EXHIBIT 10.9
ESCROW AGREEMENT
ESCROW AGREEMENT
AGREEMENT dated this 5th day of September, 1996, by and among the
Trustees of General Electric Pension Trust ("Subscriber"), Flanders
Corporation, a North Carolina corporation ("Flanders"), and State Street Bank
and Trust Company, a Massachusetts corporation (the "Escrow Agent").
W I T N E S S E T H:
WHEREAS, Flanders and Subscriber are parties to a Subscription Agreement
dated September 5, 1996 (the "Subscription Agreement") which provides for the
escrow of $4,000,005 with Escrow Agent (such amount and interest thereon being
sometimes referred to as the "Escrowed Assets") and the deposit of 444,445
shares of common stock of Flanders (the "Flanders Shares"); and
WHEREAS, Flanders and the Subscriber are desirous of entering into this
Agreement and the Escrow Agent is willing to act as escrow agent on the terms
and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
contained and subject to the conditions hereinafter set forth, the parties
hereto agree as follows:
1. Concurrently with the execution hereof, the Subscriber is paying
the sum of $4,000,005 referred to above to, and Flanders is depositing the
Flanders Shares with. the Escrow Agent, which shall hold the same, and any
interest earned on Escrowed Assets, in escrow on the terms and conditions
hereinafter set forth.
2. The Escrow Agent shall make payment of the Escrowed Assets to the
Subscriber as follows: If the Escrow Agent shall have received a written
notice from the Subscriber to the Escrow Agent given after September 30, 1996,
which notice shall (i) certify that Flanders did not complete the acquisition
of Precisionaire, Inc. ("Precisionaire"), as set forth in the Stock Purchase
Agreement dated July 1, 1996 (the "Precision Acquisition"), or (ii) certify
that the Registration Statement referred to in the Subscription Agreement did
not become effective on or before December 5, 1996, and has not, as of the
date of the Subscriber's notice, become effective and that the Subscriber has
given written notice to Flanders of the rescission of the transaction referred
to in the Subscription Agreement, and (iii) direct the Escrow Agent to pay the
Escrowed Assets to the Subscriber, the Escrow Agent shall transmit a copy of
such notice to Flanders. The Escrow Agent shall act in accordance with such
notice from the Subscriber to the Escrow Agent unless within ten days from
transmittal by the Escrow Agent to Flanders of the copy of such notice,
Flanders shall notify the Escrow Agent not to comply with the payment
instruction contained in such notice from the Subscriber to the Escrow Agent.
Simultaneously with any payment of Escrowed Assets to the Subscriber pursuant
hereto, Escrow Agent shall deliver the Flanders Shares to Flanders.
3. The Escrow Agent shall make payment of the Escrowed Assets to
Flanders as follows: If the Escrow Agent shall have received a written notice
from Flanders which notice shall certify (i) that the Precision Acquisition
has been completed, and (ii) that the Registration Statement referred to in
the Subscription Agreement has become effective and shall direct the Escrow
Agent to pay the Escrowed Assets to Flanders, the Escrow Agent shall transmit
a copy of such notice to the Subscriber. The Escrow Agent shall act in
accordance with such notice from Flanders to the Escrow Agent unless within
ten days from transmittal by the Escrow Agent to the Subscriber of the copy of
such notice the Subscriber shall notify the Escrow Agent not to comply with
the payment instruction contained in such notice from Flanders to the Escrow
Agent. Simultaneously with any payment of the Escrowed Assets to Flanders
pursuant hereto, the Escrow Agent shall deliver the Flanders Shares to
Subscriber.
4. After Flanders shall have notified the Escrow Agent not to comply
with the Subscriber's payment instruction (as referred to in paragraph 2
above) and after the Subscriber shall have notified the Escrow Agent not to
comply with Flanders payment instruction (as referred to in Paragraph 3
above), the Escrow Agent shall act with respect to the Escrowed Assets solely
in accordance with any of the following: (a) a new Instruction signed jointly
by Flanders and the Subscriber; (b) a certified copy of an arbitrator's award
issued under the rules of the American Arbitration Association as to which the
Escrow Agent shall have received an opinion of counsel, which may include the
Escrow Agent and which is addressed and delivered also to each of Flanders and
the Subscriber, satisfactory to the Escrow Agent and in its sole and absolute
discretion, that such award is final beyond appeal or (c) a certified copy of
a judgment of a court of competent jurisdiction as to which the Escrow Agent
shall have received an opinion of counsel, which may include the Escrow Agent
and which is addressed and delivered also to Flanders and the Subscriber,
satisfactory to the Escrow Agent in its sole and absolute discretion, that
such judgment is final beyond appeal. Anything in the foregoing to the
contrary notwithstanding, at the sole discretion of the Escrow Agent, the
Escrow Agent may at any time deposit the Escrowed Assets with a court selected
by the Escrow Agent and in such event all liability and responsibility of the
Escrow Agent as to acts or omissions and subsequent to such deposit shall
terminate upon such deposit having been made.
