Exhibit 2.1
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COMBINATION AGREEMENT
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DATED AS OF
OCTOBER 6, 1997
AMONG
FLIR SYSTEMS, INC., SPECTRA-PHYSICS AB,
SPECTRA-PHYSICS HOLDINGS S.A., SPECTRA-PHYSICS HOLDINGS GMBH,
SPECTRA-PHYSICS HOLDINGS PLC,
AND
PHAROS HOLDINGS, INC.
TABLE OF CONTENTS
PAGE NO.
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RECITALS............................................................. 1
ARTICLE 1 -- DEFINITIONS AND PRINCIPLES OF INTERPRETATION............ 2
1.1 Defined Terms................................................. 2
1.2 Certain Rules of Interpretation............................... 6
1.3 Exhibits and Schedules........................................ 6
1.4 Accounting Principles......................................... 7
ARTICLE 2 -- SALE AND PURCHASE OF XXXXX STOCK........................ 7
2.1 Sale and Purchase of XXXXX Stock.............................. 7
2.2 Sale and Purchase of XXXXX Canada Stock....................... 7
2.3 Sale and Purchase of XXXXX UK Stock........................... 7
2.4 Exchange of XXXXX USA Stock................................... 7
2.5 Delivery of Shares............................................ 8
ARTICLE 3 -- CLOSING................................................. 8
3.1 Closing....................................................... 8
3.2 Deliveries by Stockholders.................................... 8
3.3 Deliveries by FLIR............................................ 9
ARTICLE 4 -- REPRESENTATIONS AND WARRANTIES BY THE SPECTRA COMPANIES. 9
4.1 Spectra Companies' Organization and Qualification............. 9
4.2 Spectra Companies' Authority Relative to this Agreement....... 10
4.3 Title to Companies Stock...................................... 10
4.4 Transfer of Title............................................. 10
4.5 XXXXX Companies' Organization and Qualification............... 11
4.6 Capitalization................................................ 11
4.7 Subsidiaries.................................................. 11
4.8 XXXXX Companies' Authority Relative to this Agreement......... 11
4.9 Financial Statements.......................................... 12
4.10 Absence of Certain Changes or Events.......................... 12
4.11 Litigation.................................................... 13
4.12 Taxes......................................................... 13
4.13 Compliance with Permits, Applicable Laws and Agreements....... 14
4.14 Employee Plans and Benefit Arrangements....................... 14
4.15 Title to Assets............................................... 15
4.16 Intangible Property........................................... 15
4.17 Environmental Matters......................................... 16
4.18 Absence of Certain Payments................................... 16
4.19 No Broker, Etc................................................ 17
4.20 Other Negotiations............................................ 17
4.21 Business...................................................... 17
4.22 Securities Act Representations................................ 17
4.23 Proxy Statement............................................... 17
4.24 No Untrue Statement or Omission............................... 18
ARTICLE 5 -- REPRESENTATIONS AND WARRANTIES OF FLIR................. 18
5.1 Organization and Qualification................................ 18
5.2 Authority Relative to this Agreement.......................... 18
5.3 FLIR Stock to Be Issued at Closing............................ 19
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PAGE NO.
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5.4 FLIR Common Stock Outstanding..................................... 19
5.5 Subsidiaries...................................................... 19
5.6 SEC Filings; Financial Statements................................. 20
5.7 Absence of Certain Changes or Events.............................. 20
5.8 Litigation........................................................ 21
5.9 Taxes............................................................. 21
5.10 Compliance with Permits, Applicable Laws and Agreements........... 21
5.11 Employee Plans and Benefit Arrangements........................... 22
5.12 Title to Assets................................................... 22
5.13 Intangible Property............................................... 23
5.14 Environmental Matters............................................. 23
5.15 Absence of Certain Payments....................................... 24
5.16 No Broker, Etc.................................................... 24
5.17 Other Negotiations................................................ 24
5.18 Business.......................................................... 24
5.19 Securities Act Representations.................................... 25
5.20 Proxy Statement................................................... 25
5.21 No Untrue Statement or Omission................................... 25
ARTICLE 6 -- TAX MATTERS................................................. 25
6.1 Tax Payment and Tax Return Filing Responsibilities................ 25
6.2 Tax Sharing and Indemnification................................... 26
6.3 Tax Sharing Agreements............................................ 27
6.4 Net Operating Loss Carryforward................................... 27
6.5 Cooperation....................................................... 27
ARTICLE 7 -- ADDITIONAL AGREEMENTS AND COVENANTS......................... 27
7.1 Conduct of Business of FLIR and the XXXXX Companies............... 27
7.2 Notice of Breach.................................................. 29
7.3 Reasonable Efforts................................................ 29
7.4 Other Transactions................................................ 29
7.5 Access to Information............................................. 29
7.6 Employee Matters.................................................. 30
7.7 Access to Records and Personnel After Closing..................... 30
7.8 Purchases of FLIR Common Stock.................................... 30
7.9 Directors......................................................... 31
7.10 XXXXX and European Subsidiaries Stock............................. 31
7.11 Tax Treatment of Exchange of XXXXX USA Stock...................... 31
7.12 Confidentiality................................................... 31
7.13 Proxy Statement................................................... 32
7.14 Stockholders' Meeting............................................. 32
7.15 HSR Act Filings................................................... 32
7.16 Transferred Liabilities........................................... 32
7.17 Interim Financial Statements...................................... 32
7.18 Further Assurances................................................ 33
ARTICLE 8 -- CONDITIONS PRECEDENT........................................ 33
8.1 Conditions to Obligations of FLIR................................. 33
8.2 Conditions to Obligations of Stockholders......................... 34
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ARTICLE 9 -- TERMINATION, AMENDMENT AND WAIVER............................ 36
9.1 Termination....................................................... 36
9.2 Effect of Termination............................................. 37
9.3 Amendment......................................................... 37
9.4 Waiver............................................................ 37
ARTICLE 10 -- SURVIVAL AND INDEMNIFICATION................................ 37
10.1 Survival of Representations, Warranties, Covenants and
Agreements...................................................... 37
10.2 Indemnification by the Spectra Companies.......................... 38
10.3 Indemnification by FLIR........................................... 38
10.4 Notification and Defense of Claims or Actions..................... 38
10.5 Reliance.......................................................... 39
ARTICLE 11 -- GENERAL PROVISIONS.......................................... 39
11.1 Expenses.......................................................... 39
11.2 Public Announcements.............................................. 39
11.3 Notices, Etc...................................................... 40
11.4 Attorneys' Fees................................................... 40
11.5 Severability...................................................... 40
11.6 Remedies.......................................................... 41
11.7 No Third-Party Beneficiaries...................................... 41
11.8 Governing Law..................................................... 41
11.9 Jurisdiction...................................................... 41
11.10 Assignment and Binding Effect.................................... 41
11.11 Joint and Several Obligations.................................... 42
11.12 Entire Agreement................................................. 42
11.13 Counterparts..................................................... 43
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COMBINATION AGREEMENT
COMBINATION AGREEMENT (hereinafter called "Agreement"), dated as of October
6, 1997, among FLIR SYSTEMS, INC., an Oregon corporation ("FLIR"), SPECTRA-
PHYSICS AB, a corporation organized under the laws of Sweden ("Spectra"),
SPECTRA-PHYSICS HOLDINGS S.A., a corporation organized under the laws of
France ("Spectra France"), SPECTRA-PHYSICS HOLDINGS GMBH, a corporation
organized under the laws of Germany ("Spectra Germany"), SPECTRA-PHYSICS
HOLDINGS PLC, a public limited company organized under the laws of the United
Kingdom ("Spectra UK"), PHAROS HOLDINGS, INC., a corporation organized under
the laws of the state of Delaware ("Pharos") (collectively, Spectra, Spectra
France, Spectra Germany, Spectra UK and Pharos are referred to individually as
a "Spectra Company" and collectively as "the Spectra Companies") (Spectra,
Spectra UK and Pharos are referred to individually as "Stockholder and
collectively as "Stockholders"):
RECITALS
X. XXXXX INFRARED SYSTEMS AB, a corporation organized under the laws of
Sweden ("XXXXX"), XXXXX INFRARED SYSTEMS LTD., a corporation organized under
the federal laws of Canada ("XXXXX Canada"), XXXXX INFRARED SYSTEMS S.A.R.L.,
a corporation organized under the laws of France ("XXXXX France"), XXXXX
INFRARED SYSTEMS GMBH, a corporation organized under the laws of Germany
("XXXXX Germany"), XXXXX INFRARED SYSTEMS LIMITED, a company organized under
the laws of the United Kingdom ("XXXXX UK"), and XXXXX INFRARED SYSTEMS, INC.,
a Delaware corporation authorized to do business in New Jersey ("XXXXX USA")
(XXXXX, XXXXX Canada, XXXXX France, XXXXX Germany, XXXXX UK, XXXXX Italy
(hereinafter defined), and XXXXX USA are referred to individually as an "XXXXX
Company" and collectively as the "XXXXX Companies") (XXXXX France, XXXXX
Germany, and XXXXX Italy are referred to individually as a "European
Subsidiary" and collectively as the "European Subsidiaries") engage in the
business of design, manufacture and distribution of thermal imaging devices.
