Exhibit 99.8
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SETTLEMENT AGREEMENT
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AND MUTUAL RELEASE
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THIS SETTLEMENT AGREEMENT AND MUTUAL RELEASE (the "Agreement") is made
and entered this 3rd day of October, 2007, effective as of September 30, 2007,
by and between ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ("▇▇▇▇▇"); ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇"); ▇▇▇▇▇
▇. ▇▇▇▇▇, ▇▇. ("▇▇▇▇▇"); WAL-▇▇▇, LLC, a North Carolina limited liability
company ("Wal-▇▇▇"); MERCURY DIECUTTING, LLC, a Florida limited liability
company ("Mercury"); and FLANDERS CORPORATION, a North Carolina corporation
("Flanders").
W I T N E S S E T H:
WHEREAS, ▇▇▇▇▇▇▇, ▇▇▇▇▇ and ▇▇▇▇▇ are shareholders in Flanders; and
WHEREAS, ▇▇▇▇▇ and ▇▇▇▇▇▇▇ are members of the Board of Directors of
Flanders; and WHEREAS, ▇▇▇▇▇▇▇ and ▇▇▇▇▇ each own a fifty percent (50%)
membership interest in Wal-▇▇▇, LLC, a North Carolina limited liability company;
and
WHEREAS, ▇▇▇▇▇▇▇ and ▇▇▇▇▇ each own a fifty percent (50%) membership
interest in Mercury Diecutting, LLC, a Florida limited liability company; and
WHEREAS, ▇▇▇▇▇▇▇ and ▇▇▇▇▇ desire to separate any and all business
interests which they may own together; and
WHEREAS, ▇▇▇▇▇ and Flanders desire that ▇▇▇▇▇'▇ employment with
Flanders be terminated upon full execution of this Agreement; and
WHEREAS, Flanders and ▇▇▇▇▇ desire to settle any and all outstanding
claims which they may have against each other; and
WHEREAS, ▇▇▇▇▇ hereby submits his resignation as a member of the Board
of Directors of Flanders.
NOW, THEREFORE, for and in consideration of the covenants hereinafter
set forth and the sum of Ten Dollars ($10.00) and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree as set forth below.
1. Transfer of Interest in Wal-▇▇▇. ▇▇▇▇▇ represents and warrants that
he owns fifty percent (50%) of the membership interest in Wal-▇▇▇, LLC free and
clear of all claims and encumbrances. In consideration of the transfer of the
Mercury interests set forth in Section 2, ▇▇▇▇▇ hereby transfers to ▇▇▇▇▇▇▇ his
fifty percent (50%) membership interest in Wal-▇▇▇, LLC, subject to any and all
outstanding debts and obligations of Wal-▇▇▇, LLC. ▇▇▇▇▇ shall execute and
deliver to ▇▇▇▇▇▇▇ a ▇▇▇▇ of sale or other document evidencing the transfer of
said membership interest in form and substance acceptable to ▇▇▇▇▇▇▇. ▇▇▇▇▇▇▇
agrees to assume any and all debts and obligations of Wal-▇▇▇, LLC, and to
indemnify and hold ▇▇▇▇▇ (and his heirs, personal representatives, successors
and assigns) harmless from any and all actions, causes of action, claims,
demands, damages, costs, and expenses arising out of ▇▇▇▇▇'▇ ownership of a
fifty percent (50%) membership interest in Wal-▇▇▇, LLC, or his personal
guarantee of any debts or obligations of Wal-▇▇▇, LLC. ▇▇▇▇▇▇▇ hereby covenants
and agrees to use his best efforts to obtain a complete release of any and all
of ▇▇▇▇▇'▇ personal guarantees for Wal-▇▇▇ obligations as soon as
commercially practicable. ▇▇▇▇▇ hereby releases and abandons any right to
receive any additional distributions from Wal-▇▇▇ for the year 2007, including,
without limitation, the right to receive any tax distribution under the Wal-▇▇▇
Operating Agreement. ▇▇▇▇▇▇▇ covenants and agrees that Wal-▇▇▇ shall not
allocate to ▇▇▇▇▇ any more than ▇▇▇▇▇'▇ proportionate share of Wal-▇▇▇ income
for the year 2007 taking into account his ownership percentage and the number of
days ▇▇▇▇▇ held his interest during the year.
2. Transfer of Interest in Mercury. ▇▇▇▇▇▇▇ represents and warrants
that he owns fifty percent (50%) of the membership interest in Mercury
Diecutting, LLC free and clear of all claims and encumbrances. In consideration
of the transfer of the Wal ▇▇▇ interests set forth in Section 1, ▇▇▇▇▇▇▇ hereby
transfers to ▇▇▇▇▇ his fifty percent (50%) membership interest in Mercury
Diecutting, LLC, subject to any and all outstanding debts and obligations of
Mercury Diecutting, LLC. ▇▇▇▇▇▇▇ shall execute and deliver to ▇▇▇▇▇ a ▇▇▇▇ of
sale or other document evidencing the transfer of said membership interest in
form and substance acceptable to ▇▇▇▇▇. ▇▇▇▇▇ agrees to assume any and all debts
and obligations of Mercury Diecutting, LLC, and to indemnify and hold ▇▇▇▇▇▇▇
(and his heirs, personal representatives, successors and assigns) harmless from
any and all actions, causes of action, claims, demands, damages, costs, and
expenses arising out of ▇▇▇▇▇▇▇'▇ ownership of a fifty percent (50%) membership
interest in Mercury Diecutting, LLC, or his personal guarantee of any debts or
obligations of Mercury Diecutting, LLC. ▇▇▇▇▇ hereby covenants and agrees to use
his best efforts to obtain a complete release of any and all of ▇▇▇▇▇▇▇'▇
personal guarantees for Mercury obligations as soon as commercially practicable.
▇▇▇▇▇▇▇ hereby releases and abandons any right to receive any additional
distributions from Mercury for the year 2007, including, without limitation, the
right to receive any tax distribution under the Mercury Operating Agreement.
▇▇▇▇▇ covenants and agrees that Mercury shall not to allocate to ▇▇▇▇▇▇▇ any
more than ▇▇▇▇▇▇▇'▇ proportionate share of Mercury income for the year 2007
taking into account his ownership percentage and the number of days ▇▇▇▇▇▇▇ held
his interest during the year.
3. Delivery of Books and Records. ▇▇▇▇▇ has this day delivered to the
escrowee referred to in Section 25 for delivery to ▇▇▇▇▇▇▇ a full, complete and
accurate copy of all financial reports and corporate books for Mercury
Diecutting, LLC. No information contained in such reports contains any untrue
statement of a material fact or omits a material fact necessary to make the
statements therein not misleading. ▇▇▇▇▇▇▇ has this day delivered to the
escrowee referred to in Section 25 for delivery to ▇▇▇▇▇ a full, complete and
accurate copy of all financial reports and corporate books for Wal ▇▇▇, LLC. No
information contained in such reports contains any untrue statement of a
material fact or omits a material fact necessary to make the statements therein
not misleading.
