.
                                         Employee, by acceptance of this Notification of Award, shall be deemed to appoint, and
                                         does so appoint, the Company and each of its authorized representatives as Employee’s
                                         attorney(s)-in-fact to effect any transfer of forfeited Unreleased Shares to the Company
                                         as may be required pursuant to the Plan or this Notification of Award, and to execute
                                         such representations or other documents or assurances as the Company or such representatives
                                         deem necessary or advisable in connection with any such transfer. The Company, or its
                                         designee, shall not be liable for any act it may do or omit to do with respect to holding
                                         the Shares in escrow and while acting in good faith an in the exercise of its judgment.

    
	Restricted Stock Award	2	 
	Flexsteel Industries, Inc.	 	 

     

    

		7.	Withholding
                                         Taxes. The Company has the right to deduct and withhold any taxes due as a result
                                         of this Restricted Stock 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 Restricted Stock Award
                                         and dividends. 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 Restricted Stock Award and dividends. The Company will process payment of the
                                         amount determined under this Section 7 through the Employee’s payroll along with
                                         applicable withholding taxes.

		8.	Forfeiture
                                         and Clawback. Forfeiture and Clawback provisions as provided for in the Plan apply
                                         to this Restricted Stock Award. See the Plan document and Attachment A “Competitive
                                         Activity” and “Improper Use of Confidential Information” definitions
                                         to this Notification of Award for more details.

		9.	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.

		10.	Transferability.
                                         The Employee shall not sell, transfer, pledge, assign or otherwise encumber any of the
                                         Restricted Stock Award, whether voluntarily, involuntarily or by operation of law. Any
                                         purported transfer, pledge or encumbrance of such Restricted Stock Award shall be void
                                         and unenforceable against the Company, and no purported transferee shall acquire any
                                         right or interest with respect to the Restricted Stock Award or the payment therefor
                                         as a result.

		11.	Rights
                                         of Stockholder. Except as otherwise provided in the Plan or this Notification of
                                         Award, upon issuance of the Shares by the Company, Employee shall have all of the rights
                                         of a stockholder with respect to said Shares, subject to the restrictions herein, including
                                         the right to vote the Shares and to receive all dividends or other distributions paid
                                         or made with respect to the Shares.

    
	Restricted Stock Award	3	 
	Flexsteel Industries, Inc.	 	 

     

    

		12.	Legends.
                                         The certificate or certificates representing the Shares, if any, shall bear the following
                                         legend (as well as any legends required by applicable state and federal corporate and
                                         securities laws):

THE
SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO FORFEITURE IN FAVOR OF THE COMPANY AND MAY BE TRANSFERRED ONLY IN ACCORDANCE
WITH THE TERMS OF A RESTRICTED STOCK AWARD AGREEMENT BETWEEN THE COMPANY AND THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH
THE SECRETARY OF THE COMPANY.

		13.	Governing
                                         Law. This Notification of Award 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.

		14.	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. In
                                         the event of a conflict between the provisions of the Plan and the provisions of this
                                         Notification of Award, the provisions of the Plan will govern.

		15.	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 Restricted Stock Award, and there are no promises, agreements,
                                         conditions, understandings, warranties or representations, oral or written, express or
                                         implied, between the parties with respect to the Restricted Stock Award 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 Restricted Stock Award. 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.

		16.	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.

		17.	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.

    
	Restricted Stock Award	4	 
	Flexsteel Industries, Inc.	 	 

     

    

 

		18.	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.

IN
WITNESS WHEREOF, the Company and the Employee have executed this Notification of Award to be effective as of the Grant Date.

	FLEXSTEEL INDUSTRIES,
    INC.: 	 	EMPLOYEE:
	        /s/ Marcus D. Hamilton 	 	/s/
    Jerald K. Dittmer
	By: Marcus D. Hamilton	 	By:   Jerald K. Dittmer
	Its: Chief Financial Officer 	 	 

 

    
	Restricted Stock Award	5	 
	Flexsteel Industries, Inc.	 	 

     

    

 

ATTACHMENT
A

 

Definitions

 

The
Capitalized terms used in this Notification of Award have the meanings set forth below.

