EXHITIB 10.5
FLEXSTEEL INDUSTRIES, INC.
VOLUNTARY DEFERRED COMPENSATION PLAN
This Agreement is made this ______ day of _________, 20__, by and
between FLEXSTEEL INDUSTRIES, INC., a Minnesota corporation (hereinafter the
"Corporation") and _____________________________________________________________
(hereinafter collectively "Employees" and individually as "Employee").
WHEREAS, the above named Employees are all Executive Officers of the
Corporation as appointed by the Board of Directors of the Corporation; and
WHEREAS, the Corporation desires to allow Employees to defer a portion
of their annual salary, bonus or management incentive to a future period;
In consideration of the Agreements hereinafter contained, the parties
hereto agree as follows:
1. Plan Year and Fiscal Year. The "Plan Year" shall be a calendar year.
The "Fiscal Year" shall be July 1 to June 30 of each year.
2. Salary, Bonuses and Management Incentive. The Corporation shall pay
the Employee from time to time during the term of his employment hereunder, such
salary, bonus and management incentive as the Board of Directors may determine
from time to time.
3. Voluntary Deferral of Salary and Bonus.
A. Salary Deferral. Each Employee shall have the right to elect
to defer not less than 10 percent nor more than 30 percent of
his salary ("Deferral Salary Percentage") each year provided
an election is made by the Employee by December 20 of the year
preceding the Plan Year. The Corporation will provide Employee
with an appropriate form on which to make the deferral
election (see Exhibit A attached). The Deferral Salary
Percentage will be withheld from each salary check received by
the Employee. The Deferral Salary Percentage shall be invested
in accordance with paragraph 6 herein.
B. Bonus Deferral. Each Employee will have the right to elect to
defer not less than 10 percent and no more than 100 percent of
his annual cash bonus (Deferral Bonus Percentage), if any,
which maybe declared and subsequently paid within seventy five
(75) days after the end of each fiscal year by designating the
percentage on or before
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June 20th of the year preceding the Plan Year on a form
provided by the Corporation (see Exhibit B attached). The
Deferral Bonus Percentage will be withheld from bonus checks
received by the Employee. The Deferral Bonus Percentage shall
be invested in accordance with paragraph 6 herein.
C. Management Incentive Award (AWARD). Each Employee will have
the right to elect to defer not less than one year nor more
than three years of his Award, if any, which may be declared
and subsequently paid within seventy five (75) days after the
end of each fiscal year by designating the amount of deferral
on or before June 20th each year preceding the Plan Year on a
form provided by the Corporation (See Exhibit C attached). The
Award to be received in Corporation Stock is held by the
Corporation in a separate account for the Employee (See
Paragraph 5 below). The shares shall be subject to the same
restrictions as any shares awarded under the Management
Incentive Plan. Dividends paid on deferred shares will be
deferred and credited to the Employee's separate account.
Dividends shall be invested in accordance with paragraph 6
herein.
D. Payment. To the extent the Employee elects to defer salary or
bonus, or management incentive his salary and bonus checks and
management incentive stock shall be reduced accordingly.
4. Vesting. Subject to the Award vesting provisions of paragraph 3.C.,
all amounts deferred shall be fully vested in the Employee deferring either
salary, bonus, or management incentive.
5. Accounting. The Corporation shall keep a separate "Account" for each
Employee's salary, bonus and management incentive deferrals. The accounting
shall include the date of deferral, amount of each deferral and the number of
corporate shares deferred. The Corporation shall credit to the book reserve (the
"Deferred Compensation Account") established for this purpose, the deferral of
each Employee's Account as each deferral occurs. A statement shall be provided
to each Employee at the end of each Plan Year.
6. Investment of Deferred Compensation Account. The Employee shall have
the right to select prior to December 20 of each Plan Year on the following
investment options:
A. Prime interest rate effective on the first day of the Plan
Year; or
B. S & P 500 Index, annual return at the end of each Plan Year;
or
C. A percentage of their account under Option A and a percentage
under Option B.
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Each Employee's Account shall be credited annually with the earnings
based on the average monthly account balance for the Plan Year multiplied by the
investment option selected by the Employee. The Employee shall select his
election option on or before December 20 preceding each Plan Year (See Exhibit D
attached). If the Employee fails to make an investment election for any
particular Plan Year, the prior election selected by the Employee shall be used.
If the Employee has no investment election of record, then investment election A
above shall apply.
7. Payment of Deferred Compensation Account. Each Employee's Account
will be paid to him upon the earliest of the Employee's death, disability, age
65, or retirement (as defined in the Corporation's Employees Retirement Salaried
Plan).