B. Spectra is the record and beneficial owner of 100% of the issued and
outstanding shares of capital stock of SPECTRA-PHYSICS INDUSTRI AB, a
corporation organized under the laws of Sweden ("Spectra Industri"), XXXXX
Canada, Pharos, Spectra UK, Spectra France and Spectra Germany. Spectra
Industri is the record and beneficial owner of 100% of the issued and
outstanding capital stock of XXXXX.
C. The Spectra Companies and Spectra Industri are the record and beneficial
owner of 100% of the issued and outstanding shares of capital stock of the
XXXXX Companies (the "XXXXX Companies Stock").
D. Before Closing, (i) Spectra shall cause Spectra Industri to transfer to
Spectra 100% of the issued and outstanding capital stock of XXXXX, so that at
Closing, Spectra will be the record and beneficial owner of 100% of the issued
and outstanding shares of capital stock of XXXXX and (ii) the Spectra
Companies shall transfer to XXXXX 100% of the issued and outstanding shares of
capital stock of the European Subsidiaries, so that at Closing, XXXXX will be
the record and beneficial owner of 100% of the issued and outstanding shares
of capital stock of the European Subsidiaries (the "European Subsidiaries
Stock").
E. Before Closing, XXXXX shall form an Italian corporation as a wholly-owned
subsidiary, called XXXXX INFRARED SYSTEMS S.R.L., a corporation to be
organized under the laws of Italy ("XXXXX Italy"), into which Spectra shall
contribute certain assets and employees related to the business of design,
manufacture and distribution of thermal imaging devices conducted by Spectra
in Italy.
F. Spectra desires to sell to FLIR, and FLIR desires to purchase from
Spectra 100% of the issued and outstanding shares of capital stock of XXXXX
(the "XXXXX Stock") for an aggregate number of three million nine hundred
twelve thousand two hundred eighty (3,912,280) shares of FLIR Stock and One
hundred Dollars ($100).
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G. Spectra desires to sell to FLIR, and FLIR desires to purchase from
Spectra 100% of the issued and outstanding shares of capital stock of XXXXX
Canada (the "XXXXX Canada Stock") for an aggregate number of forty one
thousand six hundred twenty (41,620) shares of FLIR Stock and Thirty Dollars
($30).
H. Spectra UK desires to sell to FLIR, and FLIR desires to purchase from
Spectra UK 100% of the issued and outstanding shares of capital stock of XXXXX
UK (the "XXXXX UK Stock") for an aggregate number of one hundred eighty three
thousand one hundred twenty eight (183,128) shares of FLIR Stock and Twenty
Dollars ($20).
I. Pharos desires to exchange in accordance with the terms and conditions of
this Agreement, 100% of the issued and outstanding shares of capital stock of
XXXXX USA (the "XXXXX USA Stock") solely for an aggregate number of twenty
four thousand nine hundred seventy two (24,972) shares of newly-issued FLIR
Stock, and FLIR desires to acquire the XXXXX USA Stock from Pharos, solely in
exchange for such shares of FLIR Stock, as hereinafter provided (the XXXXX
Stock, the XXXXX Canada Stock, the XXXXX UK Stock and the XXXXX USA Stock are
referred to collectively as the "Target Stock").
J. The Boards of Directors of the Spectra Companies have determined that the
Transaction is in the best interest of the Spectra Companies and the
stockholders of the Spectra Companies.
K. The Board of Directors of FLIR has determined that the Transaction is in
the best interest of FLIR and the stockholders of FLIR.
L. FLIR and the Spectra Companies wish to make certain representations,
warranties, covenants and agreements in connection with the Transaction.
NOW, THEREFORE, in consideration of the mutual representations, warranties,
covenants and agreements set forth herein, the parties hereby agree as
follows:
ARTICLE 1
DEFINITIONS AND PRINCIPLES OF INTERPRETATION
1.1 DEFINED TERMS
As used in this Agreement, the following terms shall have the respective
meanings set forth below:
"Accredited Investor": As defined in Regulation D of the Securities Act.
"Affiliate": As to any Person, any other Person which, directly or
indirectly through one or more intermediaries, controls, or is controlled by,
or is under common control with, such Person.
"Affiliated Group": An "affiliated group" as defined in Section 1504(a)(1)
of the Code.
"XXXXX Material Adverse Effect": An adverse effect on the business,
properties, assets, condition (financial or otherwise), liabilities,
operations or prospects of the XXXXX Companies (taken as a whole) in an amount
in excess of $300,000.
"XXXXX Intercompany Indebtedness": Any advance, loan or credit provided to
any of the XXXXX Companies by any of the Spectra Companies or any of their
Affiliates (other than the XXXXX Companies).
"XXXXX Intercompany Receivables": Any advance, loan or credit provided by
any of the XXXXX Companies to any of the Spectra Companies or any of their
Affiliates (other than the XXXXX Companies), including, but not limited to,
any balances for the account of the XXXXX Companies maintained by the Spectra
Companies in subaccounts and other pooled cash funds or deposits.
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"XXXXX Net Intercompany Indebtedness": The aggregate amount of all XXXXX
Intercompany Indebtedness minus the aggregate amount of all XXXXX Intercompany
Receivables.
"Authorized Representative": As to any Person, such Person's officers,
directors, employees, counsel and accountants.
"Claims Period": Except as otherwise specifically provided in Section 10.1,
the period beginning on the Closing Date and ending on the first anniversary
of the Closing Date.
"Code": The Internal Revenue Code of 1986, as amended, and all regulations
promulgated thereunder, as in effect from time to time.
"Consent": Any consent, permission, approval or authorization of or by any
Person.
"Contract": Any written or oral contract, purchase or sale order, real or
personal property lease or sale agreement, Lien, promissory note, loan
agreement, guaranty or other agreement in which any of the XXXXX Companies or
the FLIR Companies, as applicable, is a party or by which any of the XXXXX
Companies or the FLIR Companies, as applicable, is bound (other than the
Employee Contracts) including, without limitation, all distributor, sales
representative and dealer agreements, joint venture and teaming agreements,
purchase and supply contracts, maintenance contracts, license and royalty
agreements, government contracts, partnering agreements, indebtedness
instruments, letters of credit, performance bonds, currency contracts,
agreements with respect to guaranties, suretyship, covenants not to compete or
solicit, confidentiality agreements and indemnification agreements, by or for
the benefit of the XXXXX Companies or the FLIR Companies, as applicable, or by
which any of the XXXXX Companies or the FLIR Companies, as applicable, is
bound, and all other contracts and agreements whatsoever, and all amendments
relating to any of the foregoing.
"Corporate Records": The articles of incorporation (including all amendments
thereto), bylaws (including all amendments thereto), similar organizational
documents (including all amendments thereto), minutes, unanimous written
consents, resolutions, stock records, stock transfer ledger, canceled
certificates and other documents customarily contained in corporate minute
books.
"Employee Contract": Any written or oral contract, agreement, arrangement,
policy, program, plan or practice (exclusive of any such contract which is
terminable within thirty (30) days without liability to the employer),
directly or indirectly providing for or relating to any employment,
consulting, remuneration, compensation or benefit, severance or other similar
arrangement, insurance coverage (including any self-insured arrangements),
medical-surgical-hospital or other health benefits, workers' compensation,
disability benefits, supplemental employment benefits, vacation benefits and
other forms of paid or unpaid leave, retirement benefits, tuition
reimbursement, deferred compensation, savings or bonus plans, profit-sharing,
stock options, stock appreciation rights, or other forms of incentive
compensation or post-retirement compensation or benefit, employment guarantee
or security, or limitation on right to discipline or discharge, or relating to
confidentiality, nonsolicitation, ownership of inventions, noncompetition or
the like, which is not a Plan.
"Employees": All current or former officers, directors, employees, agents,
or independent contractors.
"Employment Agreements": Executive Employment Agreement dated May 5, 1997
between FLIR and J. Xxxx Xxxxxx; Executive Employment Agreement dated May 5,
1997 between FLIR and Xxxxx X. Xxxxxxxxx; Executive Employment Agreement dated
May 5, 1997 between FLIR and Xxxxxxx X. Xxxxxx; Executive Employment Agreement
dated May 5, 1997 between FLIR and Xxxxxx X. Xxxxxx; Executive Employment
Agreement dated May 5, 1997 between FLIR and J. Xxxxxxx Xxxxxxxx III; and
Executive Employment Agreement dated May 5, 1997 between FLIR and Xxxxxx X.