“Cause”
means:

 

		(i)	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 death or 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

 

		(ii)	The
                                         willful engaging by the Employee in illegal conduct or misconduct as described in the
                                         Flexsteel Industries, Inc. Employee Handbook, as amended from time to time, or gross
                                         misconduct that is materially and demonstrably injurious to the Company as determined
                                         by the Company to constitute conduct that warrants forfeiture pursuant to the Plan and
                                         this Notification of Award.

 

For
purposes of this definition, no act, or failure to act, on the part of the Employee shall be considered “willful” unless it is
done, or omitted to be done, by the Employee in bad faith or without reasonable belief that the Employee’s action or omission
was in the best interests of the Company. Any act, failure to act, based on (i) authority given pursuant to resolution duly adopted
by the Board, or (ii) the advice of counsel for the Company shall be conclusively presumed to be done or omitted to be done, by
the Employee in good faith and in the best interests of the Company.

 

“Change
in Control” means any of the following (but only if such event meets the definition of “change in control” for purposes of
Section 409A of the Code):

 

		(i)	Any
                                         individual, entity or group becomes a “Beneficial Owner” (as defined in Rule 13d-3 of
                                         the Securities Exchange Act of 1934, as amended), directly or indirectly, of at least
                                         thirty percent (30%) but less than fifty percent (50%) of the voting stock of the Company
                                         in a transaction that is not previously approved by the Board of Directors of the Company;

 

		(ii)	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;

 

		(iii)	The
                                         person 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 immediately following such occurrence;

 

    
	Restricted Stock Award	1	 
	Flexsteel Industries, Inc.	 	 

     

    

 

		(iv)	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;

 

		(v)	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;

 

		(vi)	The
                                         liquidation or dissolution of the Company; or

 

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

 

“Competitive
Activity” means any of the following regardless of whether it is undertaken, directly or indirectly, on your own behalf or
on behalf of any person or entity other than the Company, including, without limitation as a proprietor, principal, agent, partner,
officer, director, stockholder, employee, member of any association, contractor, consultant or otherwise:

 

		(i)	Engaging
                                         in any business activity, in any geographic market in which the Company is then engaged
                                         in business that is competitive with the business of the Company

 

		(ii)	Hiring
                                         or soliciting for employment any person who is then an employee of the Company;

 

		(iii)	Inducing
                                         or attempting to induce any person to end his or her employment relationship with the
                                         Company;

 

		(iv)	Soliciting
                                         business concerning any business (as described in Section (i) above) from any person
                                         or entity who is, or who was, a client, customer, prospective client or prospective customer
                                         of the Company; or

 

		(v)	Taking
                                         any action to divert business from, or inducing or attempting to induce any customer
                                         or prospective customer or any vendor, supplier or other business relation to cease doing
                                         business with the Company.

 

“Improper
Use of Confidential Information” means:

 

	 	(i)	Any
    use or disclosure of Confidential Information except as required for the performance of the Employee’s duties as an employee
    of the Company;

	 	(ii)	Any
    act or omission that directly or indirectly would materially reduce the value of Confidential Information except for such
    acts or omissions that are required for the performance of the Employee’s duties as an employee of the Company.

    
	Restricted Stock Award	2	 
	Flexsteel Industries, Inc.	 	 

     

    

 

	 	(iii)	Notwithstanding
    anything in Sections (i) or (ii) above, Improper Use of Confidential Information does not include:

	 	(A)	any
    disclosure, use or other act or omission that is expressly authorized in writing, in advance by the Company; or

	 	(B)	any
    required disclosure of Confidential Information by law or legal process, if: (x) the Employee provides prompt notice to the
    Company in writing, and prior to disclosing any Confidential Information, so that the Company may elect to seek an appropriate
    protective order to prevent disclosure at the Company’s option and expense; and (y) the Employee cooperates with the Company
    in any efforts to seek a protective order.