The method of payment for each Employee's Account will be paid in
accordance with the election form signed by the Employee (see Exhibit E
attached). Additionally, the Employee shall have the right to designate a
beneficiary to receive the remaining proceeds (see Exhibit F attached), if the
Employee should die prior to receiving all of his payments. If an Employee fails
to execute a beneficiary designation or if there is no beneficiary alive at the
time of distribution, then the proceeds due Employee will be paid to the
Employee's estate. The beneficiary designation may be changed at any time during
Employee's lifetime as long as the Employee is competent or by the Employee's
attorney-in-fact who is specifically authorized to make the change.
8. Disability. For purposes of this Agreement, an Employee shall be
deemed to be disabled if the Board of Directors of the Corporation shall find on
the basis of medical evidence satisfactory to the Board of Directors that the
Employee is totally disabled, mentally or physically, so as to prevent him from
engaging in his customary employment by the Corporation and that such disability
will be permanent and continuous during the remainder of his life.
9. Board of Directors Right to Modify Payout. Notwithstanding anything
herein to the contrary, the Board of Directors of Corporation shall have the
right in its sole discretion to vary the manner and time of making any payment
to an Employee provided for in this Agreement, provided such distribution is
paid over a shorter period than that designated in any election made by the
Employee.
10. Employee Treated as Unsecured Creditor. Nothing contained in this
Agreement and no action taken pursuant to the provisions of this Agreement shall
create or be construed to create a trust of any kind, or a fiduciary
relationship between the Corporation and the Employee, or his designated
beneficiary or any other person. Any funds which may be invested under the
provisions of this Agreement shall continue for all purposes to be part of the
general funds of the Corporation and no person other than the Corporation shall
by virtue of the provisions of this Agreement have any interest in such funds.
To the extent that any person acquires a right to receive payments from the
Corporation under this Agreement, such rights shall be no greater than the
rights of any unsecured general creditor of the Corporation. All deferred
amounts shall be deemed unsecured and unfunded.
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11. Assignability. The right of any Employee or any other person to the
payment of deferred compensation or other benefits under this Agreement shall
not be assigned, transferred, pledged or encumbered except by will or by the
laws of descent and distributions.
12. Competency. If the Corporation shall find that any person to whom
any payment is payable under this Agreement is unable to care for his affairs
because of illness or accident, or is a minor, any payment due (unless a prior
claim therefore shall have been made by a duly appointed conservator, or other
legal representative) may be made to the spouse, a child, a parent, or a brother
or sister, or to any such person deemed by the Board of Directors of the
Corporation to have incurred expense for such person otherwise entitled to
payment, in such manner and proportions as the Board of Directors of the
Corporation may determine. Any such payment shall be a complete discharge of the
liability of the Corporation under this Agreement.
13. Employment Rights. Nothing contained herein shall be construed as
conferring upon the Employee the right to continue in the employ of the
Corporation as an Executive or in any other capacity.
14. Interpretation and Construction. The Board of Directors of the
Corporation shall have full power and authority to interpret, construe, and
administer this Agreement and the Board of Directors interpretation and
construction thereof, and actions thereunder, including any valuation of the
Deferred Compensation Account, or the amount or recipient of the payment to be
made therefrom, shall be binding and conclusive on all persons for all purposes.
No member of the Board of Directors shall be liable to any person for any action
taken or omitted in connection with the interpretation and administration of
this Agreement unless attributable to his own willful misconduct or lack of good
faith.
15. Amendments. Corporation shall have the right to amend this
Agreement without Employees' approval for the purpose of including additional
employees under this Agreement or to comply with tax laws to insure that all
amounts deferred are deferred for tax purposes. Any other amendment may only be
made with the consent of all of the parties.
16. Employee Who is a Member of Board of Directors. If an Employee to
this Agreement is a member of the Board of Directors of the Corporation, that
Employee agrees by signing this Agreement not to partake in any decisions under
paragraphs 8, 9, 12, 14, 15, and 19 which affect his own Deferred Compensation
Account or any matters relating thereto.
17. State Law. This Agreement shall be construed in accordance with and
governed by the laws of the State of Iowa.
18. Binding Effect. This Agreement shall be binding upon and in inure
to the benefit of the Corporation and its successors and assigns, and the
Employee, his successors, assigns, heirs, executors, administrators and
beneficiaries.
19. Right to Terminate Agreement. The Board of Directors of the
Corporation shall have the right to terminate this Agreement at the end of any
calendar year, provided it gives at least thirty
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(30) day notice to the Employees of the termination of the Agreement. If the
Agreement is terminated, any sums previously paid in will be subject to the
Agreement, but the Employee shall not be entitled to defer any additional
salary, bonus or management incentive under this Agreement.