Xxxxxxxxx.
"Environmental Laws": All present and future national, federal, provincial,
state and local laws (whether under common law, statute, rule, regulation or
otherwise), Permits, and other requirements of Governmental Authorities
relating to the protection of human health or the environment or to any
Hazardous Materials.
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"ERISA": The Employee Retirement Income Security Act of 1974, as amended,
and all regulations promulgated thereunder.
"ERISA Affiliates": Any trade or business, whether or not incorporated, that
is now or has at any time in the past been treated as a single employer with
any one or more of the XXXXX Companies or the FLIR Companies, as applicable,
under Section 414(b) or (c) of the Code and the Treasury Regulations
thereunder.
"Exchange Act": The Securities Exchange Act of 1934, as amended.
"FLIR Companies": FLIR and the FLIR Subsidiaries.
"FLIR Disclosure Schedule": The disclosure schedule dated the date of this
Agreement, delivered by FLIR to Stockholders and attached hereto, each page of
which has been initialed by a duly authorized officer of FLIR.
"FLIR Material Adverse Effect:" An adverse effect on the business,
properties, assets, condition (financial or otherwise), liabilities,
operations or prospects of the FLIR Companies (taken as a whole) in an amount
in excess of $300,000.
"FLIR Stock": Shares of voting Common Stock of FLIR, $0.01 par value, newly-
issued by FLIR (and not the transfer of treasury shares).
"FLIR Subsidiaries": Optimas Corporation, a Washington corporation
("Optimas"), Broadcast and Surveillance Systems, Ltd., a limited company
organized under the laws of the United Kingdom ("BSS"), FSI International,
Inc., a company organized under the laws of Barbados ("FSII"), and Xxxxxx
Optical Co., Inc., a California corporation ("Xxxxxx").
"GAAP": With respect to the XXXXX Companies, Swedish generally accepted
accounting principles in effect from time to time, and with respect to FLIR,
United States generally accepted accounting principles in effect from time to
time.
"Governmental Authority": Any national, federal, provincial, state or
municipal entity, any other government, or any political subdivision or other
executive, legislative, administrative, judicial, quasi-judicial or other
governmental department, commission, court, board, bureau, agency or
instrumentality, of any country, including, but not limited to, any of the
Pertinent Countries.
"Hazardous Materials": Materials that, because of their quantity,
concentration or physical, chemical or infectious characteristics, may cause
or pose a present or potential hazard to human health or the environment when
improperly used, treated, stored, disposed of, generated, manufactured,
transported or otherwise handled. "Hazardous Materials" shall include, but is
not limited to, any and all hazardous or toxic substances, materials or wastes
as defined or listed under any of the Environmental Laws. "Hazardous
Materials" shall specifically include, but not be limited to, petroleum or
petroleum products, including crude oil and any fraction thereof.
"Indebtedness": Any indebtedness for borrowed money or for the deferred
purchase price of property or services owned, or guarantee of such
indebtedness, excluding any trade payables and other accrued current
liabilities arising in the ordinary course of business, but including, but not
limited to, all obligations, contingent or otherwise, in connection with any
letters of credit, bonds, notes, debentures, conditional sale or other title
retention agreements, or other similar instruments.
"Intangible Property": All intellectual property rights, including, but not
limited to, patents, patent applications, trademarks, trademark applications
and registrations, service marks, service xxxx applications and registrations,
tradenames, copyrights, licenses and customer lists, proprietary processes,
formulae, inventions, trade secrets, know-how, development tools and other
proprietary rights used by any of the XXXXX Companies or the FLIR Companies,
as applicable, pertaining to any product, software or service manufactured,
marketed,
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licensed or sold by any of the XXXXX Companies or the FLIR Companies, as
applicable, in the conduct of its business or used, employed or exploited, or
available for use, in the development, licensing, sale, marketing,
distribution or maintenance thereof, and all documentation and media
constituting, describing or relating to the above, including, but not limited
to, manuals, memoranda, know-how, notebooks, software, records and
disclosures.
"Knowledge": With respect to the Spectra Companies, that which the Persons
listed on Schedule 1.1(a) actually knows or reasonably should know after
reviewing all relevant records and making due inquiries regarding the relevant
matter. With respect to the FLIR Companies, that which the Persons listed on
Schedule 1.1(b) actually knows or reasonably should know after reviewing all
relevant records and making due inquiries regarding the relevant matter.
"Lien": Any mortgage, pledge, lien, charge, encumbrance, security interest,
claim or restriction of any kind.
"Loss": Any and all loss, damage, claim, obligation, liability, cost and
expense (including, without limitation, reasonable attorney and other
professional fees and costs and expenses incurred in investigating, preparing,
defending against or prosecuting any Proceeding).
"Order": Any judgment, writ, injunction, order, directive, ruling or decree
of any arbitrator or any court or other Governmental Authority.
"Permit": Any permit, license, franchise, consent, variance, exemption, or
approval issued or granted by, or authorization of, expiration or termination
of any waiting period requirement by, or filing, registration, qualification,
declaration or designation with, any Governmental Authority.
"Person": Any individual or corporation, company, general partnership,
limited partnership, limited liability company, limited liability partnership,
trust, incorporated or unincorporated association, joint venture, Governmental
Authority or other entity of any kind.
"Pertinent Countries": Sweden, Canada, France, Germany, the United Kingdom,
Italy and the United States.
"Plans": All plans, programs, policies, contracts and arrangements providing
for bonuses, incentives, pensions, retirement, deferred compensation, profit
sharing, stock or stock-related awards, severance pay, salary continuation or
similar benefits, hospitalization, medical, dental or disability benefits,
life insurance or other employee benefits, or compensation to or for any
Employees or any beneficiaries or dependents of any Employee, whether or not
insured or funded, and all other material employee benefit plans, programs,
agreements and arrangements sponsored, maintained or contributed to, or
required to be sponsored, maintained or contributed to, by any of the XXXXX
Companies or the FLIR Companies, as applicable.
"Proceeding": Any claim, suit, action, arbitration, government investigation
or proceeding.
"Real Property": All real property now or in the past owned, leased or
occupied by any of the XXXXX Companies or the FLIR Companies, as applicable,
or any other Person to which any of the XXXXX Companies or the FLIR Companies,
as applicable, is or is deemed to be a successor in interest, whether directly
or indirectly (including, without limitation, by merger, under applicable
Environmental Laws or otherwise), or in which any of the XXXXX Companies or
the FLIR Companies, as applicable, or any such other Person has now or in the
past had any interest, together with (i) all buildings and improvements
located thereon and (ii) all rights, privileges, interests, easements,
hereditaments and appurtenances relating thereto.
"Release": Any spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, migration, dumping or disposing
into the environment.
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"Relevant Insider": Any holder of more than 10% of the outstanding shares
of, and any officer, director, manager or purchasing agent of, any of the
XXXXX Companies or the FLIR Companies, as applicable.
"SEC": The Securities and Exchange Commission.
"Securities Act": The Securities Act of 1933, as amended.
"Spectra Disclosure Schedule": The disclosure schedule dated the date of
this Agreement, delivered by the Spectra Companies to FLIR and attached
hereto, each page of which has been initialed by a duly authorized officer of
Spectra and XXXXX.
"Subsidiary": As to any Person, any other Person of which at least the
majority of the equity or voting interests are owned, directly or indirectly,
by such first Person.
"Tax": Any income, profits, corporation, capital gains, excise, franchise,
sales, turnover, value added, use, transfer, gross receipts, payroll,
occupation, social security, personal property, real property, occupancy or
other tax, customs, duty, levy, impost, fee, imposition, assessment,
contribution, withholding or similar charge, together with any related
addition to tax, interest or penalty thereon, of any Governmental Authority.
"Tax Affiliate": With respect to any Person, any other Person that is a
member of the same Affiliated Group as such Person.
"Tax Period" or "Taxable Period": Any period prescribed by any Governmental
Authority for which a Tax Return is required to be filed or a Tax is required
to be paid.
"Tax Return": Any type of return or report required to be filed as a result
of any Tax, and any return or informational report required to be filed under
the Code or any other tax law, statute, rule or regulation of any Governmental
Authority.
"Transaction": The execution, delivery and performance of this Agreement and
the other agreements contemplated hereby, including the acquisition by FLIR of
the Target Stock in exchange for FLIR Stock and cash, as applicable, the other
transactions contemplated by this Agreement, and the other actions required in
connection therewith.
