-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, ECJ1Xw7c8SqZ5XwFKXgwjX8xwGnS2eEJ7/vg4Jniu7x0k9cJlsq5pljzUXkMy4W5 npnPCW8Ed6LI734JT9KDQQ== 0000897101-07-002057.txt : 20071005 0000897101-07-002057.hdr.sgml : 20071005 20071005082751 ACCESSION NUMBER: 0000897101-07-002057 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20071005 DATE AS OF CHANGE: 20071005 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: FLANDERS CORP CENTRAL INDEX KEY: 0000799526 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL & COMMERCIAL FANS & BLOWERS & AIR PURIFYING EQUIP [3564] IRS NUMBER: 133368271 STATE OF INCORPORATION: NC FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-50203 FILM NUMBER: 071158111 BUSINESS ADDRESS: STREET 1: 2399 26TH AVE N CITY: ST PETERSBURG STATE: FL ZIP: 33734 BUSINESS PHONE: 7278224411 MAIL ADDRESS: STREET 1: 2399 26TH AVE N CITY: ST PETERSBURG STATE: FL ZIP: 33734 FORMER COMPANY: FORMER CONFORMED NAME: ELITE ACQUISITIONS INC DATE OF NAME CHANGE: 19960217 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: CLARK STEVEN K CENTRAL INDEX KEY: 0001271496 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: BUSINESS PHONE: 7278224411 MAIL ADDRESS: STREET 1: 2399 26TH AVE N CITY: ST PETERSBURG STATE: FL ZIP: 33713 SC 13D 1 flanders074040clark_sc13d.txt SCHEDULE 13D DATED OCTOBER 3, 2007 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D UNDER THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )* FLANDERS CORPORATION - -------------------------------------------------------------------------------- (Name of Issuer) COMMON STOCK, $0.001 PAR VALUE - -------------------------------------------------------------------------------- (Title of Class of Securities) 338494 10 7 - -------------------------------------------------------------------------------- (CUSIP Number) STEVEN K. CLARK 903 PINELLA BAYWAY, TIERRA VERDE, FLORIDA 33705 (TELEPHONE: 727-403-1177 ) - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) OCTOBER 3, 2007 - -------------------------------------------------------------------------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box. |X| NOTE: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. SEE Rule 13d-7 for other parties to whom copies are to be sent. (Continued on following pages) (Page 1 of __ Pages) *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended (the "Act"), or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). - ------------------------- ------------------------- CUSIP NO. 338494 10 7 SCHEDULE 13D PAGE 2 OF __ PAGES - ------------------------- ------------------------- - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) STEVEN K. CLARK - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) (a) (b) NOT APPLICABLE - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS (See Instructions) PF - -------------------------------------------------------------------------------- 5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) NOT APPLICABLE - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION UNITED STATES - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF 2,000,000 ----------------------------------------------------- SHARES 8 SHARED VOTING POWER BENEFICIALLY -0- ----------------------------------------------------- OWNED BY EACH 9 SOLE DISPOSITIVE POWER REPORTING 2,000,000 ----------------------------------------------------- PERSON WITH 10 SHARED DISPOSITIVE POWER -0- - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,000,000(1) - -------------------------------------------------------------------------------- 12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (See Instructions) NOT APPLICABLE - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 8.03% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON (See Instructions) IN - -------------------------------------------------------------------------------- __________________ (1) Consists of options to acquire 2,000,000 shares which are exercisable within the next 90 days. - -------------------------------------------------------------------------------- SCHEDULE 13D ITEM 1. SECURITY AND ISSUER This Schedule 13D relates to the common stock, $0.001 par value per share (the "Common Stock"), of Flanders Corporation, a North Carolina corporation (the "Issuer"). The address of the principal executive offices of the Issuer is 2399 26th Avenue North, Saint Petersburg, Florida 33713. ITEM 2. IDENTITY AND BACKGROUND (A) Steven K. Clark (B) The address of Mr. Clark is 903 Pinella Bayway, Tierra Verde, Florida, 33705. (C) Mr. Clark was until August 13, 2007 the President, Chief Executive Officer, Chief Financial Officer and temporary Principal Accounting Officer of the Issuer. Following that date, he no longer served as a management executive or officer of the Issuer, but continued as a director of the Issuer until October 4, 2007, and as an employee of the Issuer until October 3, 2007. He is now a self-employed private investor. (D) During the last five years, Mr. Clark has not been convicted in a criminal proceeding, excluding traffic violations or similar misdemeanors. (E) During the last five years, Mr. Clark has not been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction that resulted in his being subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. (F) Mr. Clark is a citizen of the United States of America. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION As of October 3, 2007, prior to the settlement reported in Items 4 and 6, Mr. Clark beneficially owned 5,487,717 shares of Common Stock of the Issuer, of which (a) 2,487,717 shares were owned of record by Mr. Clark prior to October 3, 2007, (b) 1,000,000 were covered by an option granted to Mr. Clark on December 22, 1999 with an exercise price of $2.50 per share, which options were exercised on October 3, 2007 by means of Mr. Clark surrendering to the Company a total of 543,478 shares to pay the exercise price, and (c) the remaining beneficial ownership consisted of options not yet exercised by Mr. Clark covering 2,000,000 shares. The source and amount of funds used by Mr. Clark for acquisition of the shares referred to in clause (a) above was a loan from the Issuer which, as of October 3, 2007 reflected indebtedness of $5,445,810.65 prior to consummation of the transactions provided for in the Settlement Agreement (defined below). The source and amount of consideration for exercise of the option referred to in clause (b) above consisted of 543,478 shares of the Common Stock held of record by Mr. Clark. The source of consideration for the remaining unexercised options referred to in clause (c) above was his employment with the Issuer and participation in its incentive plan. - -------------------------------------------------------------------------------- ITEM 4. PURPOSE OF TRANSACTION Mr. Clark acquired his shares of Common Stock in the Issuer pursuant to his compensation package during his tenure as an executive with the Issuer for the purpose of investment. Except as provided below in this Item 4 or otherwise in this Schedule 13D, Mr. Clark has no current plans or proposals that relate to or would result in: (A) The acquisition of additional securities of the Issuer, or the disposition of securities of the Issuer; (B) An extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving the Issuer or any of its subsidiaries; (C) A sale or transfer of a material amount of assets of the Issuer or of any of its subsidiaries; (D) Any change in the present board of directors or management of the Issuer, including any plans or proposals to change the number of term of directors or to fill any existing vacancies on the board; (E) Any material change in the present capitalization or dividend policy of the Issuer; (F) Any other material change in the Issuer's business or corporate structure; or (G) Changes in the Issuer's charter, bylaws or instruments corresponding thereto or other actions which may impede the acquisition of control of the Issuer by any