4. Exercise of Flanders Stock Option by ▇▇▇▇▇. ▇▇▇▇▇ hereby exercises
in full his stock option granted by Flanders December 22, 1999, a copy of which
is attached hereto as EXHIBIT D (the "Stock Option"), as reflected on the notice
of exercise which is hereby executed and delivered by ▇▇▇▇▇ and attached to this
Agreement as EXHIBIT C (the "Notice of Exercise") pursuant to which ▇▇▇▇▇ is
hereby surrendering to Flanders as payment of the exercise price of $2.50 per
share a total of five hundred forty-three thousand, four hundred seventy-eight
(543,478) shares of Common Stock of Flanders owned of record by ▇▇▇▇▇ since
January 10, 2000. ▇▇▇▇▇ shall deliver to Flanders a duly executed stock power,
based upon the terms and conditions required by Flanders, for the transfer of
such five hundred forty-three thousand, four hundred seventy-eight (543,478)
shares to Flanders at a valuation price of four dollars sixty cents ($4.60) per
share. Flanders hereby accepts the Notice of Exercise and the
exercise of the Stock Option in full and the surrender of the five hundred
forty-three thousand, four hundred seventy-eight (543,478) shares provided for
in this Section 4 constitutes full payment by ▇▇▇▇▇ of the exercise price of the
Stock Option. Flanders also hereby waives any requirement that ▇▇▇▇▇ deliver an
Investment Representation Statement with his Notice of Exercise. Flanders hereby
represents and warrants that the exercise of the Stock Option complies with the
terms and conditions of the Stock Option. ▇▇▇▇▇ represents that the Stock Option
was issued to him at the date and upon the terms as set forth in the Stock
Option and that the issuance of the Stock Option was approved by the Flanders
board of directors at or prior to the Stock Option date.
5. Transfer of Flanders Stock to ▇▇▇▇▇▇▇. ▇▇▇▇▇ hereby transfers and
surrenders to ▇▇▇▇▇▇▇ Two Hundred Fifty Thousand (250,000) shares of common
stock of Flanders Corporation as full and complete repayment to ▇▇▇▇▇▇▇ for
▇▇▇▇▇'▇ portion of the ▇▇▇ ▇▇▇▇▇ settlement. ▇▇▇▇▇ shall deliver to Flanders a
duly executed stock power, based upon the terms and conditions required by
Flanders, for the transfer of Two Hundred Fifty Thousand (250,000) shares to
▇▇▇▇▇▇▇. ▇▇▇▇▇▇▇▇ will thereupon issue new stock certificate(s) to ▇▇▇▇▇▇▇
representing such stock.
6. Transfer of Flanders Stock to Satisfy Debt. ▇▇▇▇▇ owes to Flanders,
and/or its subsidiaries and affiliates, the sum of Five Million Four Hundred
Forty-Five Thousand Eight Hundred Ten and 65/100 Dollars ($5,445,810.65) for
loans made by Flanders to ▇▇▇▇▇ (the "Debt"). ▇▇▇▇▇ hereby transfers and
surrenders to Flanders One Million One Hundred Eighty-Three Thousand Eight
Hundred Seventy-Two (1,183,872) shares of common stock of Flanders Corporation
as full and complete repayment to Flanders for the Debt. ▇▇▇▇▇ shall deliver to
Flanders a duly executed stock power, based upon the terms and conditions
required by Flanders, for the transfer of said shares to Flanders. Flanders will
thereafter cancel any and all promissory notes made by ▇▇▇▇▇ which evidence the
Debt.
7. Purchase of Flanders Stock by ▇▇▇▇▇▇▇ and ▇▇▇▇▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇
shall purchase, in equal shares, and ▇▇▇▇▇ shall sell all of his remaining
shares of stock of Flanders Corporation to ▇▇▇▇▇▇▇ and ▇▇▇▇▇, in equal shares,
for the purchase price of Four and 60/100 Dollars ($4.60) per share, consisting
of: (a) at total of seven hundred fifty five thousand, one hundred eighty three
and one-half (755,183.5) shares to be purchased by ▇▇▇▇▇▇▇ for an aggregate
price payable by ▇▇▇▇▇▇▇ of three million, four hundred seventy three thousand,
eight hundred forty four Dollars and ten Cents ($3,473,844.10); and (b) a total
of seven hundred fifty five thousand, one hundred eighty three and one-half
(755,183.5) shares to be purchased by ▇▇▇▇▇ for an aggregate price payable by
▇▇▇▇▇ of three million, five hundred ninety one thousand, fifteen Dollars and
thirty four hundred seventy three thousand, eight hundred forty four Dollars and
ten Cents ($3, 473,844.10). ▇▇▇▇▇▇▇ and ▇▇▇▇▇ shall pay the purchase price in
cash or other immediately available funds upon fulfillment of all escrow
conditions as referenced in Section 25. ▇▇▇▇▇ shall deliver to Flanders a duly
executed stock power, based upon the terms and conditions required by Flanders,
for the transfer of said stock to ▇▇▇▇▇▇▇ and ▇▇▇▇▇. ▇▇▇▇▇▇▇▇ will thereupon
issue new stock certificate(s) to ▇▇▇▇▇▇▇ and ▇▇▇▇▇ representing such stock.
Prior to the exercise of the Stock Option, ▇▇▇▇▇'▇ total ownership in the shares
of Flanders is set forth in EXHIBIT ▇. ▇▇▇▇▇ represents he owns no other common
shares, of record, in Flanders. ▇▇▇▇▇ represents that his sole remaining
interest in Flanders is in three stock option grants that provide him with
options to purchase an aggregate of 2,000,000 shares of Flanders' common stock,
all three of which options will expire ninety (90) days after the termination of
his employment with Flanders.
8. Representations and Warranties.
(a) Representations and Warranties by ▇▇▇▇▇. ▇▇▇▇▇ warrants and
represents that he is the sole owner of any stock in Flanders Corporation to be
surrendered or transferred pursuant to the terms of this Agreement, that he has
full power and authority, without limitation, to endorse the certificate(s), and
that all such shares are lien free and are not pledged or assigned as collateral
for any debt and are not subject to the claims of any creditor. All these
representations shall be true at the time of making this Agreement and shall
survive the delivery of all such shares transferred or sold hereunder.
(b) Representations and Warranties by Flanders. Flanders represents and
warrants that: (A) this Agreement, including (i) the exercise by ▇▇▇▇▇ of his
stock option referred to in this Agreement as a cashless exercise, (ii) his
surrender of stock to Flanders and Flanders' acceptance of his option exercise,
were approved in advance by the Board of Directors of Flanders in accordance
with Rule 16b-3(d)(1) and (e) under the Securities Exchange Act of 1934, as
amended, and applicable North Carolina law and (B) this Agreement has been
executed and delivered by a duly authorized officer of Flanders and is binding
and enforceable against Flanders in accordance with its terms.