1.2 CERTAIN RULES OF INTERPRETATION.
1.2.1 The name assigned to this Agreement and the section captions used
herein are for convenience of reference only and shall not affect the
interpretation or construction hereof. Unless otherwise specified, (a) the
terms "hereof," "herein" and similar terms refer to this Agreement as a whole
and (b) references herein to "Articles" or "Sections" refer to articles or
sections of this Agreement.
1.2.2 The use of words in the singular or plural, or with a particular
gender, shall not limit the scope or exclude the application of any provision
of this Agreement to such Person or Persons or circumstances as the context
otherwise permits.
1.2.3 Time is of the essence in the performance of the parties' respective
obligations.
1.2.4 Unless otherwise specified, all references to money amounts are to
U.S. currency.
1.3 EXHIBITS AND SCHEDULES.
The exhibits and schedules to this Agreement, as listed below, are
incorporated by this reference into this Agreement:
FLIR Disclosure Schedule
Spectra Disclosure Schedule
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Schedule 1.1(a) -- List of the Spectra Companies' Knowledge Persons
Schedule 1.1(b) -- List of the FLIR Companies' Knowledge Persons
Schedule 8.1.8 -- List of Agreements Between Spectra Companies and the
XXXXX Companies to Remain in Effect
Schedule 8.1.9 -- List of Transferred Liabilities, Indebtedness and
Liens
Exhibit 3.2.2 -- Registration Rights Agreement
Exhibit 3.2.5 -- Opinions of Counsel for the Spectra Companies and the
XXXXX Companies
Exhibit 3.3.5 -- Opinion of Counsel for FLIR
1.4 ACCOUNTING PRINCIPLES
All references, if any, to generally accepted accounting principles means to
GAAP and all accounting terms, if any, not otherwise defined in this Agreement
have the meanings assigned to them in accordance with GAAP.
ARTICLE 2
SALE AND PURCHASE OF XXXXX STOCK
SALE AND PURCHASE OF XXXXX CANADA STOCK
SALE AND PURCHASE OF XXXXX UK STOCK
EXCHANGE OF XXXXX USA STOCK
DELIVERY OF FLIR STOCK
2.1 SALE AND PURCHASE OF XXXXX STOCK
Subject to the terms and conditions of this Agreement and in reliance upon
the representations, warranties and agreements of the parties hereto, on the
Closing Date, Spectra shall sell and transfer to FLIR and FLIR shall buy from
Spectra the XXXXX Stock free and clear of all Liens. The purchase price to be
paid by FLIR to Spectra at the Closing will consist of an aggregate number of
three million nine hundred twelve thousand two hundred eighty (3,912,280)
shares of FLIR Stock plus One hundred Dollars ($100). The FLIR Stock shall be
newly-issued shares and not treasury shares.
2.2 SALE AND PURCHASE OF XXXXX CANADA STOCK
Subject to the terms and conditions of this Agreement and in reliance upon
the representations, warranties and agreements of the parties hereto, on the
Closing Date, Spectra shall sell and transfer to FLIR and FLIR shall buy from
Spectra the XXXXX Canada Stock free and clear of all Liens. The purchase price
to be paid by FLIR to Spectra at the Closing will consist of an aggregate
number of forty one thousand six hundred twenty (41,620) shares of FLIR Stock
plus Thirty Dollars ($30). The FLIR Stock shall be newly-issued shares and not
treasury shares.
2.3 SALE AND PURCHASE OF XXXXX UK STOCK
Subject to the terms and conditions of this Agreement and in reliance upon
the representations, warranties and agreements of the parties hereto, on the
Closing Date, Spectra UK shall sell and transfer to FLIR and FLIR shall buy
from Spectra UK the XXXXX UK Stock free and clear of all Liens. The purchase
price to be paid by FLIR to Spectra UK at the Closing will consist of an
aggregate number of one hundred eighty three thousand one hundred twenty eight
(183,128) shares of FLIR Stock plus Twenty Dollars ($20). The FLIR Stock shall
be newly-issued shares and not treasury shares.
2.4 EXCHANGE OF XXXXX USA STOCK
Subject to the terms and conditions of this Agreement and in reliance upon
the representations, warranties and agreements of the parties hereto, on the
Closing Date, Pharos shall deliver or cause to be delivered to FLIR the XXXXX
USA Stock. In exchange for the XXXXX USA Stock, FLIR shall issue to Pharos an
aggregate
7
number of twenty four thousand nine hundred seventy two (24,972) shares of
FLIR Stock. The FLIR Stock shall be newly-issued shares and not treasury
shares.
2.5 DELIVERY OF SHARES
2.5.1 At the Closing, Stockholders, as holders of all certificates
representing all outstanding shares of the Target Stock, shall, upon surrender
of such certificates, be entitled to receive the cash and the number of shares
of FLIR Stock described in Sections 2.1, 2.2, 2.3 and 2.4.
2.5.2 Stockholders shall deliver the certificates representing the Target
Stock, duly endorsed in blank by Stockholders along with all other instruments
of endorsement necessary to effect the transfer of such shares under
applicable law, with signatures notarized, and with all necessary transfer tax
and other revenue stamps, acquired at Stockholders' expense, affixed and
canceled. Stockholders agree to cure any deficiencies with respect to the
endorsement of the certificates or other documents of conveyance with respect
to such Target Stock or with respect to the stock powers or other instruments
of conveyance accompanying any Target Stock.
ARTICLE 3
CLOSING
3.1 CLOSING
Subject to the terms and conditions of this Agreement, the closing of the
exchange and delivery of shares pursuant to Article 2 hereof (the "Closing")
shall take place at FLIR's offices in Portland, Oregon, at 8:00 a.m. Pacific
Standard Time on the later of (i) November 26, 1997 or (ii) three business
days after receipt of FLIR shareholder consent, or such earlier or later date
as the parties may mutually agree upon in writing (the "Closing Date"). The
time of the Closing shall be referred to as the "Effective Time."
3.2 DELIVERIES BY STOCKHOLDERS
At Closing, Stockholders shall deliver, or cause to be delivered, to FLIR
the following:
3.2.1 The certificates representing the Target Stock, duly endorsed in blank
or with duly executed stock powers or instruments of conveyance attached;
3.2.2 Duly executed original counterparts of a Registration Rights Agreement
in substantially the form of attached Exhibit 3.2.2 (the "Registration Rights
Agreement");
3.2.3 Spectra's Bring-Down Certificate (hereinafter defined);
3.2.4 A certified copy of the resolutions duly adopted by the Board of
Directors and stockholders of each of the Spectra Companies authorizing the
Transaction;
3.2.5 Opinions of counsel for the Spectra Companies and the XXXXX Companies,
dated as of the Closing Date, to the effect and substantially in the form set
forth in Exhibit 3.2.5;
3.2.6 An affidavit executed by Pharos to the effect that Pharos is not a
"foreign person" within the meaning of Section 1445 of the Code;
3.2.7 Affidavits executed by each of the XXXXX Companies (other than XXXXX
USA) that it has not made an election, pursuant to Section 897(i) of the Code
and US Treasury Regulations Section 1.897-3, to be treated as a U.S. domestic
corporation for purposes of Code Sections 897, 1445 and 6039C;
3.2.8 Evidence satisfactory to FLIR that the European Subsidiaries Stock has
been duly registered in XXXXX'x name on the share transfer books and official
registries of the European Subsidiaries;
8
3.2.9 Evidence satisfactory to FLIR that the Target Stock has been duly
registered in FLIR's name on the share transfer books and official registries
of the XXXXX Companies; and
3.2.10 Such other agreements and documents, the delivery of which is
specified in Article 8 as a condition to FLIR's closing obligations, and such
other agreements, documents, certificates and instruments as FLIR may
reasonably request.
