EXHIBIT 10.8
SUBSCRIPTION AGREEMENT
EXHIBIT B
SUBSCRIPTION AGREEMENT
September 5, 1996
FLANDERS CORPORATION
000 Xxxxxxxx Xxxxxxx Xxxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Ladies and Gentlemen:
The undersigned ("Purchaser"), hereby subscribes for and agrees to
purchase 444,445 shares of common stock, $.001 par value per share (the
"Shares"), of FLANDERS CORPORATION (the "Company") at a purchase price of $9.00
per share. The Closing of the purchase of the Shares will be held at the
offices of the General Electric Pension Trust on the 6th day of September,
1996, or at such earlier date as shall be designated by the Company on not
less than 72 hours prior notice or at such other place and time as shall be
agreed to by the Company and the Purchaser (the "Closing Date"). At the
Closing, the Purchaser will make payment of the purchase price for the Shares
by depositing the same in escrow with State Street Bank ("Escrow Agent")
pursuant to an escrow agreement ("Escrow Agreement") in the form annexed
hereto as Exhibit A. At the Closing, the Company will issue to the Purchaser
and deliver to Escrow Agent a stock certificate representing such number of
fully-paid, validly issued and non-assessable shares of the Common Stock of
the Company as subscribed for hereby by the Purchaser.
Purchaser understands that this Subscription Agreement ("Subscription
Agreement") and the funds delivered hereunder will be returned promptly to
Purchaser and all of Purchaser's obligations under this Subscription Agreement
will terminate if the Company does not accept this Subscription Agreement.
Purchaser acknowledges that Purchaser has been furnished with and has
carefully read the Company's annual report on Form 10-K for the year ended
December 31, 1995, quarterly reports on Form 10-Q dated March 31, 1996 and
June 30, 1996 and Forms 8-K dated January 29, 1996 and May 31, 1996
(collectively, the "Disclosure Materials") delivered to Purchaser by the
Company in connection with the offering of the Shares.
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents, warrants and covenants to Purchaser, as of the date hereof, that:
(a) The Company has all requisite corporate power and authority
to enter into this Subscription Agreement and to perform its obligations
hereunder. The execution and delivery by the Company of this
Subscription Agreement and the consummation by the Company of the
transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of the Company. This Subscription
Agreement has been duly executed and delivered by the Company and
constitutes a valid and binding obligation of the Company enforceable
against it in accordance with its terms.
(b) The Company is a corporation duly organized and validly
existing in good standing under the laws of the State of North Carolina
with full corporate power and authority to own, lease and operate its
properties and to conduct its business as currently conducted and as
described in the Company's Annual Report on Form 10-K most recently filed
with the Securities and Exchange Commission and is duly registered and
qualified to conduct its business and is in good standing in each
jurisdiction or place where the nature of its properties or the conduct
of its business requires such registration or qualification, except where
the failure so to register or qualify does not have a material adverse
effect on the condition (financial or other), business, properties, net
worth or results of operations of the Company.
(c) The execution, delivery and performance by the Company of
this Subscription Agreement and the consummation of the transactions
contemplated hereby do not and will not (i) contravene or constitute a
default under or give rise to a right of termination, cancellation or
acceleration of any right or obligation of the Company under any
provision of applicable law or regulation or of any agreement, judgment,
injunction, order, decree or other instrument binding on the Company or
its subsidiaries, or result in the imposition of any lien on any asset of
the Company or its subsidiaries except as specifically contemplated by
the terms of this Subscription Agreement, or (ii) contravene any
provision of the Company's Articles of Incorporation or Bylaws.
(d) The issuance and delivery of the Shares to Purchaser in
accordance with this Subscription Agreement have been duly authorized by
all necessary corporate action. The Shares, upon issuance, will be
validly issued and fully paid and non-assessable, free and clear of all
liens, encumbrances, rights and claims of others.
(e) The Corporation has filed in a timely manner each document
or report required to be filed by it pursuant to the Securities Exchange
Act of 1934, as amended (the "Exchange Act") and the rules and
regulations thereunder; each such document or report at the time it was
filed conformed to the requirements of the Exchange Act and the rules and
regulations thereunder; and none of such documents or reports contained
an untrue statement of any material fact or omitted to state any material
fact required to be stated therein or necessary to make the statement
therein not misleading.