9. Transfer of Assets to ▇▇▇▇▇. ▇▇▇▇▇▇▇▇ hereby transfers to ▇▇▇▇▇ all
of the assets listed on EXHIBIT A attached hereto and incorporated herein by
reference (the "Assets"), subject to any and all outstanding leases related to
the Assets. ▇▇▇▇▇ agrees to assume any and all outstanding leases related to the
Assets and to indemnify and hold Flanders harmless from any and all actions,
causes of action, claims, demands, damages, costs, and expenses arising out of
the same. All of such leases, liens, claims and encumbrances are set forth in
and disclosed on EXHIBIT E hereto.
10. Termination of Employment Agreement between Flanders and ▇▇▇▇▇. On
December 15, 1995, Flanders and ▇▇▇▇▇ entered into an Employment Agreement as
amended on December 4. 1997 and November 3, 1999, copies of which are attached
hereto as EXHIBIT B (the "Employment Agreement"). For the good and valuable
consideration herein, the parties terminate that Employment Agreement effective
the date of the execution of this Settlement Agreement and Mutual Release. By
virtue of the termination of the Employment Agreement, both ▇▇▇▇▇ and Flanders
are relieved of any and all rights, duties, obligations, actions, payments,
benefits, etc., contained in the Employment Agreement. ▇▇▇▇▇'▇ employment with
Flanders ends simultaneous to the termination of the Employment Agreement. ▇▇▇▇▇
and ▇▇▇▇▇▇▇▇ agree that, upon execution of this Agreement, the Employment
Agreement is null and void. ▇▇▇▇▇ agrees that he has been paid everything he is
owed pursuant to the terms of the Employment Agreement and that he is not
entitled to any further payments pursuant to the terms of the Employment
Agreement. Flanders acknowledges that as of the date of termination of the
Employment Agreement and in consideration of the termination of the Employment
Agreement and all of Flanders' obligations thereunder, the non-compete language
contained in paragraph 18 of the Employment Agreement is terminated along with
all other provisions of the Employment Agreement and that ▇▇▇▇▇ may compete with
Flanders so long as he is not violating the provisions in paragraph 11 below.
Upon execution, this Agreement shall supersede the Employment Agreement. ▇▇▇▇▇
acknowledges that his release from the obligations, liabilities and restrictive
covenants under the Employment Agreement is additional good and valid
consideration.
11. Return of Information. ▇▇▇▇▇ certifies that concurrent with
executing this Settlement Agreement and Mutual Release, he has returned all
property and information including, without limitation any confidential and
proprietary information belonging to Flanders along with any and all Flanders'
company property in his possession or control except to the extent that any
information is "in ▇▇▇▇▇'▇ head" or part of his skills, knowledge, and
understanding. In addition, ▇▇▇▇▇ certifies that no copies of such documents or
computer files containing Flanders property have been made. The parties
specifically understand and agree that ▇▇▇▇▇ may use the filter designs that he
developed or assisted in developing while working at Flanders and Flanders
hereby waives any right to claim the design of such filters as a trade secret or
other confidential or proprietary information.
12. Agreement to Execute Supplier's Agreement. Concurrent with the
execution of this Agreement, Flanders and Mercury shall execute that certain
Supply Agreement whereby Flanders will purchase from Mercury certain products
including diecuts and inserts.
13. Resignation by ▇▇▇▇▇ as Director of Flanders. ▇▇▇▇▇ hereby resigns
as a director of Flanders effective immediately after the consummation of all of
the transactions outlined herein.
14. Release by ▇▇▇▇▇. Except for the duties and obligations created in
this agreement and for claims grounded or based upon fraud, ▇▇▇▇▇, for himself,
his heirs, personal representatives, successors and assigns, in consideration of
the above payments, representations, warranties and covenants, and to be fully
contingent upon completion of all payments and compliance with all covenants
detailed herein and other good and valuable consideration expressly releases,
acquits and forever discharges ▇▇▇▇▇▇▇, Wal-▇▇▇, and ▇▇▇▇▇▇▇▇, their respective
heirs, personal representatives, successors, assigns, officers, directors,
attorneys, subsidiaries and affiliates, from any and all claims, demands,
rights, causes of action, or grievances of any kind or character which he may
have accrued pursuant to common law, federal law, state laws including without
limitation any and all federal, state, and local anti-discrimination statutes,
laws and ordinances, and local laws and regulations. ▇▇▇▇▇ realizes there are
many laws and regulations prohibiting employment discrimination pursuant to
which he may have rights or claims. These include, but are not limited to, Title
VII of the Civil Rights Act of 1964, as amended; the Age Discrimination in
Employment Act of 1967, as amended; The Americans with Disabilities Act, as
amended; the National Labor Relations Act, as amended; the Vietnam Era Veterans
Readjustment Assistance Act; the Florida Civil Rights Act of 1977; Florida
Whistleblower's Act, ss.ss.448.101 - 105; ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act, 18 U.S.C. 1514 A,
Title VIII Corporate and Criminal Fraud Accountability Act of 2002; the Florida
Unemployment Compensation Law; the Florida Workers' Compensation Law; 42 U.S.C.
1981; or any other state, federal or local law concerning age, race, sex,
religion, national origin, color, disability, handicap, marital status, or any
other form of discrimination, or any other state, federal or local law or
regulation including, but not limited to, the Fair Labor Standards Act and
Florida's Minimum Wage Act. ▇▇▇▇▇ specifically releases Flanders from all
payment obligations under the Employment Agreement dated December 15, 1995 as
▇▇▇▇▇ is released from all obligations, liabilities and restrictive covenants
thereunder. ▇▇▇▇▇ also understands that there are other statutes and laws of
contract and tort otherwise related to his employment. ▇▇▇▇▇ intends to waive
and release any rights he may have under these other laws. Said release shall
run to and be in favor of, and shall forever protect Flanders, and its parent
and subsidiaries, as well as all officers, directors, employees, Board of
Directors, attorneys, and agents of Flanders and its parent and subsidiaries.
This Agreement is intended to be a general full and complete waiver and shall be
applicable to any and all claims,
demands, rights, wages, benefits, employment, causes of action, or grievances,
whether claims for psychic injuries or any other injuries, which may be brought
before an administrative agency, a court, a tribunal, an arbitrator, or
otherwise, whether in law or equity, contract, or tort, and which are related,
directly or indirectly, to ▇▇▇▇▇'▇ employment or the termination of employment
with Flanders or for any reason whatsoever between the parties to this agreement
except for obligations created by this Agreement.
15. ADEA Release and Waiver. ▇▇▇▇▇ acknowledges that he is waiving and
releasing any rights he may have under the Age Discrimination in Employment Act
(ADEA), as amended, and that the waiver and release of these rights is knowing
and voluntary. ▇▇▇▇▇ is waiving his rights under the ADEA for the consideration
set forth above which is consideration in addition to that which ▇▇▇▇▇ is
legally entitled (i.e. wages for time worked and earned vacation pay benefits)
▇▇▇▇▇ and the Company agree that this waiver and release do not apply to any
rights or claims that may arise after the date this Agreement is signed.