3.3 DELIVERIES BY FLIR
At the Closing, FLIR shall deliver to Stockholders the following:
3.3.1 The shares of FLIR Stock and cash due Stockholders in accordance with
Section 2.5.1;
3.3.2 Duly executed original counterparts of the Registration Rights
Agreement;
3.3.3 FLIR's Bring-Down Certificate (hereinafter defined);
3.3.4 Certified copies of the resolutions duly adopted by the Board of
Directors and stockholders of FLIR authorizing the Transaction;
3.3.5 An opinion of Ater Xxxxx Xxxxxx Xxxxxx & Xxxxxxxx, counsel for FLIR,
dated as of the Closing Date, to the effect and substantially in the form set
forth in Exhibit 3.3.5;
3.3.6 Evidence satisfactory to Stockholders that the FLIR Stock has been
duly registered in Stockholders' names on the share transfer books of FLIR;
and
3.3.7 Such other agreements and documents, the delivery of which is
specified in Article 8 as a condition to Stockholders' closing obligations,
and such other agreements, documents, certificates and instruments as
Stockholders may reasonably request.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES BY THE SPECTRA COMPANIES
As a material inducement to FLIR to enter into this Agreement, the Spectra
Companies jointly and severally represent and warrant to FLIR as of the date
hereof and as of the Closing Date that, except as set forth in the Spectra
Disclosure Schedule:
4.1 SPECTRA COMPANIES' ORGANIZATION AND QUALIFICATION
Spectra is a corporation duly organized and validly existing under the laws
of Sweden. Spectra France is a corporation duly organized and validly existing
under the laws of France. Spectra Germany is a corporation duly organized and
validly existing under the laws of Germany. Spectra UK is a public limited
company duly organized and validly existing under the laws of the United
Kingdom. Pharos is a corporation duly organized and validly existing under the
laws of the state of Delaware. Each of the Spectra Companies is duly licensed
or qualified and in good standing (to the extent that the concept of good
standing exists in the relevant jurisdiction) as a foreign corporation in each
jurisdiction in which it is required to be so licensed or so qualified, except
where the failure to be so qualified will not have a material adverse effect
on the business, properties, assets, condition (financial or otherwise),
liabilities, operations or prospects of the Spectra Companies, taken as a
whole. Each of the Spectra Companies has the corporate power to own its
properties and to carry on its business as it is now being conducted. None of
the Spectra Companies is bankrupt or insolvent or has committed any act of
bankruptcy or entered into any scheme or composition or arrangement with its
creditors.
9
4.2 SPECTRA COMPANIES' AUTHORITY RELATIVE TO THIS AGREEMENT
4.2.1 Each of the Spectra Companies has the corporate power to enter into
this Agreement and to carry out its obligations hereunder.
4.2.2 The Transaction has been duly authorized by the Board of Directors of
each of the Spectra Companies. No other corporate proceedings on the part of
any of the Spectra Companies are necessary to authorize the Transaction.
4.2.3 This Agreement constitutes a valid and binding obligation of each of
the Spectra Companies, enforceable against each of them in accordance with its
terms except as enforcement may be limited by bankruptcy, insolvency or other
similar laws affecting the enforcement of creditors' rights generally, and
except that the availability of equitable remedies, including specific
performance, is subject to the discretion of the court in which any such
Proceeding therefor may be brought.
4.2.4 Neither the execution, delivery or performance of this Agreement, or
any other agreement relating hereto, or any other aspect of the Transaction,
will: (a) require any Consent of the shareholders of the Spectra Companies;
(b) conflict with, or violate any provision of, or constitute or result in a
breach or default (with or without notice, lapse of time or both) or give rise
to a right of termination, cancellation or acceleration of any obligation or
the loss of any material benefit, under (i) any charter or bylaw of any of the
Spectra Companies, or (ii) any indenture, loan document provision or other
Contract, Permit, Order, statute, law, ordinance, rule or regulation
applicable to any of the Spectra Companies or their properties or assets; or
(c) result in or require the imposition of any Lien with respect to, or upon,
any of the Spectra Companies or its properties or assets, except where any
item noted in (a) through (c) will not have an XXXXX Material Adverse Effect.
4.2.5 None of the Spectra Companies is subject to or obligated under (i) any
charter or bylaw, or (ii) any indenture, loan document provision or any other
contract, Permit, Order, lease, instrument, statute, law, ordinance, rule or
regulation applicable to any of the Spectra Companies or their respective
properties or assets which would be breached or violated, or under which there
would be a default (with or without notice or lapse of time, or both), as a
result of any aspect of the Transaction.
4.2.6 No Permit or Consent is necessary for the consummation by the Spectra
Companies or the XXXXX Companies of the Transaction.
4.3 TITLE TO COMPANIES STOCK
The Spectra Companies are the lawful record and beneficial owners of the
XXXXX Companies Stock, in the amounts set forth opposite their respective
names in Section 4.3(i) of the Spectra Disclosure Schedule. Immediately before
the Closing, Stockholders will be the lawful record and beneficial owners of
the Target Stock, in the amounts set forth opposite their respective names in
Section 4.3(ii) of the Spectra Disclosure Schedule. Immediately before the
Closing, XXXXX will be the lawful record and beneficial owner of the European
Subsidiaries Stock, in the amounts set forth in Section 4.3(iii) of the
Spectra Disclosure Schedule, free and clear of all Liens. Before Closing, all
actions required under applicable law to reflect XXXXX as the record owner of
the European Subsidiaries Stock shall have been taken. Immediately before the
Closing, Stockholders will have, good, valid and indefeasible title to the
Target Stock, free and clear of all Liens, with full right and lawful
authority to sell and transfer the Target Stock. Before Closing, all action
required under applicable law to reflect Stockholders as the record owners of
the Target Stock shall have been taken.
4.4 TRANSFER OF TITLE
Upon delivery of the Target Stock as provided in Section 2.5.1, FLIR will
acquire good beneficial and legal, valid and indefeasible title to the Target
Stock, free and clear of all Liens arising with respect to the Target Stock
prior to Closing.
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4.5 XXXXX COMPANIES' ORGANIZATION AND QUALIFICATION
Each of XXXXX, XXXXX Canada, XXXXX France, XXXXX Germany, XXXXX UK and XXXXX
USA is a corporation duly organized and validly existing under the laws of
Sweden, Canada, France, Germany, the United Kingdom and the state of Delaware,
United States, respectively. At Closing, XXXXX Italy will be a corporation
duly organized and validly existing under the laws of Italy. Each of the XXXXX
Companies is duly licensed or qualified and in good standing (to the extent
that the concept of good standing exists in the relevant jurisdiction) as a
foreign corporation in each jurisdiction in which it is required to be so
licensed or so qualified, except where the failure to be so qualified will not
have an XXXXX Material Adverse Effect. None of the XXXXX Companies is bankrupt
or insolvent or has committed any act of bankruptcy or entered into any scheme
or composition or arrangement with its creditors.
4.6 CAPITALIZATION
The authorized number of shares of capital stock of each of the XXXXX
Companies, and the par value thereof, is described in Section 4.6 of the
Spectra Disclosure Schedule. The XXXXX Companies Stock constitutes all of the
issued and outstanding stock or equity interests in the XXXXX Companies as of
the date hereof and as of the Closing Date. The XXXXX Companies Stock were
duly authorized, validly issued, fully paid and nonassessable. No shares of
the XXXXX Companies' capital stock are held in the XXXXX Companies' treasury.
As of the date hereof, there are no bonds, debentures, notes or other
evidences of indebtedness having the right to vote on any matters on which any
shareholders of the XXXXX Companies may vote issued or outstanding. There are
no subscriptions, options, warrants, calls, or other rights (including, but
not limited to, preemptive rights), agreements or commitments outstanding
which obligate any of the XXXXX Companies to issue, deliver, sell or otherwise
cause to become outstanding any of its capital stock or debt securities, or
which obligate any of the XXXXX Companies to grant, extend or enter into any
such option, warrant, call or other such right, agreement or commitment. There
are no outstanding or authorized stock appreciation, phantom stock, profit
participation or similar rights with respect to any of the XXXXX Companies.
4.7 SUBSIDIARIES
None of the XXXXX Companies has any Subsidiaries, other than the European
Subsidiaries, which at Closing shall be wholly-owned subsidiaries of XXXXX.
None of the XXXXX Companies has any equity investment or other interest in or
has made advances to, any Person.
4.8 XXXXX COMPANIES' AUTHORITY RELATIVE TO THIS AGREEMENT
4.8.1 Except as described in Section 4.8 of the Spectra Disclosure Schedule,
neither the execution, delivery or performance of this Agreement, or any other
agreement relating hereto, or any other aspect of the Transaction, will: (a)
require any Consent of the Board of Directors or the shareholders of the XXXXX
Companies; (b) conflict with, or violate any provision of, or constitute or
result in a breach or default (with or without notice, lapse of time or both)
or give rise to a right of termination, cancellation or acceleration of any
obligation or the loss of any material benefit, under (i) any charter or bylaw
of any of the XXXXX Companies, or (ii) any indenture, loan document provision
or other Contract, Permit, Order, statute, law, ordinance, rule or regulation
applicable to any of the XXXXX Companies or its properties or assets; or (c)
result in or require the imposition of any Lien with respect to, or upon, any
of the XXXXX Companies or its properties or assets.
4.8.2 None of the XXXXX Companies is subject to or obligated under (i) any
charter or bylaw, or (ii) any indenture, loan document provision or any other
contract, Permit, Order, lease, instrument, statute, law, ordinance, rule or
regulation applicable to any of the XXXXX Companies or their respective
properties or assets which would be breached or violated, or under which there
would be a default (with or without notice or lapse of time, or both), as a
result of any aspect of the Transaction.