 For
purposes of this definition, “Confidential Information” means any non-public information regarding the Company or any of its owners,
directors, representatives, agents, employees, suppliers, vendors, shareholders, members, clients, customers, or other third parties
or entities with whom the Company does business and which the Employee has learned or developed in the past as a result of Employee’s
employment by or association with the Company or which the Employee learns or develops while providing services to the Company.
Confidential Information includes, but is not limited to, trade secrets, information about customers, prospective customers, marketing
strategies, business strategies, sales strategies, products, services, key personnel, suppliers, pricing, technology, computer
software code, methods, processes, designs, research, development systems, techniques, finances, accounting, purchasing, forecasts,
or planning. All information disclosed to the Employee or to which the Employee obtains access in whatever form, whether originated
by the Employee or by others, during the period that the Employee provides services to the Company will be presumed to be Confidential
Information if it is treated by the Company as being Confidential Information or if the Employee has a reasonable basis to believe
it to be Confidential Information. For these purposes, Confidential Information will not include knowledge or information: (i)
that is now or subsequently becomes generally publicly known, other than as a direct or indirect result of Improper Use or Disclosure
of Confidential Information by an Employee; or (ii) that is independently made available to the Employee in good faith by a third
party who has not violated any legal duty or confidential relationship with the Company.

 

“Involuntary
Termination” has the meaning set forth in U.S. Treasury Regulation § 1.409A-1(n). Generally, this means that the Company
has terminated your employment under circumstances where you have not initiated or requested the termination and you are willing
and able to continue your employment. An “involuntary termination,” for these purposes, also includes your separation from service
due to “good reason” if your separation occurs due to a material diminution in your base compensation; a material diminution of
your authority, duties or responsibilities; or a material change in the geographic location at which you must perform services.
In order for a separation from service to be considered a “good reason” separation from service, you must provide a written notice
to the Company of the existence of the condition within a 30-day period following the initial existence of the condition, upon
which the Company must be provided a period of at least 90 days during which it may remedy the condition.

 

    
	Restricted Stock Award	3	 
	Flexsteel Industries, Inc.	 	 

     

    

 

ATTACHMENT
B

 

STOCK
ASSIGNMENT

 

FOR
VALUE RECEIVED, the undersigned, ____________________, hereby sells, assigns and transfers unto FLEXSTEEL INDUSTRIES, INC. (the
“Company”), a Minnesota corporation, __________ shares of the Company’s common stock, standing in its name
of the books of the Company represented by Certificate No. ______ herewith and do hereby irrevocably constitute and appoint ________________________
to transfer the said stock on the books of the Company with full power of substitution on the premises.

 

This
Stock Assignment may be used only in accordance with the Notification of Restricted Stock Award between the Company and the undersigned
dated December 28, 2018. 

	 	
	 	Jerald K. Dittmer

INSTRUCTIONS:
Please do not fill in the blanks other than the signature line. The purpose of this assignment is to enable the Company to enforce
the Forfeiture Restriction as set forth in the Notification of Restricted Stock Award, without requiring additional signatures
on the part of the Employee.

 

    
	Restricted Stock Award	1	 
	Flexsteel Industries, Inc.Exhibit
10.4

 

Final

 

[DATE]

 

[PARTICIPANT
NAME]

[ADDRESS]

 

Dear
[PARTICIPANT NAME]:

 

Flexsteel
Industries, Inc. is pleased to extend to you this Award of Nonqualified Stock Options (“NSOs”) under the Omnibus Stock
Plan. The details of your Award are contained in the Notification of Award attached to this letter.

 

As
described in the Notification of Award, you are entitled to purchase Company Shares at the Exercise Price Per Share, and according
to the other terms, described in the Notification of Award.

 

Sincerely,

 

Jerald
K. Dittmer

President
& Chief Executive Officer

 

Attachments

 

    
	 		 
	NSO Form	 	Last Updated 1/22/2019

     

    

 

NOTIFICATION
OF NON-STATUTORY STOCK OPTION AWARD

UNDER
THE FLEXSTEEL INDUSTRIES, INC. OMNIBUS STOCK PLAN

 

	Name
    of Optionee: 
	Effective
    Date:
	Number
    of Shares Covered: 	Date
    of Grant: 
	Exercise
    Price Per Share: 	Expiration
    Date: 

 

Flexsteel
Industries, Inc. (the “Company”) hereby grants you an option (the “Option”) under this Notification
of Non-Statutory Stock Option Award (this “Notification of Award”), under the Flexsteel Industries Inc. Omnibus
Stock Plan (the “Plan”). (See Attachment C, “Omnibus Stock Plan.”) The Options granted under this
Notification of Award are subject to the following terms and conditions:

 

		1.	Stock
                                         Option. The Option is not intended to be an Incentive Stock Option within the meaning
                                         of Section 422 of the Internal Revenue Code (the “Code”).