16. No Charges. ▇▇▇▇▇ represents that he has not filed any complaint or
charge with any municipal, county, state, or federal office arising in any way
out of ▇▇▇▇▇'▇ employment, and he agrees that he will not do so at any time
hereinafter, and that if any agency or court assumes jurisdiction of any
complaint or charge against Flanders on behalf of ▇▇▇▇▇, ▇▇▇▇▇ will immediately
request that such complaint be dismissed and that such agency or court withdraw
from the matter to the extent any charge or complaint proceeds, employee waives
any right to any monetary recovery or other remedy.
17. Indemnification by ▇▇▇▇▇. ▇▇▇▇▇ hereby warrants that he has not
assigned, sold, subrogated, transferred or conveyed to anyone any actions,
causes of action, claims or demands that he now has or ever had against
Flanders, and he hereby agrees to defend entirely at his own expense and to
fully indemnify and forever hold harmless Flanders from any and all actions,
causes of action, claims or demands that may be brought against Flanders by
anyone to whom ▇▇▇▇▇ has assigned, sold, subrogated, transferred or conveyed any
such actions, causes of action, claims or demands, whether such are asserted by
third-party complaint, cross-claim or otherwise, or whether such are asserted
for indemnity, contribution or otherwise.
18. Release by ▇▇▇▇▇▇▇. Except for the obligations created by this
agreement and for claims grounded or based upon fraud, ▇▇▇▇▇▇▇, for himself, his
heirs, personal representatives, successors and assigns, expressly releases,
acquits and forever discharges ▇▇▇▇▇ and Mercury, their respective heirs,
personal representatives, successors, assigns, subsidiaries and affiliates, from
any and all actions, causes of action, claims, demands, damages, costs, loss of
services, expenses and compensation that ▇▇▇▇▇▇▇ ever had, or now has, or may
have, known or unknown, presently available or hereafter acquired or that anyone
claiming through or under him may have, or claim to have, against ▇▇▇▇▇ and
Mercury, their respective heirs, personal representatives, successors, assigns,
subsidiaries and affiliates.
19. Release by Flanders. Except for the obligations created by this
agreement and for claims grounded or based upon fraud, Flanders, for itself and
its successors, assigns, subsidiaries and affiliates, expressly release, acquit
and forever discharge ▇▇▇▇▇, his heirs, personal representatives, successors and
assigns, from any and all actions, causes of action, claims, demands, damages,
costs, loss of services, expenses and compensation that Flanders ever had, or
now has, or may have, known or unknown, presently available or hereafter
acquired or it may have, or claim to have, against ▇▇▇▇▇, his heirs, personal
representatives, successors and assigns.
20. Release by Mercury. Except for the obligations created by this
agreement and for claims grounded or based upon fraud, Mercury, for itself and
its successors, assigns, subsidiaries and affiliates, expressly release, acquit
and forever discharge ▇▇▇▇▇▇▇, his heirs, personal representatives, successors
and assigns, from any and all actions, causes of action, claims, demands,
damages, costs, loss of services, expenses and compensation that Mercury ever
had, or now has, or may have, known or unknown, presently available or hereafter
acquired or that anyone claiming through or under it may have, or claim to have,
against ▇▇▇▇▇▇▇, his heirs, personal representatives, successors and assigns.
21. Release by Wal-▇▇▇. Except for the obligations created by this
agreement and for claims grounded or based upon fraud, Wal-▇▇▇, for itself and
its successors, assigns, subsidiaries and affiliates, expressly release, acquit
and forever discharge ▇▇▇▇▇, his heirs, personal representatives, successors and
assigns, from any and all actions, causes of action, claims, demands, damages,
costs, loss of services, expenses and compensation that Wal-▇▇▇ ever had, or now
has, or may have, known or unknown, presently available or hereafter acquired or
that anyone claiming through or under it may have, or claim to have, against
▇▇▇▇▇, his heirs, personal representatives, successors and assigns.
22. Nonassignment of Claims. Each party hereby represents and warrants
to all other parties that he/it has not assigned, sold, subrogated, transferred
or conveyed any actions, causes of action, claims or demands that he/it now has
or ever had against any other party hereto and that is released herein.
23. Indemnification. Each of the parties hereto hereby agrees to
indemnify and hold harmless the other parties hereto (along with its/their
respective heirs, personal representatives, successors, assigns, officers,
directors, attorneys, subsidiaries and affiliates) from any and all actions,
causes of action, claims or demands in any way relating to a breach of any
obligation, representation or warranty of this Settlement Agreement and Mutual
Release. This obligation shall specifically include the obligation to reimburse
all reasonable costs and expenses, including attorneys' fees.
24. Binding Effect. The provisions of this Settlement Agreement and
Mutual Release shall be binding upon the parties hereto and their respective
heirs, personal representatives, successors, assigns, subsidiaries and
affiliates, and shall inure to the benefit of each of them.
25. Further Execution. The parties hereto and their respective heirs,
successors, personal representatives, and assigns, shall do all things and
execute and deliver all documents and other papers as may be necessary or
convenient to fully consummate the terms of this Settlement Agreement and Mutual
Release in accordance with the terms herein set forth. The parties have agreed
to use the law firm of Colombo, Kitchin, Dunn, Ball & ▇▇▇▇▇▇, LLP to act as
escrow agent for this Agreement and to hold and deliver the instruments and
documents outlined herein in accordance with its terms.
26. Paragraph Headings. The paragraph headings contained in this
Settlement Agreement and Mutual Release are for reference purposes only and
shall not affect in any way the meaning or interpretation of this agreement.
27. Governing Law/Venue. This Settlement Agreement and Mutual Release
shall be governed by and construed in accordance with the laws of the State of
North Carolina. Venue for any claim arising out of this
agreement will be in Pitt County, North Carolina, or the U.S. District Court for
the Eastern District of North Carolina.
28. Disputed Claims. The undersigned further understands that this
settlement is the compromise of a doubtful and disputed claim and that this
Settlement Agreement and Mutual Release is not to be construed as an admission
of liability on the part of the parties hereby released, by whom liability is
expressly denied.
29. Entire Agreement. The foregoing constitutes the entire agreement
between the parties hereto and its provisions are contractual and not mere
recitals.
30. Counterparts. This Settlement Agreement and Mutual Release may be
executed simultaneously in duplicate originals, each of which shall be deemed to
be an original all of which taken together shall constitute a single instrument
and shall be admissible in any proceeding, legal or otherwise, without the
production of the other such original. A facsimile, telecopy or other
reproduction of this Agreement may be executed by one or more parties hereto and
delivered by such party by facsimile or any similar electronic transmission
device pursuant to which the signature of or on behalf of such party can be
seen. Such execution and delivery shall be considered valid, binding and
effective for all purposes. At the request of any party hereto, all parties
hereto agree to execute and deliver an original of this Agreement as well as any
facsimile, telecopy or other reproduction hereof.