11
4.9 FINANCIAL STATEMENTS
4.9.1 The Spectra Companies have previously furnished FLIR with true and
complete copies of the (i) combined audited balance sheets of the XXXXX
Companies as of December 31, 1995 and 1996, (ii) related combined audited
statements of income, stockholders' equity and cash flows for the periods
ending December 31, 1994, 1995 and 1996 (including all audit opinions and all
notes accompanying such statements), (iii) combined unaudited balance sheet as
of June 30, 1997, and (iv) related combined unaudited statement of income and
cash flows for the six months ending June 30, 1997. All such balance sheets
and statements covered by (i) through (iv) are collectively referred to in
this Agreement as the "XXXXX Combined Financial Statements."
4.9.2 The XXXXX Combined Financial Statements are in accordance with the
books and records of the XXXXX Companies and fairly present the financial
position, results of operations and cash flows of the XXXXX Companies as of
the dates and for the periods indicated, in each case in conformity with GAAP
consistently applied, except as otherwise indicated in such XXXXX Combined
Financial Statements, and in the case of unaudited XXXXX Combined Financial
Statements, subject to normal year-end adjustments, the absence of footnotes
and other disclosures associated with an audited report. The XXXXX Combined
Financial Statements for June 30, 1997 include all consolidating information
required by GAAP for the XXXXX Companies and accurately reflect in all
material respects, consistent with past practice, the allocation of revenues
and expenses between the XXXXX Companies. To the Spectra Companies' Knowledge,
(i) the XXXXX Combined Financial Statements provide fully for all fixed and
non-contingent liabilities of the XXXXX Companies and disclose or provide
fully for all contingent liabilities of a type required to be disclosed or
provided for in financial statements in accordance with GAAP and (ii) all
prepaid expenses, if any, included as assets of the XXXXX Companies represent
payments theretofore made by the XXXXX Companies, the benefit and advantage of
which may be obtained or enjoyed by the XXXXX Companies, as applicable, after
the Closing Date.
4.9.3 To the Spectra Companies' Knowledge, the XXXXX Companies do not have
any indebtedness, liabilities or obligations of their own or of any
predecessor in interest (whether known or unknown, accrued, absolute,
contingent or otherwise or whether due or to become due) of any nature
whatsoever which are not disclosed or provided for in the most recent balance
sheet contained in the XXXXX Combined Financial Statements, other than (i)
liabilities and obligations incurred between June 30, 1997 and the date hereof
in the ordinary course of the business of the XXXXX Companies, consistent with
past practice and (ii) except as otherwise disclosed in this Agreement,
including the Spectra Disclosure Schedule. To Spectra Companies' Knowledge,
there is no basis for any such indebtedness, liability or obligation (whether
known or unknown, accrued, absolute, contingent or otherwise or whether due or
to become due) of any nature whatsoever against the XXXXX Companies, which is
or would have an XXXXX Material Adverse Effect, not reflected in the most
recent balance sheet contained in the XXXXX Combined Financial Statements.
4.10 ABSENCE OF CERTAIN CHANGES OR EVENTS
Since December 31, 1996, except as disclosed in Section 4.10 of the Spectra
Disclosure Schedule, there has not been:
4.10.1 any material adverse change in the business, financial condition,
liabilities (net of any corresponding increase in assets), results of
operations or, to the Spectra Companies' Knowledge, prospects of any of the
XXXXX Companies, other than changes in laws or regulations of general
applicability;
4.10.2 any damage, destruction or loss, whether covered by insurance or not,
materially and adversely affecting the financial condition, prospects,
properties or businesses of any of the XXXXX Companies;
4.10.3 any declaration, payment or setting aside for payment of any dividend
or other distribution (whether in cash, stock or property) with respect to the
capital stock of any of the XXXXX Companies or any direct or indirect
redemption, purchase or other acquisition of any shares of capital stock of
any of the XXXXX Companies;
12
4.10.4 any accrual or arrangement for or payment by any of the XXXXX
Companies of severance bonuses or special compensation of any kind to any
director, officer or Employee of the XXXXX Companies;
4.10.5 any sale or other transfer by any of the XXXXX Companies of any
material tangible or intangible asset, any granting of a Lien relating to any
such material asset, any lease of real property or equipment, or any
cancellation of any debt or claim, except any transaction involving the above
made in the ordinary course of business;
4.10.6 any incurrence by any of the XXXXX Companies of any obligation or
liability (absolute or contingent), except current obligations and liabilities
incurred in the ordinary course of business in amounts and on terms consistent
with past practices;
4.10.7 any material change in accounting methods or principles or any
revaluation of any of the assets of any of the XXXXX Companies (including,
without limitation, any change in depreciation or amortization policies or
rates);
4.10.8 any amendment or termination of any Contract or Permit to which any
of the XXXXX Companies is a party, except in the ordinary course of business
or where the same could not reasonably be expected to have an XXXXX Material
Adverse Effect;
4.10.9 any loan by any of the XXXXX Companies to any Person or guaranty by
any of the XXXXX Companies of any loan, other than inter-company advances
among the XXXXX Companies made in the ordinary course of business and of an
amount consistent with past practices;
4.10.10 any inter-company transaction between any of the XXXXX Companies and
any of the Spectra Companies, other than transactions contemplated by this
Agreement and made in the ordinary course of business and of an amount
consistent with past practices;
4.10.11 any waiver or release of any material right or claim of any of the
XXXXX Companies, except in the ordinary course of business;
4.10.12 any commencement or notice or, to the Spectra Companies' Knowledge,
threat of commencement of any Proceeding against or investigation of any of
the XXXXX Companies; or
4.10.13 any actual or threatened strike or other labor trouble or dispute or
claim of wrongful discharge or other unlawful labor practice or action
involving any of the XXXXX Companies which could reasonably be expected to
have an XXXXX Material Adverse Effect.
4.11 LITIGATION
Except as disclosed in Section 4.11 of the Spectra Disclosure Schedule,
there is no Proceeding pending or, to the Spectra Companies' Knowledge,
threatened against any of the XXXXX Companies which, either alone or in the
aggregate, could reasonably be expected to have an XXXXX Material Adverse
Effect, nor is there any Order outstanding against any of the XXXXX Companies
having, or which in the future could reasonably be expected to have, either
alone or in the aggregate, any XXXXX Material Adverse Effect.
4.12 TAXES
4.12.1 The Spectra Companies and the XXXXX Companies have accurately
prepared and timely filed all material Tax Returns required to be filed with
respect to the XXXXX Companies at or before the Effective Time and such Tax
Returns are true and correct in all material respects and have been completed
in all material respects in accordance with applicable law.
13
4.12.2 The Spectra Companies and the XXXXX Companies as of the Effective
Time: (i) will have paid all Taxes they are required to pay (including, but
not limited to, all estimated Taxes due) with respect to the XXXXX Companies
prior to the Effective Time and (ii) will have withheld with respect to the
XXXXX Companies' employees all Taxes required to be withheld, except where any
failure to make such payment or withholding would not be reasonably likely to
have an XXXXX Material Adverse Effect.
4.12.3 There is no material Tax deficiency outstanding, proposed in writing
or assessed against any of the XXXXX Companies that is not reflected as a
liability on the most recent balance sheet contained in the XXXXX Combined
Financial Statements nor has any of the XXXXX Companies executed any waiver of
any statute of limitations on or extending the period for the assessment or
collection of any Tax.
4.12.4 The XXXXX Companies do not have any material liabilities for unpaid
Taxes that have not been accrued for or reserved on the XXXXX Combined
Financial Statements, whether asserted or unasserted, contingent or otherwise.
4.13 COMPLIANCE WITH PERMITS, APPLICABLE LAWS AND AGREEMENTS
4.13.1 To the Spectra Companies' Knowledge, except as disclosed in Section
4.13 of the Spectra Disclosure Schedule, each of the XXXXX Companies holds all
Permits, the failure of which to hold would have an XXXXX Material Adverse
Effect (the "XXXXX Material Permits"). Each of the XXXXX Companies is in
compliance with the terms of the XXXXX Material Permits, except for such
failures to comply which, individually or in the aggregate, would not have an
XXXXX Material Adverse Effect.
4.13.2 To the Spectra Companies' Knowledge, except as disclosed in Section
4.13 of the Spectra Disclosure Schedule, the business of each of the XXXXX
Companies is being conducted in compliance with all laws, ordinances and
regulations of all Governmental Authorities (including, but not limited to,
laws pertaining to customs and duties, employment and employment practices,
terms and conditions of employment, wages and hours, safety, health, fire
prevention and other matters), except for possible violations which
individually or in the aggregate do not and would not have an XXXXX Material
Adverse Effect.