 

		2.	Purchase
                                         Price. The purchase price of the Stock is the Exercise Price Per Share, which shall
                                         not be less than the Fair Market Value of the Stock on the Date of Grant.

 

		3.	Expiration
                                         Date. Unless the right to exercise the Option is terminated earlier under Section
                                         7, the Option will expire on the Expiration Date. The Expiration Date shall not be more
                                         than ten years from the Date of Grant. You are solely responsible for exercising this
                                         Option, if at all, prior to its Expiration Date. The Company has no obligation to notify
                                         you of this Option’s expiration.

 

		4.	Vesting.
                                         The Shares under the Option shall vest pursuant to the following vesting schedule:

 

	Shares	Date
	 	 
	 	 
	 	 

 

    
	 	2	 
	NSO Form	 	Last Updated 1/22/2019

     

    

 

In
the event that a Change in Control (see Attachment A, “Definitions”) occurs, then the vesting schedule set forth above
shall be automatically accelerated so that all Shares purchased or purchasable upon exercise of this Option shall become fully
vested, effective as of the effective time of the Change in Control.

 

		5.	Exercise
                                         Period. The Option may only be exercised prior to the Expiration Date. Your right
                                         to exercise some or all of the Option may be terminated before the Expiration Date as
                                         provided in Section 7, relating to termination of your employment. In all cases, you
                                         may only exercise the Option to the extent the Option has vested as stated in the Notification
                                         of Award.

 

		6.	Transferability.
                                         The Option may be exercised during your lifetime only by you and any exercise must be
                                         prior to the Expiration Date. You may not transfer the Option, other than by will or
                                         the laws of descent and distribution.

 

		7.	Termination
                                         of Employment. All of your rights in this Option, to the extent not previously vested
                                         and exercised, shall terminate upon your termination of employment except as described
                                         in this Section 7. With respect to the vested and exercisable portion of the Option,
                                         and subject to subsection (f):

 

(a)       In
the event of your termination of employment due to reasons other than death, Disability, Termination for Cause (see Attachment
A, “Definitions”) or termination on or after your Retirement Date, the Option may be exercised (to the extent exercisable
at the date of termination) by you within three months after the date of termination of employment.

 

(b)       In
the event of your termination of employment on or after your Retirement Date, the Option may be exercised (to the extent exercisable
at the date of termination) by you within three years after the date of termination of employment.

 

(c)
      In the event of your termination of employment due to Disability, the Option may be
exercised in full by you within one year after the date of termination of employment.

 

(d)       In
the event of your termination of employment due to death, the Option may be exercised in full by your estate or by a person who
acquires the right to such Option by bequest or inheritance or otherwise by reason of your death, within one year after the date
of termination of employment.

 

(e)       In
the event of your Termination for Cause, the Option and your right to exercise the Option shall terminate immediately.

 

(f)        Notwithstanding
anything in this Notification of Award, in no event may the Option be exercised after the Expiration Date.

 

    
	 	3	 
	NSO Form	 	Last Updated 1/22/2019

     

    

 

		8.	Method
                                         of Exercise; Use of Company Stock.

 

(a)      
The Option may be exercised by delivering written notice of exercise to the Company at the principal executive office of the Company,
to the attention of the Company’s Secretary. The notice must state the number of Shares to be purchased, and must be signed
by the person exercising the Option. If you are not the person exercising the Option, the person also must submit appropriate
proof of his/her right to exercise the Option. The Company may designate a third party to administer the option program in which
case the third party may receive any required notice.