20. Counterparts. This Agreement may be signed in Counterparts by the
parties hereto.
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be
executed by its duly authorized officers and the Employees have hereunto set his
hand on the date set opposite their signature.
FLEXSTEEL INDUSTRIES, INC.
By: ____________________________________
K. Xxxxx Xxxxxxxxx, President
Date: __________________________________
By: ____________________________________
Xxxxxx X. Xxxxxxxxxx, Secretary
Date: __________________________________
By: ____________________________________
__________________, Employee
Date: __________________________________
By: ____________________________________
__________________, Employee
Date: __________________________________
By: ____________________________________
__________________, Employee
Date: __________________________________
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EXHIBIT A
FLEXSTEEL INDUSTRIES, INC.
VOLUNTARY DEFERRED COMPENSATION PLAN
ANNUAL ELECTIVE SALARY DEFERRAL
Under the Voluntary Deferred Compensation Plan Agreement with Flexsteel
Industries, Inc., I _______________________, elect to defer _____% of my Salary
earned for calendar year ________.
Signature ________________________
Title ________________________
Date ________________________
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EXHIBIT B
FLEXSTEEL INDUSTRIES, INC.
VOLUNTARY DEFERRED COMPENSATION PLAN
ANNUAL ELECTIVE CASH BONUS AWARD DEFERRAL
Under the Voluntary Deferred Compensation Plan Agreement with Flexsteel
Industries, Inc., I _______________________, elect to defer _____% of my Annual
Cash Bonus Award earned for fiscal year ________.
Signature ________________________
Title ________________________
Date ________________________
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EXHIBIT C
FLEXSTEEL INDUSTRIES, INC.
VOLUNTARY DEFERRED COMPENSATION PLAN
ANNUAL ELECTIVE MANAGEMENT INCENTIVE STOCK AWARD DEFERRAL
Under the Voluntary Deferred Compensation Plan Agreement with Flexsteel
Industries, Inc., I _______________________, elect to defer _____% of my
Management Incentive Award of Flexsteel Common Stock earned for fiscal year
________.
Signature ________________________
Title ________________________
Date ________________________
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EXHIBIT D
FLEXSTEEL INDUSTRIES, INC.
VOLUNTARY DEFERRED COMPENSATION PLAN
EMPLOYEE'S ELECTION OF INVESTMENT OPTIONS
Under the Voluntary Deferred Compensation Plan Agreement with Flexsteel
Industries, Inc., I _______________________, elect to have my Deferred
Compensation Account credited in accordance with the following investment
option:
[ ] A. Prime rate effective on the first day of the Plan
Year
[ ] B. S & P Index, annual return at the end of each Plan
Year
[ ] C. ____% credited in accordance with Option A above;
____% credited in accordance with Option B above
(percentages must add up to 100%)
Signature ________________________
Title ________________________
Date ________________________
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EXHIBIT E
FLEXSTEEL INDUSTRIES, INC.
VOLUNTARY DEFERRED COMPENSATION PLAN
EMPLOYEE'S ELECTION OF METHOD OF PAYMENT
Under the Voluntary Deferred Compensation Plan Agreement with Flexsteel
Industries, Inc., I _______________________, elect to receive my Deferred
Compensation Account as follows (check one of the boxes below):
[ ] A. In a lump sum within thirty (30) days of the event
requiring payment.
[ ] B. In approximate equal annual amounts over a five (5)
year period with the first payment due within thirty
(30) days after the event requiring payment.
[ ] C. In approximate equal annual amounts over a ten (10)
year period with the first payment due within thirty
(30) days after the event requiring payment.
[ ] D. In approximate equal semi-annual amounts over a five
(5) year period with the first payment due within
thirty (30) days after the event requiring payment.
[ ] E. In approximate equal semi-annual amounts over a ten
(10) year period with the first payment due within
thirty (30) days after the event requiring payment.
Notwithstanding the above, I acknowledge that the Corporation has the
authority to accelerate the payments pursuant to paragraph ______ of the
Deferred Compensation Plan.
Signature ________________________
Title ________________________
Date ________________________
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EXHIBIT F
FLEXSTEEL INDUSTRIES, INC.
VOLUNTARY DEFERRED COMPENSATION PLAN
BENEFICIARY DESIGNATION OF EMPLOYEE
Under the Voluntary Deferred Compensation Plan Agreement with Flexsteel
Industries, Inc., I _______________________, hereby designate the following as
beneficiary of any portion of my Deferred Compensation Account which has not
been paid prior to my death:
A. Primary Beneficiary: ________________________________
B. Contingent Beneficiary: ________________________________
Signature ________________________
Title ________________________
Date ________________________
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