(f) There has not been any material adverse change in the
Company's business, financial condition or prospects as reported on the
Company's quarterly report on form 10-Q for the period ended June 30,
1996.
2. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser
acknowledges, represents, warrants and covenants that:
(a) The Purchaser acknowledges that the shares are only being
offered to Accredited Investors as defined under Section 501(a) of the
Securities Act. Purchaser qualifies as an Accredited Investor in that
the net worth of Purchaser is at least (i) U.S. $1 million if Purchaser
is a natural person or (ii) U.S. $5 million if Purchaser is a
- 2 -
corporation, partnership, trust or any entity other than a natural
person. In computing net worth, the term "net worth" shall mean the
excess of total assets over total liabilities and the principal residence
of the investor must be valued at cost, including cost of improvements,
or at recently appraised value by an institutional lender making a
secured loan, net of encumbrances.
(b) Purchaser has been furnished with and has carefully read the
Disclosure Materials, and is familiar with and understands the terms of
this purchase. In evaluating an investment in the Company, the purchaser
has not relied upon any representations or other information (whether
oral or written) from the Company, (or any of its agents or
representatives), other than as set forth in the Disclosure Materials.
With respect to individual tax and other economic considerations involved
in this investment, the Purchaser is not relying on the Company. The
Purchaser has carefully considered and has, to the extent the Purchaser
believes such discussion necessary, discussed with the Purchaser's
professional legal, tax, accounting and financial advisers an investment
in the Shares.
(c) The Shares are being offered in a transaction not involving
any public offering within the meaning of the Securities Act. The Shares
have not been registered under the Securities Act and until the Shares
are registered pursuant to Section 3 hereof (i) such Shares may be
offered, resold, pledged or otherwise transferred only in accordance with
an exemption from the registration requirements of the Securities Act
(and based upon an opinion of counsel if the Company so requests) and in
accordance with any applicable securities laws of any State of the United
States or any other applicable jurisdiction, and (ii) Purchaser will, and
each subsequent holder is required to, notify any subsequent purchaser
from it of the resale restrictions set forth in (i) above.
(d) Until the Shares are registered pursuant to Section 3
hereof, the registrar and transfer agent for the Shares will not be
required to accept for registration transfer any Shares, except upon
presentation of evidence satisfactory to the Company that the
restrictions on transfer set forth in paragraph (c) above have been
complied with and that any such Shares will be in the form of definitive
physical certificates bearing the following legend:
"The Security evidenced hereby was originally issued in a
transaction exempt from registration under Section 5 of the
United States Securities Act of 1933, as amended (the
"Securities Act"), and the Security evidenced hereby may not be
offered, sold or otherwise transferred in the absence of such
registration or an applicable exemption therefrom. The holder
of the Security evidenced hereby agrees for the benefit of the
Company that (A) such Security may be resold, pledged or
otherwise transferred only in a transaction meeting the
requirements of the Securities Act or exemption therefrom (and
based upon an opinion of counsel if the Company so requests)
and in accordance with any applicable securities laws of any
State of the United States or any other applicable jurisdiction
- 3 -
and (B) the holder will, and each subsequent holder is required
to, notify any purchaser from it of the Security evidenced
hereby of the resale restrictions set forth in (A) above."
(e) Purchaser is (i) acquiring the Shares for its own account,
and (ii) not acquiring the Shares with a view to distribution or resale
thereof or with any present intention of offering or selling any of the
Shares in a transaction that would violate the Securities Act or the
securities laws of any State of the United States or any other applicable
jurisdiction.
(f) The Purchaser recognizes that investment in the Company
involves certain risks and the Purchaser has taken full cognizance of and
understands all of the risk factors related to the purchase of Shares and
inherent in the business of the Company. The Purchaser has substantial
investment experience in making investment decisions of the type
contemplated hereby, is experienced in evaluating companies such as the
Company and has such knowledge and experience in financial and business
matters that the Purchaser is capable of evaluating the merits and risks
of an investment in the Company.
(g) The Purchaser is acquiring the Shares without being
furnished any offering literature, prospectus or any other form of
general solicitation or general advertising other than the Disclosure
Materials, and the Purchaser has been given no oral or written
representations or assurances by the Company or any representative of the
Company in connection with this investment other than as set forth in the
Disclosure Materials.