31. Severability. All agreements and covenants contained herein are
severable. In the event that any of them are held to be invalid by any competent
court, this Agreement shall be interpreted as if such invalid agreement or
covenants were not contained herein.
32. Independent Negotiation. All parties have participated in the
negotiation of this agreement and have been advised to consult with an attorney
before executing this agreement. All parties acknowledge that they have been
given the opportunity to do so and are voluntarily, knowingly and freely making
the releases herein.
33. Authority. Each party warrants to the other that it has full right,
power, legal capacity and authority to enter into and perform this Agreement.
34. ▇▇▇▇▇ HEREBY ACKNOWLEDGES THAT HE HAS BEEN GIVEN TWENTY-ONE (21)
DAYS TO CONSIDER THE TERMS OF THIS AGREEMENT. HE FURTHER ACKNOWLEDGES THAT HE
MAY REVOKE THIS AGREEMENT AT ANY TIME WITHIN SEVEN (7) DAYS OF THE DATE OF HIS
EXECUTION HEREOF AND IT SHALL NOT BECOME EFFECTIVE OR ENFORCEABLE UNTIL AFTER
THE EXPIRATION OF THIS SEVEN (7) DAY PERIOD.
[THE REMAINDER OF THIS PAGE IS LEFT INTENTIONALLY BLANK--
SIGNATURE PAGE TO FOLLOW]
IN WITNESS WHEREOF, the undersigned have executed this Settlement
Agreement and Mutual Release under seal at the date and place first above
mentioned.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ (SEAL)
------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (SEAL)
------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇. (SEAL)
------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
FLANDERS CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
-------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇, COO
WAL-▇▇▇, LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Manager
MERCURY DIECUTTING, LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Manager
EXHIBIT A
Assets to be Transferred to ▇▇▇▇▇
QTY MODEL SERIAL # DESCRIPTION ORIGIN POWER
--- ----- -------- ----------- ------ -----
1 Daewoo High Speed Vert Korea 220V/3PH/79AMPS
Machining Center
1 DMY 4020d AV5E 1557 Daewoo Machining Center Korea 220V/3PH/33AMPS
1 TRAK 1840SX 064 CO 14928 CNC Lathe USA 460V/3PH/30AMPS
1 HD2260 Kington Lathe Taiwan 460V/3PH/30AMPS
1 AM-3V 990442 Acra Milling Machine Taiwan
1 Wire EDM Mod F14020
1 Used ▇▇▇▇▇▇▇ 12x24 Grinder
S/N 769-3 Model 1224H7D
1 ▇▇▇▇▇▇ ▇.▇. Grinder, Model
4R-SN#678-13
1 32 Ton Punch Press 2-45-104 Federal A13 USA 220/3PH/20AMPS
& Slitter
▇ ▇▇-▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ 220V/3PH/20AMPS
1 100S 101537 Amada 100 Ton Press Brake Japan 460V/3PH/30AMPS
1 625012 5001 AccurShear Metal Shear USA 460V/3PH/50AMPS
1 305072Q AVQ57106 Coma ▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇
1 Wyoming Press Brake NTH-11
140-168
1 Dynasty 300DX TIG Runner
w/Torch Package
1 Dynasty 300 DX TIG Runner
w/Torch Package
1 Custom/Flanders N/A Media Laminator USA 22V/1PH/80AMPS
1 Custom/Pleater N/A Media Pleater USA PNEUMATIC/110V
1 Custom Die/Flanders Diagonal1 Hydraulic Diagonal Die USA 110V/8AMPS
1 T580 N/A Central Machine Bend Saw USA 110V/5AMPS
1 Custom Saw Pou N/A Finger Notch Saw USA 110V/5AMPS
1 Custom Pleater ▇▇▇ ▇/▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
1 Custom Dual Band ▇/▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇/▇▇▇ ▇▇▇ ▇▇▇▇▇
Saw
1 3960-10k391d AN97A24309 Hot Melt Nordson Corp USA 11795
1 Custom Corigator N/A Aluminum Corigator-FFI USA 12132
1 Hot Melt Media N/A Mini Pleater 1" to 4"-FFI ▇▇▇ ▇▇▇▇▇
Pleater
EXHIBIT B
Employment Agreement
Incorporated by Reference to Form 10-K filed by the Issuer with the
SEC on December 31, 1995.
EXHIBIT C
Notice of Exercise
LONG TERM INCENTIVE PLAN
EXERCISE NOTICE
Flanders Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇.
▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
1. EXERCISE OF OPTION. Effective as of today, September 30, 2007, the
undersigned ("Optionee") hereby elects to exercise Optionee's option to purchase
1,000,000 (one million) shares of the Common Stock (the "Shares") of Flanders
Corporation (the "Company") under and pursuant to the Flanders Corporation Long
Term Incentive Plan (the "Plan") and the Flanders Corporation Directors and
Officers Plan Stock Option Agreement dated December 22, 1999 (the "Option
Agreement"). A true and correct copy of this Option Agreement is attached.
2. REPRESENTATIONS OF OPTIONEE. Optionee acknowledges that Optionee has
received, read and understood the Plan and Option Agreement and agrees to abide
by and be bound by their terms and conditions.
3. RIGHTS AS A SHAREHOLDER. Until the stock certificate evidencing such
Shares is issued (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company), no right to vote
or receive dividends or any other rights as a shareholder shall exist with
respect to the optioned Stock, notwithstanding the exercise of the Option. The
Company shall issue (or cause to be issued) such stock certificate promptly
after the Option is exercised. No adjustment will be made for a dividend or
other right for which the record date is prior to the date the stock certificate
is issued, except as provided in the Plan.
4. TAX CONSULTATION. Optionee understands that Optionee may suffer
adverse tax consequences as a result of Optionee's purchase or disposition of
the Shares. Optionee represents that Optionee has consulted with any tax
consultants Optionee deems advisable in connection with the purchase or
disposition of the Shares and Optionee is not relying on the Company for any tax
advice.
5. RESTRICTIVE LEGEND. Optionee understands and agrees that in the
event the Shares are not registered, the Company shall cause the legend set
forth below or legends substantially equivalent thereto, to be placed upon any
certificate(s) evidencing ownership of the Shares together with any other
legends that may be required by state or federal securities laws:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "1933 ACT") OR ANY STATE SECURITIES LAWS
AND MAY NOT BE OFFERED, SOL OR OTHERWISE TRANSFERRED, PLEDGED OR
HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE 1933 ACT OR SUCH
APPLICABLE STATE SECURITIES LAWS, OR, IN THE OPINION OF COUNSEL IN
FORM AND SUBSTANCE, SATISFACTORY TO THE ISSUER OF THESE SECURITIES,
SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN
COMPLIANCE THEREWITH.
6. SUCCESSORS AND ASSIGNS. The Company may assign any of its rights
under this Agreement to single or multiple assignees, and this Agreement shall
inure to the benefit of the successors and
assigns of the Company. Subject to the restrictions on transfer herein set
forth, this Agreement shall be binding upon Optionee and his or her heirs,
executors, administrators, successors and assigns.