4.13.3 To the Spectra Companies' Knowledge, except as disclosed in Section
4.13 of the Spectra Disclosure Schedule, none of the XXXXX Companies is in
default (and not in a circumstance which, with notice or lapse of time, or
both, would constitute a default) under any agreement or instrument to which
such XXXXX Company is a party, whether or not such default has been waived,
except for any such default which, alone or in the aggregate with other such
defaults, would not have an XXXXX Material Adverse Effect.
4.13.4 The provisions of this Section shall not be construed or applied to
narrow or otherwise restrict the scope of any other representations and
warranties in this Article 4.
4.14 EMPLOYEE PLANS AND BENEFIT ARRANGEMENTS
4.14.1 The Spectra Companies have set forth in Section 4.14 of the Spectra
Disclosure Schedule all Plans for the benefit of, or relating to, any current
or former employee of the XXXXX Companies or any ERISA Affiliate of the XXXXX
Companies.
4.14.2 With respect to each such Plan, the Spectra Companies have made
available to FLIR, a true and correct copy of (i) the most recent annual
report filed with the applicable Governmental Authority, (ii) such Plan, (iii)
each trust agreement and group annuity contract, if any, relating to such Plan
and (iv) the most recent actuarial report or valuation relating to such Plan.
4.14.3 With respect to such Plans, individually and in the aggregate, no
event has occurred, and to the Spectra Companies' Knowledge, there exists no
condition or set of circumstances in connection with which any of the XXXXX
Companies could be subject to any liability that is reasonably likely to have
an XXXXX Material Adverse Effect under ERISA, the Code or any other applicable
law.
14
4.14.4 With respect to such Plans, individually and in the aggregate, there
are no funded benefit obligations for which contributions have not been made
or properly accrued and there are no unfunded benefit obligations which have
not been accounted for by reserves, or otherwise properly footnoted in
accordance with GAAP, on the XXXXX Combined Financial Statements, which
obligations are reasonably expected to have an XXXXX Material Adverse Effect.
4.14.5 Except as disclosed in Section 4.14 of the Spectra Disclosure
Schedule, there are no pending petitions for recognition of a labor union,
confederation or association as the exclusive bargaining agent for any of the
Employees of any of the XXXXX Companies; no such petitions have been pending
at any time within two years of the date of this Agreement, and, to the
Spectra Companies' Knowledge, there has not been any organizing effort by any
union, confederation or association or other group seeking to represent any
Employees of any of the XXXXX Companies as their exclusive bargaining agent at
any time within two years of the date of this Agreement. There are no labor
strikes, work stoppages or other labor troubles, other than routine grievance
matters, now pending or, to the Spectra Companies' Knowledge, threatened
against any of the XXXXX Companies.
4.14.6 The XXXXX Companies have performed their duty to inform their
respective employees about the Transaction in accordance with applicable law,
if any, concerning the employees' right to participate in the decision making
process, including but not limited to, any requirements under the
"medbestammande i arbetslivet (co-determination at the workplace), Swedish Law
1976:580.
4.15 TITLE TO ASSETS
Each of the XXXXX Companies has good and marketable title to all of its
leasehold interests and other assets as described in the most recent balance
sheet contained in the XXXXX Combined Financial Statements and in the Spectra
Disclosure Schedule, except for such assets that have been disposed of in the
ordinary course of business since the date of such balance sheet, free and
clear of all Liens, except (i) the Lien for current taxes, payments of which
are not yet delinquent, (ii) such imperfections in title and easements and
encumbrances, if any, as are not substantial in character, amount or extent
and do not materially detract from the value or interfere with the present use
of the property subject thereto or affected thereby, or otherwise materially
impair the XXXXX Companies' business operations, or (iii) as otherwise set
forth in Section 4.15 of the Spectra Disclosure Schedule, and except for such
matters which, individually or in the aggregate, could not reasonably be
expected to have an XXXXX Material Adverse Effect. All leases under which the
XXXXX Companies lease any real or personal property are in good standing,
valid and effective in accordance with their respective terms, and there is
not, under any of such leases, any existing default or event which with notice
or lapse of time or both would become a default other than failures to be in
good standing, valid and effective and defaults under such leases which in the
aggregate will not have an XXXXX Material Adverse Effect. None of the XXXXX
Companies owns any real property, of record or beneficially.
4.16 INTANGIBLE PROPERTY
4.16.1 The XXXXX Companies own, or are licensed or otherwise possess legally
enforceable rights to use, all patents, trademarks, trade names, service
marks, copyrights, and any applications for such patents, trademarks, trade
names, service marks and copyrights, processes, formulae, methods, schematics,
technology, know-how, computer software programs or applications and tangible
or intangible proprietary information or material that are necessary to
conduct the business of the XXXXX Companies as currently conducted, or
proposed to be conducted, the absence of which would be reasonably likely to
have an XXXXX Material Adverse Effect (the "XXXXX Intellectual Property
Rights"). Section 4.16 of the Spectra Disclosure Schedule lists (i) all
patents and patent applications and all trademarks, registered copyrights,
trade names and service marks material to the XXXXX Companies' business and
included in the XXXXX Intellectual Property Rights, including the
jurisdictions in which each such XXXXX Intellectual Property Right has been
issued or registered or in which any such application for such issuance and
registration has been filed, (ii) all material licenses, sublicenses and other
agreements as to which any of the XXXXX Companies is a party and pursuant to
which
15
any person is authorized to use any XXXXX Intellectual Property Rights, and
(iii) all material licenses, sublicenses and other agreements as to which any
of the XXXXX Companies is a party and pursuant to which any of the XXXXX
Companies is authorized to use any third-party patents, trademarks or
copyrights, including software ("XXXXX Third Party Intellectual Property
Rights") which are incorporated in, are, or form a part of any product of any
of the XXXXX Companies that is material to their business.
4.16.2 None of the XXXXX Companies is, nor will it be as a result of the
execution and delivery of this Agreement or the performance of its obligations
under this Agreement, in breach of any license, sublicense or other agreement
relating to the XXXXX Intellectual Property Rights or XXXXX Third Party
Intellectual Property Rights, the breach of which would be reasonably likely
to have an XXXXX Material Adverse Effect.
4.16.3 To the Spectra Companies' Knowledge, all patents, registered
trademarks, service marks and copyrights held by the XXXXX Companies are valid
and subsisting. Except as set forth in Section 4.16 of the Spectra Disclosure
Schedule, the XXXXX Companies (i) have not been sued in any suit, action or
proceeding which involves a claim of infringement of any patents, trademarks,
service marks, copyrights or violation of any trade secret or other
proprietary right of any third party; and (ii) have no knowledge that the
manufacturing, marketing, licensing or sale of their products infringes any
patent, trademark, service xxxx, copyright, trade secret or other proprietary
right of any third party, which such infringement would reasonably be expected
to have an XXXXX Material Adverse Effect.
4.17 ENVIRONMENTAL MATTERS
4.17.1 To the Spectra Companies' Knowledge, each of the XXXXX Companies, and
each of such Company's assets, properties and operations are now and at all
times have been in compliance in all material respects with all applicable
Environmental Laws. To the Spectra Companies' Knowledge, there has not been
any Release or threatened Release of any Hazardous Material at, on, under, in,
to or from any of the XXXXX Companies' Real Property which relates to any
Company's operations and activities at such Real Property or otherwise. None
of the XXXXX Companies has received any notice of alleged, actual or potential
responsibility for, or any Proceeding regarding, the presence, Release or
threatened Release of any Hazardous Material at any location, whether at the
XXXXX Companies' Real Property or otherwise, which Hazardous Materials were
allegedly manufactured, used, generated, processed, treated, stored, disposed
or otherwise handled at or transported from the XXXXX Companies' Real Property
or otherwise.
4.17.2 None of the XXXXX Companies has received any notice of any Proceeding
by any Person alleging any actual or threatened injury or damage to any
Person, property, natural resource or the environment arising from or relating
to the presence, Release or threatened Release of any Hazardous Materials at,
on, under, in, to or from the XXXXX Companies' Real Property or in connection
with any operations or activities thereat, or at, on, under, in, to or from
any other property. To the Spectra Companies' Knowledge, neither the XXXXX
Companies' Real Property nor any operations or activities thereat is or has
been subject to any Proceeding, Order or Lien relating to any applicable
Environmental Laws.
