THE CORPORATE LIBRARY

Related Party Transactions and Outside Related Director Information

(FLDR)

11/14/2005 Proxy Information

Mr. Amerson is the Chairman of Flanders Corporation. He served as President and Chief Executive Officer of Flanders Corporation from 1987 to December of 2004.

At November 1, 2005, Steven K. Clark owed the Company $4,832,028 which includes $1,050,021 of accrued interest which he previously borrowed to settle claims, to make certain payments under an indemnity agreement he entered into with the Company, to exercise options and to purchase certain shares from Thomas T. Allan, a former officer and director. This debt is evidenced by a note which bears interest at LIBOR plus 1%, and is due in full on December 31, 2010, or on demand by the Company.

At November 1, 2005, Robert R. Amerson owed the Company $2,844,215 which includes $876,766 of accrued interest, which he previously borrowed, the majority of which was used to settle claims, to make certain payments under an indemnity agreement he entered into with the Company, to purchase certain shares from Thomas T. Allan, a former officer and director of the Company, and for other unspecified reasons. This debt is evidenced by a note which bears interest at LIBOR plus 1%, and is due in full on December 31, 2010, or on demand by the Company.

The Company made payments totaling $6,932,620 and $3,738,179 in 2004 and 2003, respectively, to Superior Die Cutting, Inc., a vendor supplying raw materials to the company. Superior Die Cutting, Inc. is partially owned by Mercury Diecutting, Inc., an entity wholly-owned by Robert R. Amerson and Steven K. Clark. The Company made payments totaling $1,040,869 and $1,037,613 in 2004 and 2003, respectively, to Wal-Pat II, a real estate partnership which leases property to the Company. Wal-Pat II is owned by Robert R. Amerson and Steven K. Clark as fifty percent partners. At December 31, 2004, the Superior Die Cutting owed Company a total of $3,289,000.