 

(b)      
Upon giving notice of any exercise hereunder, you must provide for payment of the purchase price of the Shares being purchased
through one or a combination of the following methods:

 

(i)
       Purchase. By paying cash (including check paid to the Company, wire transfer, bank draft, or money order);

 

(ii)      
Delivery of Shares. By delivery or tender to the Company of unencumbered Shares (by actual delivery or attestation) having an
aggregate Fair Market Value on the date the Option is exercised equal to the purchase price of the Shares being purchased under
the Option, or a combination thereof, as determined by the Committee (provided, however, that no fractional Shares will be issued
or accepted);

 

(iii)
     Broker-Assisted Cashless Exercise. By directing a stockbroker designated by the Company to affect a broker assisted cashless exercise
to sell Shares issued on exercise of the Option and remitting the proceeds of such sale to the Company; or

 

(iv)     
Net Exercise. By instructing the Company to withhold Shares having an aggregate Fair Market Value on the date of exercise less
than or equal to the purchase price of the Shares acquired upon exercise; provided that this method of exercise may only be used
to deliver net shares to you and no cash compensation may be provided.

 

 In
no event will you be permitted to pay any portion of the purchase price with Shares, through a broker-assisted cashless exercise
or through net exercise, if the Committee, in its sole discretion, determines that payment in such manner could have adverse tax
or financial accounting consequences for the Company. 

 

		9.	Withholding.
                                         In any case where withholding is required or advisable under federal, state or local
                                         law in connection with any exercise by you under this Notification of Award, the Company
                                         is authorized to withhold appropriate amounts from amounts payable to you, or may require
                                         that you remit to the Company an amount equal to such appropriate amounts. Upon the exercise
                                         of the Option, you may elect, subject to the approval of the Committee and compliance
                                         with applicable laws and regulations, to satisfy any withholding requirements, in whole
                                         or in part, by having the Company withhold Stock having a Fair Market Value, on the date
                                         the tax is to be determined, equal to the standard required withholding rates for non-periodic
                                         payments. In no event will the Company be required to permit the exercise of the Option
                                         unless the applicable withholding requirements are satisfied.

 

    
	 	4	 
	NSO Form	 	Last Updated 1/22/2019

     

    

 

		10.	Changes
                                         in Capitalization, Dissolution, Liquidation, Reorganization, Acquisition. The terms
                                         stated in the Notification of Award are subject to modification upon the occurrence of
                                         certain events as described in Section 16 of the Plan.

 

		11.	Severability.
                                         In the event any provision of this Notification of Award is held illegal or invalid for
                                         any reason, the illegality or invalidity will not affect the remaining parts of this
                                         Notification of Award, and the Notification of Award will be interpreted and enforced
                                         as if the illegal or invalid provision had not been included.

 

		12.	No
                                         Guarantee of Employment. The Notification of Award will in no way restrict the right
                                         of the Company to terminate your employment at any time.

 

		13.	Tax
                                         Advice. You acknowledge that you have not looked to or relied upon the Company or
                                         any of its officers, directors, optionees, shareholders, accountants or legal counsel
                                         for tax advice concerning the tax consequences of the grant to, and your exercise of,
                                         the Option and that you have obtained such advice, to the extent you determine that it
                                         is necessary, from other sources located by you.

 

		14.	No
                                         Shareholder Rights. You will have no rights as a shareholder with respect to any
                                         Stock subject to the Option prior to the date of exercise of the Option and, after such
                                         date, will only have rights as a shareholder with respect to the Stock acquired upon
                                         exercise.

 

		15.	Governing
                                         Terms. This Notification of Award is made according to the provisions of the Plan.
                                         The terms of the Plan are incorporated by reference in this Notification of Award. Terms
                                         used in this Notification of Award have the meanings used in the Plan unless the context
                                         clearly requires otherwise. The terms “termination of employment,” “terminate
                                         employment,” and similar terms shall mean “Separation from Service”
                                         as defined in the Plan. In the event of a conflict between the provisions of the Plan
                                         and the provisions of this Notification of Award, the provisions of the Plan will govern.

 

		16.	Resale
                                         Restrictions. The resale of Stock acquired upon exercise of awards granted under
                                         the Plan is generally not restricted by the terms of the Plan. Resales by participants
                                         who are officers or directors of the Company must comply with (i) Rule 144 under the
                                         Securities Act of 1933, as amended, and (ii) the six-month short swing profit restrictions
                                         under Section 16(b) of the Securities Exchange Act of 1934, as amended. The Board of
                                         Directors of Flexsteel Industries, Inc. has adopted Stock Ownership Guidelines (see Attachment
                                         D “Stock Ownership Guidelines”). These guidelines are a part of this Notification
                                         of Award.  

