Promissory Note

PROMISSORY NOTE Principal Loan Date Maturity Loan No Call / Coll Account Officer Initials A5A0 / A0 References in the Boxes Above Are for Lenders Use Only and Do Not Limit the Applicability of This Document to Any Particular Loan or Item. Any Item Above ...

Exhibit 10.1



















Loan Date




Loan No


Call / Coll






























A5A0 / A0







References in the boxes above are for Lender’s use only and do not limit the applicability of this document to any particular loan or item.
Any item above containing “***” has been omitted due to text length limitations.







Flexsteel Industries, Inc.



American Trust & Savings Bank


385 Bell St



Dubuque - Main


Dubuque, IA     52001-7004



895 Main St





PO Box 938





Dubuque, IA     52004-0938








Principal Amount:



Date of Note:

February 14, 2014




PROMISE TO PAY. Flexsteel Industries, Inc. (“Borrower”) promises to pay to American Trust & Savings Bank (“Lender”), or order, in lawful money of the United States of America, the principal amount of Eight Million & 00/100 Dollars ($8,000,000.00) or so much as may be outstanding, together with interest on the unpaid outstanding principal balance of each advance. Interest shall be calculated from the date of each advance until repayment of each advance.




PAYMENT. Borrower will pay this loan in one payment of all outstanding principal plus all accrued unpaid interest on February 13, 2015. In addition, Borrower will pay regular monthly payments of all accrued unpaid interest due as of each payment date, beginning March 14, 2014, with all subsequent interest payments to be due on the same day of each month after that. Unless otherwise agreed or required by applicable law, payments will be applied to accrued unpaid interest first; then to principal; then to escrow; then to insurance; then to dealer reserves; then to late charges, and then to fee plan. Borrower will pay Lender at Lender’s address shown above or at such other place as Lender may designate in writing.




VARIABLE INTEREST RATE. The interest rate on this Note is subject to change from time to time based on changes in an independent index which is the base rate on corporate loans posted by at least 70% of the 10 largest U.S. banks known as Wall Street Journal U.S. Prime Rate as published in the Wall Street Journal (the “Index”). The Index is not necessarily the lowest rate charged by Lender on its loans. If the Index becomes unavailable during the term of this loan, Lender may designate a substitute index after notifying Borrower. Lender will tell Borrower the current Index rate upon Borrower’s request. The interest rate change will not occur more often than each day the Wall Street Journal is published. Borrower understands that Lender may make loans based on other rates as well. The Index currently is 3.250% per annum. Interest on the unpaid principal balance of this Note will be calculated as described in the “INTEREST CALCULATION METHOD” paragraph using a rate of 2.000 percentage points under the Index, resulting in an initial rate of 1.250%. NOTICE: Under no circumstances will the interest rate on this Note be more than the maximum rate allowed by applicable law.




INTEREST CALCULATION METHOD. Interest on this Note is computed on a 365/360 basis; that is, by applying the ratio of the interest rate over a year of 360 days, multiplied by the outstanding principal balance, multiplied by the actual number of days the principal balance is outstanding. All interest payable under this Note is computed using this method. This calculation method results in a higher effective interest rate than the numeric interest rate stated in this Note.




PREPAYMENT. Borrower may pay without penalty all or a portion of the amount owed earlier than it is due. Early payments will not, unless agreed to by Lender in writing, relieve Borrower of Borrower’s obligation to continue to make payments of accrued unpaid interest. Rather, early payments will reduce the principal balance due. Borrower agrees not to send Lender payments marked “paid in full”, “without recourse”, or similar language. If Borrower sends such a payment, Lender may accept it without losing any of Lender’s rights under this Note, and Borrower will remain obligated to pay any further amount owed to Lender. All written communications concerning disputed amounts, including any check or other payment instrument that indicates that the payment constitutes “payment in full” of the amount owed or that is tendered with other conditions or limitations or as full satisfaction of a disputed amount must be mailed or delivered to: AMERICAN TRUST & SAVINGS BANK, ATTN: LOAN OPERATIONS, PO BOX 938 DUBUQUE, IA 52004-0938.




LATE CHARGE. If a payment is 15 days or more late, Borrower will be charged 5.000% of the regularly scheduled payment.




INTEREST AFTER DEFAULT. Upon default, including failure to pay upon final maturity, the interest rate on this Note shall be increased by adding an additional 5.000 percentage point margin (“Default Rate Margin”). The Default Rate Margin shall also apply to each succeeding interest rate change that would have applied had there been no default. However, in no event will the interest rate exceed the maximum interest rate limitations under applicable law.




DEFAULT. Each of the following shall constitute an event of default (“Event of Default”) under this Note:




Payment Default. Borrower fails to make any payment when due under this Note.




Other Defaults. Borrower fails to comply with or to perform any other term, obligation, covenant or condition contained in this Note or in any of the related documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement between Lender and Borrower.




Default in Favor of Third Parties.