FLEXSTEEL INDUSTRIES INC

Asset Coverage Ratio not less than 2.00 to 1.00, at each fiscal quarter end, with “Asset Coverage Ratio” defined as the ratio of (a) gross accounts receivable plus gross inventory net of (i) foreign raw materials, (ii) foreign finished goods, (iii) in-transit inventory, and (iv) work-in-process inventory, to (b) principal outstandings on the Line of Credit.

EBITDA not less than $15,000,000.00 as of each fiscal quarter end, determined on a rolling 4-quarter basis, with “EBITDA” defined as (a) consolidated net income (or loss), minus (b) the sum of (i) interest income and (ii) unusual or non-recurring gains, plus (c) the sum of (i) interest expense, (ii) income taxes, (iii) depreciation and amortization, (iv) non-cash stock-based compensation and (v) non-cash unusual or non-recurring losses; provided the aggregate amount added back pursuant to this clause (v) shall not exceed $3,000,000.00 during any of the four consecutive fiscal quarters.