 

    
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		17.	Entire
                                         Understanding. This Notification of Award constitutes the entire understanding of
                                         you and the Company with respect to the subject matter of this Notification of Award,
                                         and, except as otherwise provided in the Plan, may not be amended, changed, modified,
                                         terminated, or waived other than by written instrument signed by you and the Company.
                                         This Notification of Award supersedes all prior oral or written agreements and understandings
                                         between you and the Company concerning the subject matter of the Notification of Award,
                                         including any implied or express representations regarding your ownership of any interest
                                         in the Company or its property, and any prior oral or written agreements conveying stock
                                         option rights to you.

 

		18.	Limitation
                                         on Rights; No Right to Future Grants; Extraordinary Item of Compensation. By accepting
                                         the Option, you acknowledge that: (a) the Plan is discretionary in nature and may be
                                         suspended or terminated by the Company at any time; (b) the grant of the Option is a
                                         one-time benefit that does not create any contractual or other right to receive future
                                         grants of options, or benefits in lieu of options; (c) all determinations with respect
                                         to any such future grants, including but not limited to, the times when options will
                                         be granted, the number of shares of Stock subject to each option, the Exercise Price
                                         Per Share, and the time or times when each option will be exercisable, will be at the
                                         sole discretion of the Company; (d) your participation in the Plan is voluntary; (e)
                                         the value of the Option is an extraordinary item of compensation that is outside the
                                         scope of your employment agreement, if any, with the Company; (f) the Option is not part
                                         of normal or expected compensation for purposes of calculating any severance, resignation,
                                         redundancy, end of service payment, bonus, long-service award, pension or retirement
                                         benefit or similar payment; (g) the exercisability of the Option ceases upon termination
                                         of employment with the Company for any reason except as may otherwise be explicitly provided
                                         in the Plan or this Notification of Award or otherwise permitted by the Committee; (h)
                                         the future value of the Stock subject to the Option is unknown and cannot be predicted
                                         with certainty; and (i) if the Stock subject to the Option does not increase in value,
                                         the Option will have no value.

 

		19.	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 17 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. 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 prior to the payment date.

 

    
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		20.	Beneficiary
                                         Designation. If your employment is terminated as a result of your death, someone
                                         other than you may become entitled to exercise this Option, as provided in Section 7
                                         of this Notification of Award. The Plan permits you to designate a beneficiary to exercise
                                         the vested portion of this Option in the event of your death. Any beneficiary can be
                                         named and you may change your beneficiaries at any time by submitting such designation,
                                         in writing, to the Company. (See Attachment B, “Beneficiary Designation of Employee”)

 

	 	FLEXSTEEL INDUSTRIES, INC.:
	 	 	 
	 	 	 
	 	By:	 	 
	 	Its:	 	 
	 	 	 	 
	 	OPTIONEE:
	 	 	 	 
	 	 	 
	 	[NAME]

 

    
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ATTACHMENT
A

 

Definitions

 

The
Capitalized terms used in this Notification of Award have the meanings set forth below.

 

“Change
in Control” means any of the following but only if such event meets the definition of “change in control”
for purposes of Section 409A of the Code):

 

		(i)	Any
                                         individual, entity or group becomes a “Beneficial Owner” (as defined in Rule
                                         13d-3 of the Securities Exchange Act of 1934, as amended), directly or indirectly, of
                                         at least thirty percent (30%) but less than fifty percent (50%) of the voting stock of
                                         the Company in a transaction that is not previously approved by the Board of Directors
                                         of the Company;

 

		(ii)	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;

 

		(iii)	The
                                         person 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 immediately following such occurrence;

 

		(iv)	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;

 

		(v)	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;

 

		(vi)	The
                                         liquidation or dissolution of the Company; or

 

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

 

“Competitive
Activity” means any of the following regardless of whether it is undertaken, directly or indirectly, on your own behalf
or on behalf of any person or entity other than the Company, including without limitation as a proprietor, principal, agent, partner,
officer, director, stockholder, employee, member of any association, contractor, consultant or otherwise:

 

		(i)	Engaging
                                         in any business activity, in any geographic market in which the Company is then engaged
                                         in business that is competitive with the business of the Company; or

 

		(ii)	Hiring
                                         or soliciting for employment any person who is then an employee of the Company; or

 

    
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		(iii)	Inducing
                                         or attempting to induce any person to end his or her employment relationship with the
                                         Company; or

 

		(iv)	Soliciting
                                         business concerning any business (as described in Section (i) above) from any person
                                         or entity who is, or who was, a client, customer, prospective client or prospective customer
                                         of the Company; or

 

		(v)	Taking
                                         any action to divert business from, or inducing or attempting to induce any customer
                                         or prospective customer or any vendor, supplier or other business relation to cease doing
                                         business with the Company.

