Exhibit 10.1
EMPLOYMENT
AGREEMENT
This Agreement is made and entered
into this 1 st day of October, 2006, (Effective Date),
by and between FLEXSTEEL INDUSTRIES, INC., a Minnesota Corporation
(hereafter “Employer”) and DONALD D. DREHER, (hereafter
“Employee”).
RECITALS
WHEREAS, Employer is engaged in the
manufacturing, importing and sale of residential, commercial and
recreational furniture (“the Business”); and
WHEREAS, Employee desires to be
employed by Employer, and Employer desires to employ Employee on a
full-time basis of employment; and
WHEREAS, it is the desire of the
parties to provide for the terms and conditions of Employee’s
employment and to reduce their agreements and understandings to
writing in the form of an Employment Agreement;
NOW THEREFORE, in consideration of
the mutual terms, covenants and conditions herein contained, the
parties agree as follows:
1.
EMPLOYMENT . Employer hereby engages
Employee to perform, and Employee hereby accepts such engagement
and agrees to perform, the following services for Employer in
connection with Employer’s business:
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A.
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Employee will have the title Senior Vice
President of Flexsteel Industries, Inc. and President and CEO of
DMI Furniture (DMI). Employee will perform duties assigned to him
by the Chief Executive Officer (CEO) of Employer and such duties
will be those normally performed by a person with the title held by
Employee.
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B.
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Employee will use his best efforts to identify
and hire a successor for himself within two (2) years from the
effective date of this Agreement.
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C.
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Employee agrees to devote his time and attention
to the performance of such duties as may be assigned to him and
agrees that he will not, either directly or indirectly, alone or in
association with others, engage in Employer’s Business other
than as an employee of Employer during the terms of this Agreement
or any renewals thereof, except as expressly authorized and
approved by the CEO of Employer, and he further agrees to serve
Employer faithfully and diligently and according to the best of his
abilities and to use every effort to promote the interests of
Employer.
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D.
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Employee will perform his duties primarily at
DMI’s location in
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Louisville, Kentucky, but will be
required to travel to the Employer’s home office in Dubuque,
Iowa from time to time.
2. TERM
. The term of this Agreement shall begin on the
Effective Date set forth above and shall terminate on December 31,
2009, unless terminated prior to that time as otherwise provided in
this Agreement. At the end of said term, this Agreement shall not
automatically renew unless a renewal agreement is executed by all
parties. Sixty (60) days prior to December 31, 2009, the parties
agree to meet and conduct good faith negotiations either to renew
this Agreement or to enter into a consulting agreement both on such
terms and conditions as the parties mutually agree.
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A.
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BY EMPLOYER. Notwithstanding
anything herein contained to the contrary, the employment of
Employee may be terminated by Employer with or without cause at any
time upon thirty (30) days written notice to Employee. For purposes
of this agreement, Employer shall have cause to terminate Employee
upon the occurrence of any of the following:
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(i)
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conviction of a felony or a crime of moral
turpitude;
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(ii)
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acts of fraud, theft, misrepresentation, or
embezzlement;
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(iii)
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misappropriation of Employer’s
assets;
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(iv)
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appearing at place of employment or performing
duties of employment while intoxicated as a result of the
consumption of alcohol or drugs; and
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(v)
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any breach of a fiduciary duty involving
personal profit;
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(vii)
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disability as defined in Paragraph 7
hereof;
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(viii)
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employee’s failure to reasonably perform
his duties after being provided a thirty (30) day notice to cure;
only one notice to cure is required to be given to employee in any
consecutive six (6) month period;
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(ix)
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gross misconduct of employee after being
provided a thirty (30) day notice to cure; only one notice to cure
is required to be given to employee in any consecutive six (6)
month period; or
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(x)
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violation of paragraph 18.
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B.
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BY EMPLOYEE. The employment of
Employee may be terminated by Employee at any time upon one hundred
twenty (120) days written notice to Employer.
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C.
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WAIVER OF NOTICE. The notice
requirement may be waived by the party entitled to such notice. If
employment is terminated, see Paragraph 8 below.
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4.
COMPENSATION . Employer agrees to pay to
Employee, and Employee hereby agrees to accept, as full
compensation for the performance of her services hereunder the
following:
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A.
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SALARY. From and after the
Effective Date, Employee shall be paid an annual salary of
$354,300.00 in installments of $14,762.50 on the 15 th
and 30 th of each month. The amount of the salary shall
be subject to increase as determined by the Compensation Committee
of the Board of Directors, but it is agreed that the salary will
not be reduced during the term of this Agreement.
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B.
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BONUSES. Employee will be
eligible for a bonus each year based on achieving annual
performance levels as established by the Board of Directors
Compensation Committee. Annual cash bonuses shall not be less than
$50,000.00 in any year ending June 30 th during the term
of this Agreement (6/30/07, 6/30/08 and 6/30/09) unless DMI reports
a financial pre-tax loss (before this bonus) in which case no bonus
shall be paid. Any bonus will be paid at the same time other
executives of Employer are paid their bonus.
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C.
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WITHHOLDING ON
COMPENSATION. There shall be deducted from the
payment of salary, bonus and other taxable compensation, if any,
paid to Employee the customary withholding tax and other employment
taxes as required with respect to the compensation paid said
Employee.
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5. FRINGE
BENEFITS . In addition to Employee’s
compensation, as specified in paragraph 4 above, Employee shall
also be entitled to the following fringe benefits in the same
manner and in the same amounts as are paid to other key employees
of employer unless a specific amount is indicated:
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A.
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Life insurance in the amount of $750,000.00,
subject to insurability at standard rates.
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B.
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Health, disability and travel accident insurance
(consistent with DMI’s current coverage for DMI’s
exempt employees).
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C.
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$1,500.00 per month automobile
allowance.
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D.
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Reimbursement of up to $2,000.00 each for
medical care expense and personal tax and financial planning
expense.
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E.
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Monthly dues at Valhalla Country
Club.
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6. VACATION
. Employee shall be entitled to six (6) weeks paid
vacation per calendar year.
7.
EMPLOYEE’S DISABILITY . Once the
Employee is eligible for disability insurance under Paragraph 5.B.
above, Employee shall be deemed disabled and Employee shall not be
entitled to any further compensation under Paragraph 4 above, but
shall be entitled to retain his
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fringe benefits under Paragraph 5 above until
December 31, 2009.
8. COMPENSATION
UPON TERMINATION OF EMPLOYMENT .
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A.
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In the event Employee is terminated by Employer
without cause prior to December 1, 2009 Employee shall be entitled
to one of the following:
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(i)
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A lump sum payment equal to the balance of his
salary (no bonus) through December 31, 2009 if Employee agrees to
comply with the Covenant Not to Compete in Paragraph 15 hereof
within thirty (30) days of the termination of his employment;
or
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(ii)
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No further compensation at all if the Employee
elects not to comply with the Covenant Not to Compete set forth in
Paragraph 15 hereof within thirty (30) days of
termination.
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B.
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In the event Employee’s employment is
terminated for cause as defined in paragraph 3 hereof,
Employee’s salary shall only be paid to the date of
termination and no further salary shall be
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