person; (H) Causing a class of securities of the Issuer to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association; (I) A class of equity securities of the Issuer becoming eligible for termination of registration; or (J) Any action similar to any of those enumerated above. On August 13, 2007, a dispute arose between Mr. Clark and the Issuer. As of that date, Mr. Clark was removed as an officer of the Issuer and since then Mr. Clark has not participated as a management executive or officer of the Issuer, but continued as an employee of the Issuer on administrative leave. Between August 13, 2007 and October 3, 2007, Mr. Clark and the Issuer attempted to resolve their dispute. During that time, Mr. Clark continued to hold the Common Stock for investment purposes. On October 3, 2007, Mr. Clark entered into a Settlement Agreement and Mutual Release (the "Settlement Agreement")(included as Exhibit 99.8 hereto) with the Issuer, Robert R. Amerson ("Mr. Amerson"), Harry L. Smith, Jr. ("Mr. Smith"), Wal-Pat, LLC, and Mercury Diecutting, LLC as reported in Item 6. The Settlement Agreement provides for the transactions described in Item 6. Except for his prospective resignation as a Director, the effective date of which is deferred until consummation of the transactions contemplated by the Settlement Agreement, the transactions provided for in the Settlement Agreement shall be effective as of September 30, 2007 unless Mr. Clark exercises his unconditional right to revoke the Settlement Agreement on or before October 10, 2007 (the "Revocation Right"). Pursuant to the Settlement Agreement, Mr. Clark's resignation as a director is expected to become effective on October 4, 2007 only if he does not exercise the Revocation Right. Mr. Clark does not presently intend to exercise the Revocation Right, but reserves the right to do so. As a result of the transactions under the Settlement Agreement, unless Mr. Clark exercises his Revocation Right on or before October 10, 2007, he will be deemed as of October 3, 2007 to no longer hold of record any shares in the Issuer. He retains three stock option grants (the "Remaining Options") consisting of options to purchase an aggregate of 2,000,000 shares of the Common Stock as described in Item 6. Because the current market price of the stock of the Issuer is lower than the exercise prices of Mr. Clark's Remaining Options, he does not expect to exercise the Remaining Options. Under the terms of the associated Stock Option Agreements (see Exhibits 99.3 - 99.5), the expiration dates of the Remaining Options have been accelerated as a result of the termination of his employment with the Issuer, such that all of the Remaining Options will expire within 90 days of the termination of his employment. Unless the market price of the Issuer's stock increases to a price that exceeds Mr. Clark's exercise prices (see Item 6 below), which Mr. Clark does not expect to occur, Mr. Clark has no current intention to exercise the Remaining Options prior to their expiration. Therefore, Mr. Clark expects that at the end of such 90 days, he will have no remaining beneficial ownership of Common Stock of the Issuer. The above description of the Settlement Agreement is qualified in its entirety by this reference to the attached copy of the Settlement Agreement included as Exhibit 99.8 hereto. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER (A) As a result of the transactions under the Settlement Agreement, unless Mr. Clark exercises his Revocation Right on or before October 10, 2007, the aggregate number of shares, and percentage of the outstanding shares, of Common Stock beneficially owned by Mr. Clark is 2,000,000 shares or 8.03% of the issued and outstanding shares of Common Stock. If Mr. Clark exercises his Revocation Right, the aggregate number of shares, and percentage of the outstanding shares, of Common Stock that would be beneficially owned by Mr. Clark is 5,487,717 shares or 20.61% of the issued and outstanding shares of Common Stock. At the date hereof, Mr. Clark does not presently intend to exercise the Revocation Right, but reserves the right to do so. (B) Mr. Clark has the sole power to vote or to direct the vote and the sole power to dispose or to direct the disposition of all shares of Common Stock identified pursuant to paragraph (A) above. (C) Not Applicable. (D) Not applicable. (E) Not applicable. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER On December 15, 1995, Mr. Clark entered into an Employment Agreement (the "Employment Agreement")(included as Exhibit 99.1 hereto) with Elite Acquisitions, Inc. (predecessor of the Issuer) and Flanders Filters, Inc (a subsidiary of the Issuer), which agreement will have been terminated as of October 10, 2007 pursuant to the Settlement Agreement unless Mr. Clark exercises his Revocation Right. The Issuer granted to Mr. Clark options to purchase such shares of Common Stock from the Issuer as follows: (i) 1,000,000 shares which were subject to an option to purchase at $2.50 per share (expiring in 2009), which option Mr. Clark exercised in full pursuant to the Settlement Agreement; (ii) 1,000,000 shares subject to an option to purchase such shares at $7.50 per share (expiring in 2011); (iii) 500,000 shares subject to an option to purchase at $8.60 per share (expiring in 2009); and (iv) 500,000 shares subject to an option to purchase at $11.10 per share (expiring in 2010). In connection with such options, Mr. Clark entered into the following agreements with the Issuer: (a) Stock Option Agreement dated December 22, 1999 (attached as Exhibit 99.2 hereto) exercised in full pursuant to the Settlement Agreement; (b) Stock Option Agreement dated November 7, 2001 (attached as Exhibit 99.3 hereto); (c) Stock Option Agreement dated August 24, 2004 (attached as Exhibit 99.4 hereto); and (d) Stock Option Agreement dated December 7, 2005 (attached as Exhibit 99.5 hereto). On October 3, 2007, Mr. Clark entered into the Settlement Agreement (included as Exhibit 99.8 hereto) with the Issuer, Mr. Amerson, Mr. Smith, Wal-Pat, LLC, and Mercury Diecutting, LLC. As part of the settlement of various disputes regarding his removal as an officer, the Settlement Agreement provided, among other things, for the disposition of Mr. Clark's shares of Common Stock from the Issuer as follows: (i) In satisfaction of debt owed to the Issuer, Mr. Clark agreed to transfer 1,183,872 of his shares of the Common Stock to the Issuer. (ii) In satisfaction of his portion of the liability owed with respect to a previous and unrelated settlement agreement, Mr. Clark agreed to transfer 250,000 of his shares of Common Stock to Mr. Amerson. (iii) Mr. Amerson and Mr. Smith agreed to purchase all remaining shares of Common Stock in the Issuer held of record by Mr. Clark, including the shares acquired pursuant to the exercise below in (iv), for a cash price of $4.60 per share, resulting in Mr. Amerson purchasing 755,183.5 of such shares and Mr. Smith agreeing to purchase 755,183.5 of such shares. (iv) Mr. Clark exercised in full his Option to purchase 1,000,000 shares pursuant to the Option Agreement dated December 22, 1999 (Exhibit 99.2 hereto) at the price of $2.50 per share pursuant to a cashless exercise under which Mr. Clark surrendered 543,478 shares of the Common Stock held of record by him to the Issuer in satisfaction of the $2,500,000 exercise price. Pursuant to the Settlement Agreement Mr. Clark then immediately disposed of such shares so acquired. The above description of the Settlement Agreement is qualified in its entirety by this reference to the attached copy of the Settlement Agreement included as Exhibit 99.8 hereto. Other than as described in this Item 6 and elsewhere, there are no current contracts, arrangements, understandings of relationships (legal or otherwise) among or between Mr. Clark and any other person with respect to any securities of the Issuer. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS Exhibit 99.1 - Employment Agreement between Elite Acquisitions, Inc., Flanders Filters, Inc., and Mr. Clark, entered into December 15, 1995 (Intentionally omitted and incorporated by reference to Form 10-K filed by the Issuer with the SEC on December 31, 1995). Exhibit 99.2 - Stock Option Agreement between Flanders Corporation and Mr. Clark, entered into December 22, 1999 (included as Exhibit D to Exhibit 99.8 to this Schedule 13D). Exhibit 99.3 - Stock Option Agreement between Flanders Corporation and Mr. Clark, entered into November 7, 2001 (Intentionally omitted and incorporated by reference to Form 10-K filed by the Issuer with the SEC on April 19, 2002). Exhibit 99.4 - Stock Option Agreement between Flanders Corporation and Mr. Clark, entered into August 24, 2004 (Intentionally omitted and incorporated by reference to Form 10-K filed by the Issuer with the SEC on February 18, 2005). Exhibit 99.5 - Stock Option Agreement between Flanders Corporation and Mr. Clark, entered into December 7, 2005 (Intentionally omitted and incorporated by reference to Form 10-K filed by the Issuer with the SEC on February 22, 2006). Exhibit 99.6 - Promissory Note of Mr. Clark payable to Flanders Corporation dated April 24, 1999 (Intentionally omitted and incorporated by reference to Form 10-K filed by the Issuer with the SEC on April 14, 2000). Exhibit 99.7 - Indemnity Agreement entered into by and between Mr. Clark and Flanders Corporation. Exhibit 99.8 - Settlement Agreement between Mr. Clark, Flanders Corporation, Robert R. Amerson, Harry L. Smith, Jr., Wal-Pat, LLC, and Mercury Diecutting, LLC, dated October 3, 2007. - -------------------------------------------------------------------------------- SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement on Schedule 13D is true, complete and correct. Date: October 3, 2007 /s/ Steven K. Clark ------------------------ Steven K. Clark ATTENTION: Intentional misstatements or omissions of fact constitute Federal criminal violations (SEE 18 U.S.C. 1001). SCHEDULE 13D EXHIBIT INDEX -------------------------- EXHIBIT NO. DESCRIPTION OF EXHIBIT 99.1 Employment Agreement between Elite Acquisitions, Inc., Flanders Filters, Inc., and Mr. Clark, entered into December 15, 1995 (Intentionally omitted and incorporated by reference to Form 10-K filed by the Issuer with the SEC on December 31, 1995). 99.2 Stock Option Agreement between Flanders Corporation and Mr. Clark, entered into December 22, 1999 (included as Exhibit D to Exhibit 99.8 to this Schedule 13D). 99.3 Stock Option Agreement between Flanders Corporation and Mr. Clark, entered into November 7, 2001 (Intentionally omitted and incorporated by reference to Form 10-K filed by the Issuer with the SEC on April 19, 2000). 99.4 Stock Option Agreement between Flanders Corporation and Mr. Clark, entered into August 24, 2004 (Intentionally omitted and incorporated by reference to Form 10-K filed by the Issuer with the SEC on February 18, 2005). 99.5 Stock Option Agreement between Flanders Corporation and Mr. Clark, entered into December 7, 2005 (Intentionally omitted and incorporated by reference to Form 10-K filed by the Issuer with the SEC on February 22, 2006). 99.6 Promissory Note of Mr. Clark payable to Flanders Corporation dated April 24, 1999 (Intentionally omitted and incorporated by reference to Form 10-K filed by the Issuer with the SEC on April 14, 2000). 99.7 Indemnity Agreement entered into by and between Mr. Clark and Flanders Corporation. 99.8 Settlement Agreement between Mr. Clark, Flanders Corporation, Robert R. Amerson, Harry L. Smith, Jr., Wal-Pat, LLC, and Mercury Diecutting, LLC, dated October 3, 2007. EX-99.7 2 flanders074040clark_ex99-7.txt INDEMNITY AGREEMENT Exhibit 99.7 ------------ INDEMNIFICATION AGREEMENT THIS INDEMNIFICATION AGREEMENT (the "AGREEMENT") is made and entered into as of __________, ____, between Flanders Corporation (the "COMPANY"), and _____________________________ ("INDEMMITEE"). WHEREAS, Indemnitee performs valuable services for the Company; and WHEREAS, the Company is permitted to provide indemnification of the officers ,directors and other key personnel or consultants of the Company to the maximum extent authorized by the Law, (the "LAW"); and WHEREAS, the indemnification provisions of Law are nonexclusive and do not prohibit the Company from entering into indemnification agreements with its officers or directors and other key personnel or consultants; and WHEREAS, as permitted by the Law, the Company may purchase and maintain policies of directors' and officers' liability insurance ("D & O INSURANCE"), covering certain liabilities which may be incurred by its officers or directors in the performance of their obligations to the Company (or the Enterprise, as hereinafter defined); and WHEREAS, in recognition of past services and in order to induce Indemnitee to continue to serve as an officer, director, consultant or otherwise a key personnel of the Company, the Company has determined and agreed to enter into this Agreement with Indemnitee; NOW, THEREFORE, in consideration of Indemnitee's service as an officer or director after the date hereof, the parties hereto agree as follows: 1. INDEMNITY OF INDEMNITEE. The Company hereby agrees to hold harmless and indemnify Indemnitee to the full extent authorized or permitted by the provisions of the Law, as such may be amended from time to time, and Article Eight of the Certificate, as such may be amended. In furtherance of the foregoing indemnification, and without limiting the generality thereof: (a) OTHER THAN PROCEEDINGS BY OR IN THE RIGHT OF THE COMPANY. Indemnitee shall be entitled to the rights of indemnification provided in this Section 1(a) if, by reason of his Corporate Status (as hereinafter defined), he is, or is threatened to be made, a party to or participant in any Proceeding (as hereinafter defined) other than a Proceeding by or in the right of the Company. Pursuant to this Section 1(a), Indemnitee shall be indemnified against all Expenses (as hereinafter defined), judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by him or on his behalf in connection with such Proceeding or any claim, issue or matter therein, if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company and, with respect to any criminal Proceeding, had no reasonable cause to believe his conduct was unlawful. (b) PROCEEDINGS BY OR IN THE RIGHT OF THE COMPANY. Indemnitee shall be entitled to the rights of indemnification provided in this Section 1(b) if, by reason of his Corporate Status, he is, or is threatened to be made, a party to or participant in any Proceeding brought by or in the right of the Company. Pursuant to this Section 1(b), Indemnitee shall be indemnified against all Expenses actually and reasonably incurred by him or on his behalf in connection with such Proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company; provided, however, that, if applicable law so provides, no indemnification against such Expenses shall be made in respect of any claim, issue or matter in such Proceeding as to which Indemnitee shall have been adjudged to be liable to the Company unless and to the extent that the Court of Chancery of the State of Delaware shall determine that such indemnification may be made. (c) INDEMNIFICATION FOR EXPENSES OF A PARTY WHO IS WHOLLY OR PARTLY SUCCESSFUL. Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason of his Corporate Status, a party to and is successful, on the merits or otherwise, in any Proceeding, he shall be indemnified to the maximum extent permitted by law against all Expenses actually and reasonably incurred by him or on his behalf in connection therewith. If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by him or on his behalf in connection with each successfully resolved claim, issue or matter. For purposes of this Section and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter. 2. ADDITIONAL INDEMNITY. In addition to, and without regard to any limitations on, the indemnification provided for in Section 1, the Company shall and hereby does indemnify and hold harmless Indemnitee against all Expenses, judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by him or on his behalf if, by reason of his Corporate Status, he is, or is threatened to be made, a party to or participant in any Proceeding (including a Proceeding by or in the right of the Company), including, without limitation, all liability arising out of the negligence or active or passive wrongdoing of Indemnitee. The only limitation that shall exist upon the Company's obligations pursuant to this Agreement shall be that the Company shall not be obligated to make any payment to Indemnitee that is finally determined (under the procedures, and subject to the presumptions, set forth in Sections 6 and 7 hereof) to be unlawful under Delaware law. 3. CONTRIBUTION IN THE EVENT OF JOINT LIABILITY. (a) Whether or not the indemnification provided in Sections 1 and 2 hereof is available, in respect of any threatened, pending or completed action, suit or proceeding in which Company is jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), Company shall pay, in the first instance, the entire amount of any judgment or settlement of such action, suit or proceeding without requiring Indemnitee to contribute to such payment and Company hereby waives and relinquishes any right of contribution it may have against Indemnitee. Company shall not enter into any settlement of any action, suit or proceeding in which Company is jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding) unless such settlement provides for a full and final release of all claims asserted against Indemnitee. (b) Without diminishing or impairing the obligations of the Company set forth in the preceding subparagraph, if, for any reason, Indemnitee shall elect or be required to pay all or any portion of any judgment or settlement in any threatened, pending or completed action, suit or proceeding in which Company is jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), Company shall contribute to the amount of expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred and paid or payable by Indemnitee in proportion to the relative benefits received by the Company and all officers, directors or employees of the Company other than Indemnitee who are jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and Indemnitee, on the other hand, from the transaction from which such action, suit or proceeding arose; provided, however, that the proportion determined on the basis of relative benefit may, to the extent necessary to conform to law, be further adjusted by reference to the relative fault of Company and all officers, directors or employees of the Company other than Indemnitee who are jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and Indemnitee, on the other hand, in connection with the events that resulted in such expenses, judgments, fines or settlement amounts, as well as any other equitable considerations which the law may require to be considered. The relative fault of Company and all officers, directors or employees of the Company other than Indemnitee who are jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and Indemnitee, on the other hand, shall be determined by reference to, among other things, the degree to which their actions were motivated by intent to gain personal profit or advantage, the degree to which their liability is primary or secondary, and the degree to which their conduct is active or passive. (c) Company hereby agrees to fully indemnify and hold Indemnitee harmless from any claims of contribution which may be brought by officers, directors or employees of the Company or Enterprise other than Indemnitee who may be jointly liable with Indemnitee. 4. INDEMNIFICATION FOR EXPENSES AS A WITNESS. Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason of his Corporate Status, a witness in any Proceeding to which Indemnitee is not a party, he shall be indemnified against all Expenses actually and reasonably incurred by him or on his behalf in connection therewith. 5. ADVANCEMENT OF EXPENSES. Notwithstanding any other provision of this Agreement but subject to Article Eight (b) of the Certificate, the Company shall advance all Expenses incurred by or on behalf of Indemnitee in connection with any Proceeding by reason of Indemnitee's Corporate Status within ten (10) days after the receipt by the Company of a statement or statements from Indemnitee requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding. Such statement or statements shall reasonably evidence the Expenses incurred by Indemnitee and shall include or be preceded or accompanied by an undertaking by or on behalf of Indemnitee to repay any Expenses advanced if it shall ultimately be determined that Indemnitee is not entitled to be indemnified against such Expenses. Any advances and undertakings to repay pursuant to this Section 5 shall be unsecured and interest free. Notwithstanding the foregoing, the obligation of the Company to advance Expenses pursuant to this Section 5 shall be subject to the condition that, if, when and to the extent that the Company determines that Indemnitee would not be permitted to be indemnified under applicable law, the Company shall be entitled to be reimbursed, within thirty (30) days of such determination, by Indemnitee (who hereby agrees to reimburse the Company) for all such amounts theretofore paid; provided, however, that if Indemnitee has commenced or thereafter commences legal proceedings in a court of competent jurisdiction to secure a determination that Indemnitee should be indemnified under applicable law, any determination made by the Company that Indemnitee would not be permitted to be indemnified under applicable law shall not be binding and Indemnitee shall not be required to reimburse the Company for any advance of Expenses until a final judicial determination is made with respect thereto (as to which all rights of appeal therefrom have been exhausted or lapsed). 6. PROCEDURES AND PRESUMPTIONS FOR DETERMINATION OF ENTITLEMENT TO INDEMNIFICATION. It is the intent of this Agreement to secure for Indemnitee rights of indemnity that are as favorable as may be permitted under the law and public policy of the State of Delaware. Accordingly, the parties agree that the following procedures and presumptions shall apply in the event of any question as to whether Indemnitee is entitled to indemnification under this Agreement: (a) To obtain indemnification (including, but not limited to, the advancement of Expenses and contribution by the Company) under this Agreement, Indemnitee shall submit to the Company a written request, including therein or therewith such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification. The Secretary of the Company shall, promptly upon receipt of such a request for indemnification, advise the Board of Directors in writing that Indemnitee has requested indemnification. (b) Upon written request by Indemnitee for indemnification pursuant to the first sentence of Section 6(a) hereof, a determination, if required by applicable law, with respect to Indemnitee's entitlement thereto shall be made in the specific case by one of the following three methods, which shall be at the election of Indemnitee: (1) by a majority vote of the disinterested directors, even though less than a quorum, or (2) by independent legal counsel in a written opinion, or (3) by the stockholders. (c) If the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 6(b) hereof, the Independent Counsel shall be selected as provided in this Section 6(c). The Independent Counsel shall be selected by Indemnitee (unless Indemnitee shall request that such selection be made by the Board of Directors). Indemnitee or the Company, as the case may be, may, within 10 days after such written notice of selection shall have been given, deliver to the Company or to Indemnitee, as the case may be, a written objection to such