 

“Improper
Use of Confidential Information” means:

 

		(i)	Any
                                         use or disclosure of Confidential Information except as required for the performance
                                         of your duties as an employee of the Company;

 

		(ii)	Any
                                         act or omission that directly or indirectly would materially reduce the value of Confidential
                                         Information except for such acts or omissions that are required for the performance of
                                         your duties as an employee of the Company.

 

		(iii)	Notwithstanding
                                         anything in Sections (i) or (ii) above, Improper Use of Confidential Information does
                                         not include:

 

		(A)	any
                                         disclosure, use or other act or omission that is expressly authorized in writing, in
                                         advance by the Company; or

 

		(B)	any
                                         required disclosure of Confidential Information by law or legal process, if: (x) you
                                         provide prompt notice to the Company in writing, and prior to disclosing any Confidential
                                         Information, so that the Company may elect to seek an appropriate protective order to
                                         prevent disclosure at the Company’s option and expense; and (y) you cooperate with
                                         the Company in any efforts to seek a protective order.

 

    
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For
purposes of this definition, “Confidential Information” means any non-public information regarding the Company or
any of its owners, directors, representatives, agents, employees, suppliers, vendors, shareholders, members, clients, customers,
or other third parties or entities with whom the Company does business and which you have learned or developed in the past as
a result of your employment by or association with the Company or which you learn or develop while providing services to the Company.
Confidential Information includes, but is not limited to, trade secrets, information about customers, prospective customers, marketing
strategies, business strategies, sales strategies, products, services, key personnel, suppliers, pricing, technology, computer
software code, methods, processes, designs, research, development systems, techniques, finances, accounting, purchasing, forecasts,
or planning. All information disclosed to you or to which you obtain access in whatever form, whether originated by you or by
others, during the period that you provide services to the Company will be presumed to be Confidential Information if it is treated
by the Company as being Confidential Information or if you have a reasonable basis to believe it to be Confidential Information.
For these purposes, Confidential Information will not include knowledge or information: (i) that is now or subsequently becomes
generally publicly known, other than as a direct or indirect result of Improper Use or Disclosure of Confidential Information
by you; or (ii) that is independently made available to you in good faith by a third party who has not violated any legal duty
or confidential relationship with the Company.

 

“Termination
for Cause” means the involuntary termination of a Participant’s employment with the Company as a result of dishonesty,
fraud, misappropriation of funds, theft relating to the Participant’s position, harassment, an act of violence, acts punishable
by law, misconduct as described in the Flexsteel Industries, Inc. 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.

 

    
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ATTACHMENT
B

 

FLEXSTEEL
INDUSTRIES, INC.

 

OMNIBUS
STOCK PLAN

 

NON-QUALIFIED
STOCK OPTION

 

BENEFICIARY
DESIGNATION OF EMPLOYEE

 

Under
the Flexsteel Industries, Inc. Omnibus Stock Plan, I, ________________________________, hereby designate the following as
beneficiary of any portion of my award which has been earned according to the terms of the Plan and unpaid at the time of my
death.

 

A.       Primary
Beneficiary: _____________________________________

 

B.       Contingent
Beneficiary: ___________________________________

 

	 	Signature: 	 
	 	 	 	 
	 	Name: 	 
	 	 	 	 
	 	Date: 	 

 

*This
election is valid until a later dated designation is completed and filed with the Company.

 

    
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ATTACHMENT
C

 

FLEXSTEEL
INDUSTRIES, INC.

OMNIBUS
STOCK PLAN

 

 

    
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ATTACHMENT
D

 

STOCK
OWNERSHIP GUIDELINES

 

    
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