3. SECURITIES ACT REGISTRATION.
(a) The Company shall use its best efforts to register for
resale under the Securities Act of 1933, as amended (the "Securities
Act"), at the Company's expense, all of the Shares (the "Registerable
Shares") within ninety days from the date hereof, and in that regard will
file a Registration Statement (the "Registration Statement") on the
appropriate form with the Securities and Exchange Commission ("SEC") as
soon as practicable. Notice of effectiveness of the Registration
Statement shall be furnished promptly to the Purchaser. The Company
shall maintain the effectiveness of the Registration Statement and from
time to time will amend or supplement such Registration Statement and the
prospectus contained therein as and to the extent necessary to comply
with the Securities Act. The effectiveness of the Registration Statement
shall be maintained with respect to Registrable Shares until the later to
occur of the second anniversary of the Closing Date or such date as the
Registrable Shares may be sold pursuant to Rule 144 under the Securities
Act or otherwise without registration. The Registration Statement and
any registration filed pursuant to Section 3(b) below is sometimes also
referred to as a "Registration Statement."
(b) So long as the Registrable Shares shall exceed three percent
(3%) of the number of issued and outstanding shares of Common Stock of
the Company, if the Company shall determine to register any of its
securities for its own account or the
- 4 -
account of a security holder or holders ("Other Holders") in respect of a
registered public offering involving an underwriting, the Company will
promptly give the Purchaser written notice thereof and use its best efforts
to include in such registration and underwriting all of the Registrable
Shares specified in a written request made by the Purchaser within 20 days
after the written notice from the Company to the Purchaser. Such written
request may specify all or part of the Purchaser's Registrable Securities.
(i) The Purchaser shall, together with the Company and the
Other Holders enter into an underwriting agreement in customary form
with the representative of the Underwriter or underwriters selected
by the Company.
(ii) If the representative of the underwriters advises the
Company in writing that marketing factors require a limitation on
the number of shares to be underwritten, the representative may
exclude all Registrable Securities from, or limit the number of
Registrable Securities to be included in, the registration and
underwriting. The Company shall so advise all holders of securities
requesting registration and the number of shares of securities that
are entitled to be included in the registration and underwriting
shall be allocated first to the Company for securities being sold
for its own account and thereafter as set forth in Subsection
3(b)(iii) below.
(iii) In any circumstances in which all of the Registrable
Securities and shares of Holders requested to be included in a
registration cannot be so included for the reason set forth in
Subsection 3(b)(ii) above, the number of Registrable Securities and
shares of Other Holders that may be so included shall be allocated
among the Purchaser and Other Holders requesting inclusion of
securities pro rata on the basis of the number of shares of
Registrable Securities and the number of shares of Other Holders.
4. RESCISSION.
(a) In the event the Registration Statement is not declared
effective by the SEC on or prior to the ninetieth (90th) day following
the Closing Date (the "Effective Date") the Purchaser may thereafter
rescind this transaction at any time prior to the effectiveness of the
Registration Statement by (i) written notice to the Company and (ii)
written notice to the Escrow Agent certifying that the Registration
Statement referred to in this Subscription Agreement did not become
effective on or before the Effective Date, and has not yet become
effective and that the Purchaser has given written notice of the
rescission of the transaction referred to in such Subscription Agreement
and directing the Escrow Agent to pay to the Purchaser the amount
deposited in escrow as provided above.
(b) In the event that the Company has not acquired all of the
outstanding shares of Precisionaire, Inc. pursuant to that certain Stock
Purchase Agreement between the Company and Precisionaire dated July 1,
1996, on or before September 30, 1996, the Purchaser may rescind this
subscription at any time thereafter by giving written notice to
- 5 -
(i) the Company, and (ii) the Escrow Agent certifying that the Precisionaire
acquisition referred to above was not consummated on or before September 30,
1996. This right of rescission shall terminate upon consummation of the
Precisionaire acquisition, as described in the Precisionaire Stock Purchase
Agreement.
5. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless Purchaser
as a seller of Shares, each underwriter, if any (within the meaning of
the Securities Act) of such securities and each person, if any, who
controls (within the meaning of either Section 15 of the Act or Section
20 of the Securities Exchange Act of 1934) any such seller, controlling
person or underwriter, from and against any losses, claims, damages or
liabilities, joint or several, that any such seller, underwriter or
controlling person may incur or to which any such seller, underwriter or
controlling person may become subject, under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in any
preliminary prospectus, or contained, on the effective date thereof, in
any registration statement or final or summary prospectus included
therein, or any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading; and the Company will reimburse each such seller,
underwriter or controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating or defending
any such loss, claim, damage, liability or action, whether or not
resulting in liability; provided, however, the Company will not be liable
in any case to the extent that any such loss, claim, damage, liability or
expense arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in such
registration statement, such preliminary, final or summary prospectus or
such amendment or supplement in reliance upon and in conformity with
written information furnished by or on behalf of any such seller
specifically for use in the preparation thereof.
(b) Purchaser will indemnify and hold harmless the Company, each
of its directors, each of its officers who sign or have signed said
registration statement, each underwriter, each other seller and each
person, if any, who controls the Company or such underwriter or seller
(within the meaning of either Section 15 of the Act or Section 20 of the
Exchange Act), to the same extent as the foregoing indemnity from the
Company to Purchaser, but only with reference to written information
furnished by or omitted to be furnished by or on behalf of Purchaser, for
use in the preparation of such registration statement, such preliminary,
final or summary prospectus or such amendment or supplement, and will
reimburse the Company or any such director, officer, underwriter or
controlling person for any legal or other expenses reasonably incurred by
it in connection with investigating or defending any such loss, claim,
damage, liability or action, whether or not resulting in any liability;
provided, however, that the obligations of Purchaser hereunder shall not
apply to amounts paid in settlement of any such claims, losses, damages
or liabilities (or actions in respect thereof) if such settlement is
effected without
- 6 -
the consent of Purchaser (which consent shall not be unreasonably withheld);
and, provided further, that Purchaser shall only be responsible for the
reimbursement of the legal and other expenses incurred by a single counsel
on behalf of the Company and such officers, directors and controlling
Persons.
(c) Promptly after receipt by an indemnified party of notice of
the commencement of any legal action against such indemnified party in
respect of which indemnity or reimbursement may be sought against the
indemnifying party under this Agreement, such indemnified party shall
notify the indemnifying party in writing of the commencement thereof,
and, subject to the provisions hereinafter stated, the indemnifying party
shall assume the defense of such action (including, the employment of
counsel, who shall be counsel satisfactory to such indemnified party, and
the payment of expenses in connection therewith). To the extent the
Company and the indemnified party believe it prudent or necessary, in
their good faith discretion, such indemnified party shall, in addition to
the foregoing, have the right to employ separate counsel in any such
action and to participate in the defense thereof, and the fees and
expenses of such counsel shall be at the expense of the indemnifying
party. The indemnifying party shall not be liable to indemnify any
person for any settlement of any such action effected without the consent
of the indemnifying party.
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for above is due in
accordance with its terms but is held by a court to be unavailable on
grounds of policy or otherwise, the person or persons (individually, an
"Indemnitor" and collectively, the "Indemnitors") who would otherwise
have been required to indemnify any other person (the "Indemnitee")
hereunder shall contribute to the aggregate losses, claims, damages,
liabilities and expenses to which any such Indemnitee may be subject in
such proportion so that such Indemnitor is or such Indemnitors,
collectively, are responsible for that portion represented by the
percentage that the aggregate public offering price of the shares sold by
such Indemnitor or Indemnitors bears to the aggregate public offering
price of all shares sold in such registered offering; provided, however,
that no person adjudged guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Act) by a court of competent
jurisdiction, in a final judgment, shall be entitled to contribution from
any person who was not adjudged guilty of such fraudulent
misrepresentation. Any party entitled to contribution shall, promptly,
after receipt of notice of the commencement of any action, suit or
proceeding against such party in respect of which a claim for
contribution may be made against another person hereunder, notify such
other person, but the omission to so notify another person shall not
relieve such person from any other obligation it may have hereunder or
otherwise.
6. MISCELLANEOUS.
(a) Grammatical References. All pronouns and any variations
thereof used herein shall be deemed to refer to the masculine, feminine,
neuter, singular or plural as the identity of the antecedent may require.