7. INTERPRETATION. Any dispute regarding the interpretation of this
Agreement shall be submitted by Optionee or by the Company forthwith to the
Company's Board of Directors or the committee thereof that administers the Plan,
which shall review such dispute at its next regular meeting. The resolution of
such a dispute by the Board of committee shall be final and binding on the
Company and on Optionee.
8. GOVERNING LAW; SEVERABILITY. This Agreement shall be governed by and
construed in accordance with the laws of the State of North Carolina excluding
that body of law pertaining to conflicts of law. Should any provision of this
Agreement be determined by a court of law to be illegal or unenforceable, the
other provisions shall nevertheless remain effective and shall remain
enforceable.
9. NOTICES. Any notice required or permitted hereunder shall be given
in writing and shall be deemed effectively given upon personal delivery or upon
deposit in the United States mail by certified mail, with postage and fees
prepaid, addressed to the other party at its address as shown below beneath its
signature, or to such other address as such other party may designate in writing
from time to time to the other party.
10. FURTHER INSTRUMENTS. The parties agree to execute such further
instruments and to take such further action as may be reasonably necessary to
carry out the purposes and intent of this Agreement.
11. DELIVERY OF PAYMENT. Optionee herewith delivers to the Company the
full Exercise Price for the Shares in the form of a surrender of shares, as
expressly permitted by Section 4(c)(A) of the Option Agreement.
12. ENTIRE AGREEMENT. The Plan and Option Agreement are incorporated
herein by reference. This Agreement, the Plan and the Option Agreement
constitute the entire agreement of the parties and supersede in their entirety
all prior undertakings and agreements of the Company and Optionee with respect
to the subject matter hereof.
13. TAX INDEMNITY. ▇▇▇▇▇ agrees to indemnify, keep indemnified and hold
harmless the Company from any and all claims, suits, actions, debts, damages,
costs, charges, demands and expenses of any kind in nature whatsoever, including
attorney fees and costs that may arise out of or by reason of any obligation,
taxes, penalties, interest or other changes due to the Internal Revenue Service
or other taxing authority for federal withholding or other taxing authority for
federal withholding or other income taxes relating to exercise of the Stock
Option. ▇▇▇▇▇ agrees to reimburse the Company for any necessary expenses,
including reasonable attorney fees and costs incurred in connection with the
enforcement of any part of this Agreement and covenant.
14. NET CASHLESS EXERCISE COMPUTATION.
$4.60 = 1 Share
------------------
$2.50 = .543478 Shares
Pursuant to this formula, ▇▇▇▇▇ will surrender 543,478 shares to Flanders, and
Flanders will issue 456,522 shares to ▇▇▇▇▇.
Submitted by: Accepted by:
OPTIONEE: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ FLANDERS CORPORATION
------------------------------------ By:
(Signature) ----------------------------
Title:
----------------------------
Address: Address:
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇.
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
EXHIBIT D
FLANDERS CORPORATION
DIRECTORS AND OFFICERS PLAN
STOCK OPTION AGREEMENT
Unless otherwise defined herein, the terms defined in the Flanders
Corporation Long Term Incentive Plan ("the "Plan") shall have the same defined
meanings in this Option Agreement.
1. NOTICE OF STOCK OPTION GRANT
Optionee: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
You have been granted an option (the `Option") to purchase Common Stock
of the Company, subject to the terms and conditions of the Plan and this Option
Agreement, as follows:
Date of Grant: December 22, 1999
Exercise Price per Share: $2.50
Total Number of Shares: 1,000,000
Type of Option: _________Incentive Stock Option
____X____Nonstatutory Stock Option
Term/Expiration Date: December 22, 2009
Vesting Schedule
----------------
This Option is fully vested upon issuance.
Termination Period
------------------
This Option may be exercised for 90 days after termination of
employment or consulting relationship, or such longer period as rosy be
applicable upon death or disability of Optionee as provided in the Plan, but in
no event later than the Term/Expiration Date as provided above.
2. AGREEMENT
(a) Grant of Option. Flanders Corporation, a North
Carolina corporation (the "Company"), hereby grants to the Optionee named in the
Notice of Stock Option Grant in Section 1 above (the "Optionee"), an option (the
"Option") to purchase a total number of shares of Common Stock (the "Shares")
set forth in Section 1, at the exercise price per share set forth in Section 1
(the "Exercise Price") subject to the terms, definitions and provisions of the
Plan adopted by the Company, which is incorporated herein by reference.
If designated in Section 1 as an Incentive Stock Option, this
Option is intended to qualify as an Incentive Stock Option as defined in Section
422 of the Code. However, if this Option is intended to be an Incentive Stock
Option, to the extent that it exceeds the $100,000 rule of Code Section 422(d)
it shall be treated as a Nonstatutory Stock Option.
(b) Exercise of Option. This Option shall be exercisable
during its term in accordance with the Exercise Schedule set out in Section 1
and with the provisions of the Plan as follows:
(c) Right to Exercise.
(i) This Option may not be exercised for a fraction
of a share.
(ii) In the event of Optionee's death, disability or
other termination of employment, the exercisability of the Option is governed by
Sections 6, 7 and 8 below, subject to the limitation contained in subsection
2(i)(c).
(iii) In no event may this Option be exercised after
the date of expiration of the term of this Option as set forth in Section 1.
(d) Method of Exercise. This Option shall be exercisable
by written notice (in the form attached as Exhibit A) which shall state the
election to exercise the Option, the number of Shares in respect of which the
Option is being exercised, and such other representations and agreements as to
the bolder investment intent with respect to such shares of Common Stock as may
be required by the Company pursuant to the provisions of the Plan. Such written
notice shall be signed by the Optionee and shall be delivered in person or by
certified mail to the Secretary of the Company. The written notice shall be
accompanied by payment of the Exercise Price. This Option shall be deemed to be
exercised upon receipt by the Company of such written notice accompanied by the
Exercise Price.
No Shares will be issued pursuant to the exercise of an Option
unless such issuance and such exercise shall comply with all relevant provisions
of law and the requirements of any stock exchange upon which the Shares may then
be listed. Assuming such compliance, for income tax purposes the Shares shall be
considered transferred to the Optionee on the date on which the Option is
exercised with respect to such Shares.
3. OPTIONEE'S REPRESENTATIONS. In the event the Shares
purchasable pursuant to the exercise of this Option have not been registered
under the Securities Act of 1933, as amended ("1933 Act"), at the time this
Option is exercised, Optionee shall, if required by the Company, concurrently
with the exercise of all or any portion of this Option, deliver to the Company
his Investment Representation Statement in the form attached hereto as
Exhibit B.