selection; provided, however, that such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of "Independent Counsel" as defined in Section 13 of this Agreement, and the objection shall set forth with particularity the factual basis of such assertion. Absent a proper and timely objection, the person so selected shall act as Independent Counsel. If a written objection is made and substantiated, the Independent Counsel selected may not serve as Independent Counsel unless and until such objection is withdrawn or a court has determined that such objection is without merit. If, within 20 days after submission by Indemnitee of a written request for indemnification pursuant to Section 6(a) hereof, no Independent Counsel shall have been selected and not objected to, either the Company or Indemnitee may petition the Court of Chancery of the State of Delaware or other court of competent jurisdiction for resolution of any objection which shall have been made by the Company or Indemnitee to the other's selection of Independent Counsel and/or for the appointment as Independent Counsel of a person selected by the court or by such other person as the court shall designate, and the person with respect to whom all objections are so resolved or the person so appointed shall act as Independent Counsel under Section 6(b) hereof. The Company shall pay any and all reasonable fees and expenses of Independent Counsel incurred by such Independent Counsel in connection with acting pursuant to Section 6(b) hereof, and the Company shall pay all reasonable fees and expenses incident to the procedures of this Section 6(c), regardless of the manner in which such Independent Counsel was selected or appointed. (d) In making a determination with respect to entitlement to indemnification hereunder, the person or persons or entity making such determination shall presume that Indemnitee is entitled to indemnification under this Agreement if Indemnitee has submitted a request for indemnification in accordance with Section 6(a) of this Agreement. Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion, by clear and convincing evidence. (e) Indemnitee shall be deemed to have acted in good faith if Indemnitee's action is based on the records or books of account of the Enterprise (as hereinafter defined), including financial statements, or on information supplied to Indemnitee by the officers of the Enterprise in the course of their duties, or on the advice of legal counsel for the Enterprise or on information or records given or reports made to the Enterprise by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Enterprise. In addition, the knowledge and/or actions, or failure to act, of any director, officer, agent or employee of the Enterprise shall not be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement. Whether or not the foregoing provisions of this Section 6(e) are satisfied, it shall in any event be presumed that Indemnitee has at all times acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company. Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion, by clear and convincing evidence. (f) If the person, persons or entity empowered or selected under Section 6 to determine whether Indemnitee is entitled to indemnification shall not have made a determination within thirty (30) days after receipt by the Company of the request therefor, the requisite determination of entitlement to indemnification shall be deemed to have been made and Indemnitee shall be entitled to such indemnification, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee's statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law; provided, however, that such 30 day period may be extended for a reasonable time, not to exceed an additional fifteen (15) days, if the person, persons or entity making the determination with respect to entitlement to indemnification in good faith requires such additional time for the obtaining or evaluating documentation and/or information relating thereto; and provided, further, that the foregoing provisions of this Section 6(g) shall not apply if the determination of entitlement to indemnification is to be made by the stockholders pursuant to Section 6(b) of this Agreement and if (A) within fifteen (15) days after receipt by the Company of the request for such determination the Board of Directors or the Disinterested Directors, if appropriate, resolve to submit such determination to the stockholders for their consideration at an annual meeting thereof to be held within seventy-five (75) days after such receipt and such determination is made thereat, or (B) a special meeting of stockholders is called within fifteen (15) days after such receipt for the purpose of making such determination, such meeting is held for such purpose within sixty (60) days after having been so called and such determination is made thereat. (g) Indemnitee shall cooperate with the person, persons or entity making such determination with respect to Indemnitee's entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination. Any Independent Counsel, member of the Board of Directors, or stockholder of the Company shall act reasonably and in good faith in making a determination under the Agreement of the Indemnitee's entitlement to indemnification. Any costs or expenses (including attorneys' fees and disbursements) incurred by Indemnitee in so cooperating with the person, persons or entity making such determination shall be borne by the Company (irrespective of the determination as to Indemnitee's entitlement to indemnification) and the Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom. (h) The Company acknowledges that a settlement or other disposition short of final judgment may be successful if it permits a party to avoid expense, delay, distraction, disruption and uncertainty. In the event that any action, claim or proceeding to which Indemnitee is a party is resolved in any manner other than by adverse judgment against Indemnitee (including, without limitation, settlement of such action, claim or proceeding with or without payment of money or other consideration) it shall be presumed that Indemnitee has been successful on the merits or otherwise in such action, suit or proceeding. Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion, by clear and convincing evidence. 7. REMEDIES OF INDEMNITEE. (a) In the event that (i) a determination is made pursuant to Section 6 of this Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 5 of this Agreement, (iii) no determination of entitlement to indemnification shall have been made pursuant to Section 6(b) of this Agreement within 90 days after receipt by the Company of the request for indemnification, (iv) payment of indemnification is not made pursuant to this Agreement within ten (10) days after receipt by the Company of a written request therefor, or (v) payment of indemnification is not made within ten (10) days after a determination has been made that Indemnitee is entitled to indemnification or such determination is deemed to have been made pursuant to Section 6 of this Agreement, Indemnitee shall be entitled to an adjudication in an appropriate court of the State of Delaware, or in any other court of competent jurisdiction, of his entitlement to such indemnification. Indemnitee shall commence such proceeding seeking an adjudication within 180 days following the date on which Indemnitee first has the right to commence such proceeding pursuant to this Section 7(a). The Company shall not oppose Indemnitee's right to seek any such adjudication. (b) In the event that a determination shall have been made pursuant to Section 6(b) of this Agreement that Indemnitee is not entitled to indemnification, any judicial proceeding commenced pursuant to this Section 7 shall be conducted in all respects as a DE NOVO trial, on the merits and Indemnitee shall not be prejudiced by reason of that adverse determination under Section 6(b). (c) If a determination shall have been made pursuant to Section 6(b) of this Agreement that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding commenced pursuant to this Section 7, absent a prohibition of such indemnification under applicable law. (d) In the event that Indemnitee, pursuant to this Section 7, seeks a judicial adjudication of his rights under, or to recover damages for breach of, this Agreement, or to recover under any directors' and officers' liability insurance policies maintained by the Company, the Company shall pay on his behalf, in advance, any and all expenses (of the types described in the definition of Expenses in Section 13 of this Agreement) actually and reasonably incurred by him in such judicial adjudication, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advancement of expenses or insurance recovery. (e) The Company shall be precluded from asserting in any judicial proceeding commenced pursuant to this Section 7 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court that the Company is bound by all the provisions of this Agreement. 