- 7 -
(b) Notices. Notices required or permitted to be given
hereunder shall be in writing and shall be deemed to be sufficiently
given when personally delivered or upon receipt when sent by facsimile or
registered mail, return receipt requested, addressed to the other party
at the address of such party set forth in this Subscription Agreement, or
to such other address furnished by notice given in accordance with this
paragraph.
(c) No Waiver. Failure of the Company or the Purchaser to
exercise any right or remedy under this Subscription Agreement or any
other agreement between the Company and a Purchaser, or otherwise, or
delay by the Company or the Purchaser is exercising same, will not
operate as a waiver thereof. No waiver by the Company or the Purchaser
will be effective unless and until it is in writing and signed by the
Company or the Purchaser.
(d) Governing Law. This Subscription Agreement shall be
enforced, governed and construed in all respects in accordance with the
laws of the State of New York without giving effect to its conflicts of
law rules or principles.
(e) Complete Agreement. This Subscription Agreement and the
documents referred to herein, shall constitute the entire agreement among
the parties hereto with respect to the subject matter hereof and shall
supersede all prior understandings or agreements with respect to such
subject matter. This Subscription Agreement may be amended only by the
written consent of both the Company and the Purchaser.
(f) Severability. If a court of competent jurisdiction
determines that any provision of this Subscription Agreement is invalid,
unenforceable or illegal for any reason, such determination shall not
affect or impair the validity, legality and enforceability of the other
provisions of this Subscription Agreement, which shall remain in full
force and effect in the same manner and to the same extent as if the
invalid, unenforceable or illegal provision had not been contained in
this Subscription Agreement. In the event that any provision of this
Subscription Agreement is invalid or unenforceable under any applicable
statute or rule of law, then such provision shall be deemed inoperative
to the extent that it may conflict therewith and shall be deemed modified
to conform with such statute or rule of law. Any provision hereof which
may prove invalid or unenforceable under any law shall not affect the
validity or enforceability or any other provision hereof.
(g) Execution in Counterparts. This Subscription Agreement may
be executed in counterparts, each of which shall be deemed an original,
but all of which together shall constitute the same Subscription
Agreement.
(h) Title and Subtitles. The titles and subtitles used in this
Subscription Agreement are used for convenience only and are not to be
considered in construing or interpreting this Subscription Agreement.
- 8 -
(i) Rights and Remedies Cumulative. The rights and remedies
provided in this Subscription Agreement shall be cumulative and not
exclusive of any other rights or remedies provided by law or otherwise.
IF YOU AGREE WITH THE FOREGOING, PLEASE SIGN THE SIGNATURE PAGES TO THIS
SUBSCRIPTION AGREEMENT LOCATED IN THE SUBSCRIPTION DOCUMENTS PROVIDED AND
RETURN THEM TO THE COMPANY, AND THIS LETTER SHALL THEN BECOME A BINDING
AGREEMENT BETWEEN YOU AND THE COMPANY IN ACCORDANCE WITH ITS TERMS.
- 9 -
SUBSCRIPTION AGREEMENT
SIGNATURE PAGE
By executing this signature page the Purchaser hereby swears to, adopts
and agrees to all terms, conditions, representations, warranties and covenants
contained in the Subscription Agreement.
Dated: September 12, 1996
Number of Shares subscribed for: 444,445
Aggregate purchase price: $ 4,000,005
NAME OF PURCHASER: TRUSTEES OF GENERAL ELECTRIC PENSION TRUST
(If purchaser is trust or retirement fund list name of such trust or fund)
PURCHASER: /s/ Xxxx X. Xxxxx
(signature)
Name of person signing: Xxxx X. Xxxxx
If signing in capacity of officer or trustee, please indicate: Trustee
________________________________________________________
(signature of any co-tenant, joint-tenant or co-trustee)
Name of co-signer:
Print exact name in which Share will be held: Trustees of General Electric
Pension Trust
Tax or Other Identification Number[s]: 00-0000000
Address of Purchaser(s): 0000 Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
ACCEPTED BY:
FLANDERS CORPORATION
000 Xxxxxxxx Xxxxxxx Xxxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
By: /s/ Xxxxxx X. Xxxxx
Its: ____________________________
Date: ______________________, 1996
- 10 -