4. METHOD OF PAYMENT. Payment of the Exercise Price shall be by
any of the following, or a combination thereof, at the election of the Optionee:
(a) cash; or
(b) check; or
(c) surrender of other shares of Common Stock of the
Company which (A) in the case of Shares acquired pursuant to the exercise of a
Company option, have been owned by the Optionee for more than six (6) months on
the date of surrender, and (B) have a fair market value on the date of surrender
equal to the Exercise Price of the Shares as to which the Option is being
exercised; or
(d) delivery of a properly executed exercise notice
together with such other documentation as the Administrator and the broker, if
applicable, shall require to effect an exercise of the Option and delivery to
the Company of the sale or loan proceeds required to pay the Exercise Price.
5. RESTRICTIONS ON EXERCISE. This Option may not be exercised
until such time as the Plan has been approved by the shareholders of the
Company, or if the issuance of such Shares upon such exercise or the method of
payment of consideration for such shares would constitute a violation of any
applicable federal or state securities or other law or regulation, including any
rule under Part 207 of Title 12 of the Code of Federal Regulations ("Regulation
G") as promulgated by the Federal Reserve Board. As a condition to the exercise
of this Option, the Company may require Optionee to make any representation and
warranty to the Company as may be required by any applicable law or regulation.
6. TERMINATION OF RELATIONSHIP. In the event an Optionee's
Continuous Status as an Employee or Consultant terminates, Optionee may, to the
extent otherwise so entitled at the date of such termination (the "Termination
Date"), exercise this Option during the 90-day Termination Period set out in
Section 1. To the
extent that Optionee was not entitled to exercise this Option at the date of
such termination, or if Optionee does not exercise this Option within the time
specified herein, the Option shall terminate.
7. DISABILITY OF OPTIONEE. Notwithstanding the provisions of
Section 6 above, in the event of termination of au Optionee's consulting
relationship or Continuous Status as an Employee as a result of his or her
disability, Optionee may, but only within 180 days from the date of such
termination (and in no event later than the expiration date of the term of such
Option as set forth in this Option Agreement), exercise the Option to the extent
otherwise entitled to exercise it at the date of such termination; provided,
however, that if such disability is not a "disability" as such term is defined
in Section 22(e)(3) of the Internal Revenue Code, in the case of an incentive
Stock Option such Incentive Stock Option shall automatically convert to a
Nonstatutory Stock Option on the day three months and one day following such
termination. To the extent that Optionee was not entitled to exercise the Option
at the date of termination, or if Optionee does not exercise such Option to the
extent so entitled within the time specified herein, the Option shall terminate,
and the Shares covered by such Option shall revert to the Plan.
8. DEATH OF OPTIONEE. In the event of termination of Optionee's
Continuous Status as an Employee or Consultant as a result of the death of
Optionee, the Option may be exercised at any time within 180 days following the
date of death (but in no event later than the date of expiration of the term of
this Option as set forth in Section 10 below), by Optionee's estate or by a
person who acquired the right to exercise the Option by bequest or inheritance,
but only to the extent the Optionee could exercise the Option at the date of
death.
9. NON-TRANSFERABILITY OF OPTION. This Option may not be
transferred in any manner otherwise than by will or by the laws of descent or
distribution and may be exercised during the lifetime of Optionee only by him.
The terms of this Option shall be binding upon the executors, administrators,
heirs, successors and assigns of the Optionee.
10. TERM OF OPTION. This Option maybe exercised only within the
term set out in Section 1, and may be exercised during such term only in
accordance with the Plan and the terms of this Option. The limitations set forth
in the Plan regarding Options designated as incentive Stock Options and Options
granted to more than ten percent (10%) shareholders shall apply to this Option.
11. TAXATION UPON EXERCISE OF OPTION. Optionee understands that,
upon exercising a Nonstatutory Option, he or she will recognize income for tax
purposes in an amount equal to the excess of the then fair market value of the
Shares over the exercise price. However, the timing of this income recognition
may be deferred for up to six months if Optionee is subject to Section 16 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). If the
Optionee is an employee, the Company will be required to withhold from
Optionee's compensation, or collect from Optionee and pay to the applicable
taxing authorities an amount equal to a percentage of this compensation income.
Additionally, the Optionee may at some point be required to satisfy tax
withholding obligations with respect to the disqualifying disposition of an
Incentive Stock Option. The Optionee shall satisfy his or her tax withholding
obligation arising upon the exercise of this Option out of Optionee's
compensation or by payment to the Company.
12. "MARKET STAND-OFF" AGREEMENT. Optionee hereby agrees, if
requested by the Company and an underwriter of Common Stock (or other equity
securities) of the Company, not to sell or otherwise transfer or dispose of any
Common Stock (or other equity securities) of the Company held by the Optionee
during the 180 day period following the date of a final prospectus of the
Company, filed under the 1993 Act. The Company may impose "stop transfer"
instructions with respect to any shares held by Optionee subject to the
foregoing restriction until the end of such 180 day period.
13. TAX CONSEQUENCES. Set forth below is a brief summary as of the
date of this Option of some of the federal and state tax consequences of
exercise of this Option and disposition of the Shares. THIS SUMMARY IS
NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE.
OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING
OF THE SHARES.
(a) Exercise of ISO. If this Option qualifies as an ISO,
there will be no regular federal income tax liability or state income tax
liability upon the exercise of the Option, although the excess if any, of the
fair market value of the Shares on the date of exercise over the Exercise Price
will be treated as an adjustment to the
alternative minimum tax for federal tax purposes and may subject the Optionee to
the alternative minimum tax in the year of exercise.
(b) Exercise of ISO Following Disability. If the
Optionee's Continuous Status as an Employee or Consultant terminates as a result
of disability that is not total and permanent disability as defined in Section
22(e)(3) of the Internal Revenue Code, to the extent permitted on the date of
termination, the Optionee must exercise an ISO within 90 days of such
termination for the ISO to be qualified as an ISO.
(c) Exercise of Nonstatutory Stock Option. There may be a
regular federal income tax liability and state income tax liability upon the
exercise of a Nonstatutory Stock Option. The Optionee will be treated as having
received compensation income (taxable at ordinary income tax rates) equal to the
excess, if any, of the fair market value of the Shares on the date of exercise
over the Exercise Price. If Optionee is an employee, the Company will be
required to withhold from Optionee's compensation or collect from Optionee and
pay to the applicable taxing authorities an amount equal to a percentage of this
compensation income at the time of exercise.
(d) Disposition of Shares. In the case of an ISO, if
Shares are held for at least one year, any gain realized on disposition of the
Shares will be treated as long-term capital gain for federal and state income
tax purposes. In the case of an ISO, if Shares transferred pursuant to the
Option are held for at least one year after exercise and are disposed of at
least two years after the Date of Grant, any gain realized on disposition of the
Shares will also be treated as long-term capital gain for federal income tax
purpose. If Shares purchased under an ISO are disposed of within such one-year
period or within two years after the Date of Grant, any gain realized on such
disposition will be treated as compensation income (taxable at ordinary income
rates) to the extent of the difference between the Exercise Price and the lesser
of (1) the fair market value of the Shares on the date of exercise, or (2) the
sale price of the Shares.