8. NON-EXCLUSIVITY; SURVIVAL OF RIGHTS; INSURANCE; SUBROGATION. (a) The rights of indemnification as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the Certificate, any agreement, a vote of stockholders or a resolution of directors, or otherwise. No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee in his Corporate Status prior to such amendment, alteration or repeal. To the extent that a change in the Law, whether by statute or judicial decision, permits greater indemnification than would be afforded currently under the Certificate and this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change. No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy. (b) To the extent that the Company maintains an insurance policy or policies providing liability insurance for directors, officers, employees, or agents or fiduciaries of the Enterprise, Indemnitee shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage available for any such director, officer, employee or agent under such policy or policies. (c) In the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights. (d) The Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable hereunder if and to the extent that Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise. 9. EXCEPTION TO RIGHT OF INDEMNIFICATION. Notwithstanding any other provision of this Agreement, Indemnitee shall not be entitled to indemnification under this Agreement with respect to any Proceeding brought by Indemnitee, or any claim therein, unless (a) the bringing of such Proceeding or making of such claim shall have been approved by the Board of Directors of the Company, or (b) such Proceeding is being brought by the Indemnitee to assert, interpret or enforce his rights under this Agreement. 10. DURATION OF AGREEMENT. All agreements and obligations of the Company contained herein shall continue during the period Indemnitee is an officer or director of the Company (or is or was serving at the request of the Company as an officer, director, employee or agent of another corporation, partnership, joint venture, trust or other enterprise) and shall continue thereafter so long as Indemmitee shall be subject to any Proceeding (or any proceeding commenced under Section 7 hereof) by reason of his Corporate Status, whether or not he is acting or serving in any such capacity at the time any liability or expense is incurred for which indemnification can be provided under this Agreement. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of the Company), assigns, spouses, heirs, executors and personal and legal representatives. This Agreement shall continue in effect regardless of whether Indemnitee continues to maintain his Corporate Status. 11. SECURITY. To the extent requested by the Indemnitee and approved by the Board of Directors of the Company, the Company may at any time and from time to time provide security to the Indemnitee for the Company's obligations hereunder through an irrevocable bank line of credit, funded trust or other collateral. Any such security, once provided to the Indemnitee, may not be revoked or released without the prior written consent of the Indemnitee. 12. ENFORCEMENT. (a) The Company expressly confirms and agrees that it has entered into this Agreement and assumed the obligations imposed on it hereby in order to induce Indemnitee to serve as an officer or director of the Company or act in a Corporate Status, and the Company acknowledges that Indemnitee is relying upon this Agreement in serving as an officer or director of the Company. (b) This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral, written and implied, between the parties hereto with respect to the subject matter hereof. 13. DEFINITIONS. For purposes of this Agreement: (a) "CORPORATE STATUS" describes the status of a person who is or was a director, officer, employee or agent or fiduciary of the Enterprise. (b) "DISINTERESTED DIRECTOR" means a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification is sought by Indemnitee. (c) "ENTERPRISE" means the Company and any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise of which Indemnitee is or was serving at the express written request of the Company as a director, officer, employee, agent or fiduciary. (d) "EXPENSES" includes all reasonable attorneys' fees, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, participating, or being or preparing to be a witness in a Proceeding. (e) "INDEPENDENT COUNSEL" means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently is, nor in the past five years has been, retained to represent: (i) the Company or Indemnitee in any matter material to either such party (other than with respect to matters concerning the Indemnitee under this Agreement, or of other indemnitees under similar indemnification agreements), or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term "Independent Counsel" shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee's rights under this Agreement. The Company agrees to pay the reasonable fees of the Independent Counsel referred to above and to fully indemnify such counsel against any and all Expenses, claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto. (f) "PROCEEDING" includes any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether brought by or in the right of the Company or otherwise and whether civil, criminal, administrative or investigative, in which Indemnitee was, is or will be involved as a party or otherwise, by reason of the fact that Indemnitee is or was an officer or a director of the Company, by reason of any action taken by him or of any inaction on his part while acting in a Corporate Status; in each case whether or not he is acting or serving in any such capacity at the time any liability or expense is incurred for which indemnification can be provided under this Agreement; including one pending on or before the date of this Agreement; and excluding one initiated by an Indemnitee pursuant to Section 7 of this Agreement to enforce his rights under this Agreement. 14. SEVERABILITY. If any provision or provisions of this Agreement shall be held by a court of competent jurisdiction to be invalid, void, illegal or otherwise unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Agreement (including without limitation, each portion of any section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and shall remain enforceable to the fullest extent permitted by law; and (b) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby. Without limiting the generality of the foregoing, this Agreement is intended to confer upon Indemnitee indemnification rights to the fullest extent permitted by applicable laws. In the event any provision hereof conflicts with any applicable law, such provision shall be modified, consistent with the aforementioned intent, to the extent necessary to resolve such conflict. 