5. Upon any distribution of the Escrowed Assets to Subscriber
pursuant to paragraph 2 above, or to Flanders pursuant to paragraph 3 above,
the Escrow Agent shall deliver the Flanders Shares to Flanders, in the case of
a delivery of Escrowed Assets pursuant to paragraph 2 above, and to
Subscriber, pursuant to delivery of the Escrowed Assets to Flanders pursuant
to paragraph 3 above. In no event shall the Escrow Agent deliver the Escrowed
Assets without contemporaneously delivering the Flanders shares to the party
not receiving the Escrowed Assets.
6. The Escrow Agent shall deliver the Escrowed Assets in accordance
with any instruction or instructions which shall be signed jointly by both
Flanders and the Subscriber.
7. Flanders shall be liable for any and all fees and expenses of the
Escrow Agent incurred in connection with this Agreement, including counsel
fees, if any, payable in
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connection with the delivery of the Escrowed Assets hereunder. Flanders shall
pay any such amounts due to the Escrow Agent promptly upon demand therefor.
8. Flanders and Subscriber acknowledge and agree that the Escrow
Agent may consult counsel satisfactory to it, including house counsel, and the
opinion of such counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in accordance with the opinion of such counsel.
9. Neither the Escrow Agent nor any of its directors, officers or
employees shall be liable to anyone for any action taken or omitted to be
taken by it or any of its directors, officers or employees hereunder except in
the case of gross negligence or willful misconduct. Flanders and Subscriber,
jointly and severally, covenant and agree to indemnify the Escrow Agent and
hold it harmless without limitation from and against any loss, liability or
expense of any nature incurred by the Escrow Agent arising out of or in
connection with this Agreement or with the administration of its duties
hereunder, including but not limited to legal fees and other costs and
expenses of defending or preparing to defend against any claim or liability in
the premises, unless such loss, liability or expense shall be caused by the
Escrow Agent's willful misconduct or gross negligence. In no event shall the
Escrow Agent be liable for indirect, punitive, special or consequential
damages. The provisions of this paragraph 9 shall survive termination of this
Agreement.
10. The Escrow Agent shall not be bound in any way by any agreement
or contract (other than this Agreement) between Flanders and the Subscriber,
whether or not it has knowledge thereof, and the Escrow Agent's only duties
and responsibilities shall be to hold the Escrowed Assets as escrow agent and
to dispose of said assets in accordance with the terms of this Agreement. The
Escrow Agent may act upon any instruments or other writings believed by the
Escrow Agent in good faith to be genuine and to be signed or presented by the
proper persons and the Escrow Agent shall not be liable in connection with the
performance of its duties under this Agreement except for its own willful
malfeasance or bad faith.
11. The Escrow Agent may at any time resign as Escrow Agent hereunder
by giving thirty (30) days' prior written notice of resignation to Flanders
and Subscriber. Prior to the effective date of the resignation as specified
in such notice, Subscriber will issue to the Escrow Agent a written
instruction authorizing redelivery of the Escrowed Assets to a bank or trust
company that it selects, subject to the reasonable consent of Flanders. Such
bank or trust company shall have a principal office in New York, New York, and
shall have capital, surplus and undivided profits in excess of $50,000,000.
If however, Subscriber shall fail to name such a successor escrow agent within
twenty (20) days after the notice or resignation from the Escrow Agent,
Flanders shall be entitled to name such successor escrow agent. If no
successor escrow agent is named by Subscriber or Flanders, the Escrow Agent
may apply to a court of competent jurisdiction for appointment of a successor
escrow agent.
12. Neither Flanders nor Subscriber nor Escrow Agent shall be
responsible for delays or failures in performance resulting from acts beyond
its control. Such acts shall
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include but not be limited to acts of God, strikes, lockouts, riots, acts or
war, epidemics, governmental regulations superimposed after the fact, fire,
communication line failures, computer viruses, power failures, earthquakes or
other disasters.
13. Any notice, report, demand or instruction required or permitted
by the provisions of this Agreement shall be deemed to have been sufficiently
transmitted, delivered, given or served for all purposes if delivered by hand
or if sent by prepaid registered mail or certified mail, or by responsible
overnight delivery service or telecopy to the parties at their addresses set
forth above, or at such other address as a party may hereinafter give by
written notice as herein provided:
If to Flanders:
Flanders Corporation
000 Xxxxxxxx Xxxxxxx Xxxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx
If to Subscriber:
Trustees of General Electric Pension Trust
0000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxx Xxxxxxx
If to Escrow Agent:
State Street Bank and Trust Company
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx
Master Trust Services
The date of delivery or transmittal shall be the date of delivery, if by
hand or telecopy, or if mailed shall be deemed to be the date of mailing, or
if sent by overnight delivery service shall be deemed to be the next business
day except that no notice, report, demand or Instruction shall be deemed to
have been delivered or transmitted to the Escrow Agent until actual receipt
thereof by the Escrow Agent.
14. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York and shall be binding upon and shall
inure to the benefit of the parties hereto and their respective heirs,
successors and assigns. This Agreement may not be changed or amended in any
manner whatsoever except in writing signed by each of the parties hereto.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
made and executed the day and year first above written.
ESCROW AGENT:
By: /s/ Xxxxxxx X. Xxxxxxxx
Its: Vice President
SUBSCRIBER:
By: /s/ Xxxx X. Xxxxx
Its: Trustee
FLANDERS CORPORATION:
By: /s/ Xxxxxx X. Xxxxx
Its: CFO
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