(e) Notice of Disqualifying Disposition of ISO Shares. If
the Option granted to Optionee herein is an ISO, and if Optionee sells or
otherwise disposes of any of the Shares acquired pursuant to the ISO on or
before the later of (1) the date two years after the Date of Grant, or (2) the
date one year after the date of exercise, the Optionee shall immediately notify
the Company in writing of such disposition Optionee agrees that Optionee may be
subject to income tax withholding by the Company on the compensation income
recognized by the Optionee.
FLANDERS CORPORATION
a North Carolina corporation
By
---------------------------
Its
---------------------------
OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO
THE OPTION HEREOF IS EARNED ONLY BY CONTINUING CONSULTANCY OR EMPLOYMENT AT THE
WILL OF THE COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS
OPTION OR ACQUIRING SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES
THAT NOTHING IN THIS AGREEMENT, NOR IN THE COMPANY'S LONG-TERM INCENTIVE PLAN
WHICH IS INCORPORATED HEREIN BY REFERENCE, SHALL CONFER UPON OPTIONEE ANY RIGHT
WITH RESPECT TO CONTINUATION OF EMPLOYMENT OR CONSULTANCY BY THE COMPANY, NOR
SHALL IT INTERFERE IN ANY WAY WITH HIS RIGHT OR THE COMPANY'S RIGHT TO TERMINATE
HIS EMPLOYMENT OR CONSULTANCY AT ANY TIME, WITH OR WITHOUT CAUSE.
Optionee acknowledges receipt of a copy of the Plan and represents that
he is familiar with the terms and provisions thereof, and hereby accepts this
Option subject to all of the terms and provisions thereof Optionee has reviewed
the Plan and this Option in their entirety, has had an opportunity to obtain the
advice of counsel prior to executing this Option and fully understands all
provisions of the Optionee hereby agrees to accept as binding, conclusive and
final all decisions or interpretations of the Administrator upon any questions
arising under the Plan or this Option.
Dated
--------------------------- -------------------------------
Optionee
EXHIBIT A
LONG-TERM INCENTIVE PLAN
EXERCISE NOTICE
Flanders Corporation
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
1. EXERCISE OF OPTION. Effective as of today, ___________, 19___,
the undersigned ("Optionee") hereby elects to exercise Optionee's option to
purchase _________ shares of the Common Stock (the "Shares") of Flanders
Corporation (the "Company") under and pursuant to the Flanders Corporation
Long-Term Incentive Plan (the "Plan") and the [ ] Incentive [ ] Nonstatutory
Stock Option Agreement dated April 1, 1999 (the "Option Agreement").
2. REPRESENTATIONS OF OPTIONEE. Optionee acknowledges that
Optionee has received, read and understood the Plan and the Option Agreement and
agrees to abide by and be bound by their terms and conditions.
3. RIGHTS AS SHAREHOLDER. Until the stock certificate evidencing
such Shares is issued (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company), no right to vote
or receive dividends or any other rights as a shareholder shall exist with
respect to the optioned Stock, notwithstanding the exercise of the Option. The
Company shall issue (or cause to be issued) such stock certificate promptly
alter the Option is exercised. No adjustment will be made for a dividend or
other right for which the record date is prior to the date the stock certificate
is issued, except as provided in of the Plan.
4. TAX CONSULTATION. Optionee understands that Optionee may
suffer adverse tax consequences as a result of Optionee's purchase or
disposition of the Shares. Optionee represents that Optionee has consulted with
any tax consultants Optionee deems advisable in connection with the purchase or
disposition of the Shares and that Optionee is not relying on the Company for
any tax advice.
5. RESTRICTIVE LEGEND. Optionee understands and agrees that in
the event the Shares are not registered, the Company shall cause the legend set
forth below or legends substantially equivalent thereto, to be placed upon any
certificate(s) evidencing ownership of the Shares together with any other
legends that may be required by state or federal securities laws:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "1933 ACT") OR ANY STATE SECURITIES LAWS
AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR
HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE 1933 ACT OR SUCH
APPLICABLE STATE SECURITIES LAWS, OR, IN THE OPINION OF COUNSEL IN FORM
AND SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH
OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE
THEREWITH.
6. SUCCESSORS AND ASSIGNS. The Company may assign any of its
rights wider this Agreement to single or multiple assignees, and this Agreement
shall inure to the benefit of the successors and assigns of the Company. Subject
to the restrictions on transfer herein set forth, this Agreement shall be
binding upon Optionee and his or her heirs, executors, administrators,
successors and assigns.
7. INTERPRETATION. Any dispute regarding the interpretation of
this Agreement shall be submitted by Optionee or by the Company forthwith to the
Company Board of Directors or the committee thereof that administers the Plan,
which shall review such dispute at its next regular meeting. The resolution of
such a dispute by the Board or committee shall be final and binding on the
Company and on Optionee.
8. GOVERNING LAW; SEVERABILITY. This Agreement shall be governed
by and construed in accordance with the laws of the State of North Carolina
excluding that body of law pertaining to conflicts of law. Should any provision
of this Agreement be determined by a court of law to be illegal or
unenforceable, the other provisions shall nevertheless remain effective and
shall remain enforceable.
9. NOTICES. Any notice required or permitted hereunder shall be
given in writing and shall be deemed effectively given upon personal delivery or
upon deposit in the United States mail by certified mail, with postage and fees
prepaid, addressed to the other party at its address as shown below beneath its
signature, or to such other address as such party may designate in writing from
time to time to the other party.
10. FURTHER INSTRUMENTS. The parties agree to execute such further
instruments and to take such further action as may be reasonably necessary to
carry out the purposes and intent of this Agreement.
11. DELIVERY OF PAYMENT. Optionee herewith delivers to the Company
the full Exercise Price for the Shares.
12. ENTIRE AGREEMENT. The Plan and Option Agreement are
incorporated herein by reference. This Agreement, the Plan, the Option Agreement
and the Investment Representation Statement constitute the entire agreement of
the parties and supersede in their entirety all prior undertakings and
agreements of the Company and Optionee with respect to the subject matter
hereof.
Submitted by:
Accepted by:
OPTIONEE: FLANDERS CORPORATION
By
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(Signature) Its
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Address: Address:
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EXHIBIT E
Leases, Liens and Encumbrances on Assets
----------------------------------------
Form UCC-1 Blanket Lien on all assets for the benefit of Bank of America.
EXHIBIT F
▇▇▇▇▇'▇ Pre-Option Ownership in Flanders
▇▇▇▇▇ ▇▇▇▇▇ STOCK CERTIFICATES
NUMBER OF SHARES DATE CERTIFICATE NUMBER
---------------- ---- ------------------
999,074 December 16, 1997 6154
1,150,000 December 6, 2000 6992
13,929 December 31, 2003 7255
35,900 December 30, 2004 7318
288,814 December 26, 2006 7387
AGGREGATE SHARES = 2,487,717