15. MODIFICATION AND WAIVER. No supplement, modification, termination or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver. 16. NOTICE BY INDEMNITEE. Indemnitee agrees promptly to notify the Company in writing upon being served with or otherwise receiving any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter which may be subject to indemnification covered hereunder. The failure to so notify the Company shall not relieve the Company of any obligation which it may have to the Indemnitee under this Agreement or otherwise unless and only to the extent that such failure or delay materially prejudices the Company. 17. NOTICES. All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given if (i) delivered by hand and receipted for by the party to whom said notice or other communication shall have been directed, or (ii) mailed by certified or registered mail with postage prepaid, on the third business day after the date on which it is so mailed: If to Indemnitee, to the address set forth below Indemnitee's signature hereto. If to the Company, to: Flanders Corporation 2399 26th Avenue North St, Petersburg, Florida 33713 or to such other address as may have been furnished to Indemnitee by the Company or to the Company by Indemnitee, as the case may be. 18. IDENTICAL COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same Agreement. Only one such counterpart signed by the party against whom enforceability is sought needs to be produced to evidence the existence of this Agreement. 19. INTERPRETATION. The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof. Use of the masculine pronoun shall be deemed to include usage of the feminine pronoun where appropriate. In the event of conflict between the Law and the Certificate, the Law will prevail. In the event of conflict between the Certificate and the Agreement, the Certificate will prevail. 20. GOVERNING LAW. The parties agree that this Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Florida without application of the conflict of laws principles thereof. IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and as of the day and year first above written. INDEMMITEE FLANDERS COROPORATION. - ----------------------------------- Signature By: -------------------------- ----------------------------- Name: Name: -------------------------- ----------------------------- Address: Title: -------------------------- ----------------------------- - ----------------------------------- EX-99.8 3 flanders074040clark_ex99-8.txt SETTLEMENT AGREEMENT & MUTUAL RELEASE Exhibit 99.8 ------------ SETTLEMENT AGREEMENT -------------------- AND MUTUAL RELEASE ------------------ 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 STEVEN K. CLARK ("Clark"); ROBERT R. AMERSON ("Amerson"); HARRY L. SMITH, JR. ("Smith"); WAL-PAT, LLC, a North Carolina limited liability company ("Wal-Pat"); 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, Amerson, Smith and Clark are shareholders in Flanders; and WHEREAS, Clark and Amerson are members of the Board of Directors of Flanders; and WHEREAS, Amerson and Clark each own a fifty percent (50%) membership interest in Wal-Pat, LLC, a North Carolina limited liability company; and WHEREAS, Amerson and Clark each own a fifty percent (50%) membership interest in Mercury Diecutting, LLC, a Florida limited liability company; and WHEREAS, Amerson and Clark desire to separate any and all business interests which they may own together; and WHEREAS, Clark and Flanders desire that Clark's employment with Flanders be terminated upon full execution of this Agreement; and WHEREAS, Flanders and Clark desire to settle any and all outstanding claims which they may have against each other; and WHEREAS, Clark 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-Pat. Clark represents and warrants that he owns fifty percent (50%) of the membership interest in Wal-Pat, LLC free and clear of all claims and encumbrances. In consideration of the transfer of the Mercury interests set forth in Section 2, Clark hereby transfers to Amerson his fifty percent (50%) membership interest in Wal-Pat, LLC, subject to any and all outstanding debts and obligations of Wal-Pat, LLC. Clark shall execute and deliver to Amerson a bill of sale or other document evidencing the transfer of said membership interest in form and substance acceptable to Amerson. Amerson agrees to assume any and all debts and obligations of Wal-Pat, LLC, and to indemnify and hold Clark (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 Clark's ownership of a fifty percent (50%) membership interest in Wal-Pat, LLC, or his personal guarantee of any debts or obligations of Wal-Pat, LLC. Amerson hereby covenants and agrees to use his best efforts to obtain a complete release of any and all of Clark's personal guarantees for Wal-Pat obligations as soon as commercially practicable. Clark hereby releases and abandons any right to receive any additional distributions from Wal-Pat for the year 2007, including, without limitation, the right to receive any tax distribution under the Wal-Pat Operating Agreement. Amerson covenants and agrees that Wal-Pat shall not allocate to Clark any more than Clark's proportionate share of Wal-Pat income for the year 2007 taking into account his ownership percentage and the number of days Clark held his interest during the year. 2. Transfer of Interest in Mercury. Amerson 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 Pat interests set forth in Section 1, Amerson hereby transfers to Clark his fifty percent (50%) membership interest in Mercury Diecutting, LLC, subject to any and all outstanding debts and obligations of Mercury Diecutting, LLC. Amerson shall execute and deliver to Clark a bill of sale or other document evidencing the transfer of said membership interest in form and substance acceptable to Clark. Clark agrees to assume any and all debts and obligations of Mercury Diecutting, LLC, and to indemnify and hold Amerson (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 Amerson's 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. Clark hereby covenants and agrees to use his best efforts to obtain a complete release of any and all of Amerson's personal guarantees for Mercury obligations as soon as commercially practicable. Amerson 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. Clark covenants and agrees that Mercury shall not to allocate to Amerson any more than Amerson's proportionate share of Mercury income for the year 2007 taking into account his ownership percentage and the number of days Amerson held his interest during the year. 3. Delivery of Books and Records. Clark has this day delivered to the escrowee referred to in Section 25 for delivery to Amerson 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. Amerson has this day delivered to the escrowee referred to in Section 25 for delivery to Clark a full, complete and accurate copy of all financial reports and corporate books for Wal Pat, 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 Clark. Clark 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 Clark and attached to this Agreement as EXHIBIT C (the "Notice of Exercise") pursuant to which Clark 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 Clark since January 10, 2000. Clark 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 Clark of the exercise price of the Stock Option. Flanders also hereby waives any requirement that Clark 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. Clark 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 Amerson. Clark hereby transfers and surrenders to Amerson Two Hundred Fifty Thousand (250,000) shares of common stock of Flanders Corporation as full and complete repayment to Amerson for Clark's portion of the Tom Allen settlement. Clark 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 Amerson. Flanders will thereupon issue new stock certificate(s) to Amerson representing such stock. 6. Transfer of Flanders Stock to Satisfy Debt. Clark 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 Clark (the "Debt"). Clark 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. Clark 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 Clark which evidence the Debt. 7. Purchase of Flanders Stock by Amerson and Smith. Amerson and Smith shall purchase, in equal shares, and Clark shall sell all of his remaining shares of stock of Flanders Corporation to Amerson and Smith, 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 Amerson for an aggregate price payable by Amerson 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 Smith for an aggregate price payable by Smith 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). Amerson and Smith shall pay the purchase price in cash or other immediately available funds upon fulfillment of all escrow conditions as referenced in Section 25. Clark 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 Amerson and Smith. Flanders will thereupon issue new stock certificate(s) to Amerson and Smith representing such stock. Prior to the exercise of the Stock Option, Clark's total ownership in the shares of Flanders is set forth in EXHIBIT F. Clark represents he owns no other common shares, of record, in Flanders. Clark 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 Clark. Clark 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 Clark 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 Clark. Flanders hereby transfers to Clark 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. Clark 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 Clark. On December 15, 1995, Flanders and Clark 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 Clark and Flanders are relieved of any and all rights, duties, obligations, actions, payments, benefits, etc., contained in the Employment Agreement. Clark's employment with Flanders ends simultaneous to the termination of the Employment Agreement. Clark and Flanders agree that, upon execution of this Agreement, the Employment Agreement is null and void. Clark 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 Clark 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. Clark 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. Clark 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 Clark's head" or part of his skills, knowledge, and understanding. In addition, Clark certifies that no copies of such documents or computer files containing Flanders property have been made. The parties specifically understand and agree that Clark 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 Clark as Director of Flanders. Clark hereby resigns as a director of Flanders effective immediately after the consummation of all of the transactions outlined herein. 14. Release by Clark. Except for the duties and obligations created in this agreement and for claims grounded or based upon fraud, Clark, 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 Amerson, Wal-Pat, and Flanders, 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. Clark 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; Sarbanes-Oxley 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. Clark specifically releases Flanders from all payment obligations under the Employment Agreement dated December 15, 1995 as Clark is released from all obligations, liabilities and restrictive covenants thereunder. Clark also understands that there are other statutes and laws of contract and tort otherwise related to his employment. Clark 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 Clark's 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. Clark 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. Clark is waiving his rights under the ADEA for the consideration set forth above which is consideration in addition to that which Clark is legally entitled (i.e. wages for time worked and earned vacation pay benefits) Clark 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. Clark represents that he has not filed any complaint or charge with any municipal, county, state, or federal office arising in any way out of Clark's 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 Clark, Clark 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 Clark. Clark 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 Clark 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 Amerson. Except for the obligations created by this agreement and for claims grounded or based upon fraud, Amerson, for himself, his heirs, personal representatives, successors and assigns, expressly releases, acquits and forever discharges Clark 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 Amerson 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 Clark 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 Clark, 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 Clark, 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 Amerson, 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 Amerson, his heirs, personal representatives, successors and assigns. 21. Release by Wal-Pat. Except for the obligations created by this agreement and for claims grounded or based upon fraud, Wal-Pat, for itself and its successors, assigns, subsidiaries and affiliates, expressly release, acquit and forever discharge Clark, 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-Pat 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 Clark, 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 & Porter, 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. CLARK 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/ Steven K. Clark (SEAL) ------------------------------ Steven K. Clark /s/ Robert R. Amerson (SEAL) ------------------------------ Robert R. Amerson /s/ Harry L. Smith, Jr. (SEAL) ------------------------------ Harry L. Smith, Jr. FLANDERS CORPORATION By: /s/ Harry L. Smith, Jr. ------------------------------- Name: Harry L. Smith, COO WAL-PAT, LLC By: /s/ Robert R. Amerson ------------------------------- Robert R. Amerson, Manager MERCURY DIECUTTING, LLC By: /s/ Steven K. Clark ------------------------------- Steven K. Clark, Manager EXHIBIT A Assets to be Transferred to Clark
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 Gardner 12x24 Grinder S/N 769-3 Model 1224H7D 1 Landis O.D. Grinder, Model 4R-SN#678-13 1 32 Ton Punch Press 2-45-104 Federal A13 USA 220/3PH/20AMPS & Slitter 1 CS-220 544646 Amada Notcher Japan 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 357 Amada 50 Ton Japan 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 FFI N/A PCELL Pleater USA 10466 1 Custom Dual Band N/A Duan Band Saw/FFI USA 11395 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 USA 10355 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 2399 26th Ave N. St. Petersburg, FL 33734 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. Clark 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. Clark 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, Clark will surrender 543,478 shares to Flanders, and Flanders will issue 456,522 shares to Clark. Submitted by: Accepted by: OPTIONEE: Steven K. Clark FLANDERS CORPORATION - ------------------------------------ By: (Signature) ---------------------------- Title: ---------------------------- Address: Address: 903 Pinellas Bay Way 2399 26th Ave N. Tierra Verde, FL 33705 St. Petersburg, FL 33734 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: Steven K. Clark 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 531 Flanders Filters Road Washington, NC 27889 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 - ---------------------------------- ---------------------------- (Signature) Its - ---------------------------------- ---------------------------- Address: Address: - ---------------------------------- -------------------------------- - ---------------------------------- -------------------------------- 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 Clark's Pre-Option Ownership in Flanders STEVE CLARK 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 -----END PRIVACY-ENHANCED MESSAGE-----