4.17.3 To the Spectra Companies' Knowledge, there are no underground storage
tanks presently located at the XXXXX Companies' Real Property and there have
been no Releases of any Hazardous Materials from any underground storage tanks
or related piping at the XXXXX Companies' Real Property. To the Spectra
Companies' Knowledge, there are no PCBs located at, on or in the XXXXX
Companies' Real Property. To the Spectra Companies' Knowledge, there is no
asbestos or asbestos-containing material located at, on or in the XXXXX
Companies' Real Property.
4.18 ABSENCE OF CERTAIN PAYMENTS
To the Spectra Companies' Knowledge, none of the XXXXX Companies nor any of
its Employees or other Persons acting on behalf of the XXXXX Companies, or any
Affiliate of any of the foregoing, have with respect to the XXXXX Companies'
businesses, (i) engaged in any activity, prohibited by the United States
Foreign
16
Corrupt Practices Act of 1977 or any other similar law, regulation or Order of
any Governmental Authority or (ii) without limiting the generality of the
preceding clause (i), used any corporate or other funds for unlawful
contributions, payments, gifts or entertainment, or made any unlawful
expenditures relating to political activity to officials of any Governmental
Authority. To the Spectra Companies' Knowledge, none of the XXXXX Companies or
any of such XXXXX Company's shareholders, Employees or other Persons acting on
behalf of any of them, or any Affiliate of any of the foregoing, has accepted
or received any unlawful contributions, payments, gifts or expenditures.
4.19 NO BROKER, ETC.
No broker, finder or investment banker is entitled to any brokerage,
finder's or other fee or commission in connection with the Transaction based
upon arrangements made by or on behalf of any of the Spectra Companies or the
XXXXX Companies.
4.20 OTHER NEGOTIATIONS
Except for the Transaction, there is no existing commitment or offer by any
of the Spectra Companies or the XXXXX Companies to sell all or any of the
XXXXX Companies Stock or all or a significant part of the assets of any of the
XXXXX Companies or to merge or consolidate any of the XXXXX Companies with or
into any other Person, and there are no pending negotiations for any such
sale, exchange, merger or consolidation.
4.21 BUSINESS
Since December 31, 1996, the business of the XXXXX Companies has been
conducted in the normal course, consistent with past practices of the XXXXX
Companies. Without limiting the foregoing, since December 31, 1996, the XXXXX
Companies have paid in a manner consistent with past practices all liabilities
of the XXXXX Companies owed to Persons other than the Spectra Companies,
including, without limitation, all accounts payable.
4.22 SECURITIES ACT REPRESENTATIONS
Stockholders (i) understand that the FLIR Stock to be issued to Stockholders
at Closing has not been, and will not prior to the Closing be, registered
under the Securities Act, or under any state or foreign securities laws (and
that the certificates evidencing such FLIR Stock shall be legended to reflect
this), and is being offered and sold in reliance upon federal, state and
foreign exemptions for transactions not involving any public offering, (ii)
are acquiring such FLIR Stock solely for their own account for investment
purposes, and not with a view to the distribution thereof in violation of the
Securities Act, (iii) are sophisticated investors with knowledge and
experience in business and financial matters, (iv) have received certain
information concerning FLIR and have had the opportunity to obtain additional
information as desired in order to evaluate the merits and the risks inherent
in holding such FLIR Stock, (v) are able to bear the economic risk and lack of
liquidity inherent in holding the FLIR Stock, and (vi) are each an Accredited
Investor. FLIR has furnished to Stockholders copies of the FLIR SEC Reports.
The foregoing notwithstanding, nothing contained in this Section 4.22 shall
limit Stockholders' rights with respect to any breach by FLIR of any
representation, warranty or covenant by FLIR contained in this Agreement, or
shall prevent Stockholders from enforcing such rights.
4.23 PROXY STATEMENT
The information supplied by the Spectra Companies in writing specifically
for inclusion in the proxy statement to be sent to the stockholders of FLIR in
connection with the meeting of FLIR's stockholders (the "FLIR Stockholders'
Meeting") to consider the issuance of shares of FLIR Stock pursuant to the
Transaction (the "Proxy Statement") shall not, on the date the Proxy Statement
is first mailed to stockholders of FLIR, at the time of the FLIR Stockholders'
Meeting and at the Effective Time, contain any statement which, at such time
and in light of the circumstances under which it was made, is false or
misleading with respect to any
17
material fact, or omit to state any material fact necessary in order to make
the statements made in the Proxy Statement not false or misleading, or omit to
state any material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies for the FLIR
Stockholders Meeting which has become false or misleading. If at any time
prior to the Effective Time any event relating to the Spectra Companies, the
XXXXX Companies or any of their Affiliates, officers or directors should be
discovered by the Spectra Companies which should be set forth in a supplement
to the Proxy Statement, the Spectra Companies shall promptly inform FLIR.
4.24 NO UNTRUE STATEMENT OR OMISSION
No representation or warranty made by the Spectra Companies contained in
this Agreement and no statement by the Spectra Companies and/or any Authorized
Representatives of the Spectra Companies or the XXXXX Companies contained in
this Agreement or the Spectra Disclosure Schedule contains (or will contain
when made) any untrue statement of a material fact or omits (or will omit when
made) to state a material fact necessary to make the statements contained
therein, in light of the circumstances under which they were (or will be
made), not misleading.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF FLIR
As a material inducement to the Spectra Companies to enter into this
Agreement, FLIR represents and warrants to the Spectra Companies as of the
date hereof and as of the Closing Date that, except as set forth in the FLIR
Disclosure Schedule:
5.1 ORGANIZATION AND QUALIFICATION
FLIR is a corporation duly organized and validly existing under the laws of
the State of Oregon. Optimas is a corporation duly organized and validly
existing under the laws of the state of Washington. BSS is a limited company
duly organized and validly existing under the laws of the United Kingdom. FSII
is a corporation duly organized and validly existing under the laws of
Barbados. Each of the FLIR Companies is duly licensed or qualified and in good
standing (to the extent that the concept of good standing exists in the
relevant jurisdiction) as a foreign corporation in each jurisdiction in which
it is required to be so licensed or so qualified, except where the failure to
be so qualified will not have a FLIR Material Adverse Effect. Each of the FLIR
Companies has the corporate power to own its properties and to carry on its
business as it is now being conducted. None of the FLIR Companies is bankrupt
or insolvent or has committed any act of bankruptcy nor entered into any
scheme or composition or arrangement with its creditors.
5.2 AUTHORITY RELATIVE TO THIS AGREEMENT
5.2.1 FLIR has the corporate power to enter into this Agreement and to carry
out its obligations hereunder.
5.2.2 The Transaction has been duly authorized by FLIR's Board of Directors.
Except for the consent of FLIR's stockholders, no other corporate proceedings
on the part of FLIR are necessary to authorize the Transaction.
5.2.3 This Agreement constitutes a valid and binding obligation of FLIR,
enforceable against FLIR in accordance with its terms except as enforcement
may be limited by bankruptcy, insolvency or other similar laws affecting the
enforcement of creditors' rights generally, and except that the availability
of equitable remedies, including specific performance, is subject to the
discretion of the court in which any such Proceeding may be brought.
18
5.2.4 Neither the execution, delivery or performance of this Agreement, or
any other agreement relating hereto, or any other aspect of the Transaction,
will: (a) conflict with, or violate any provision of, or constitute or result
in a breach or default (with or without notice, lapse of time or both) or give
rise to a right of termination, cancellation or acceleration of any obligation
or the loss of any material benefit, under (i) any charter or bylaw of any of
the FLIR Companies, or (ii) any indenture, loan document provision or other
Contract, Permit, Order, statute, law, ordinance, rule or regulation
applicable to any of the FLIR Companies or their properties or assets; or (b)
result in or require the imposition of any Lien with respect to, or upon, any
of the FLIR Companies or their properties or assets, except where any item
noted in (a) through (c) will not have a FLIR Material Adverse Effect.
5.2.5 None of the FLIR Companies is subject to or obligated under (i) any
charter or bylaw, or (ii) any indenture, loan document provision or any other
contract, Permit, Order, lease, instrument, statute, law, ordinance, rule or
regulation applicable to any of the FLIR Companies or their properties or
assets which would be breached or violated, or under which there would be a
default (with or without notice or lapse of time, or both), as a result of any
aspect of the Transaction.
5.2.6 No Permit or Consent is necessary for the consummation by FLIR of the
Transaction.
5.3 FLIR STOCK TO BE ISSUED AT CLOSING
The FLIR Stock to be issued to Stockholders at Closing will be at Closing
duly and validly authorized and, when issued and delivered against payment
therefor as provided herein, will be duly and validly issued and fully paid
and nonassessable and will conform to the description thereof contained in the
SEC Reports. Stockholders will acquire good beneficial and legal, valid and
indefeasible title to the FLIR Stock to be issued to Stockholders under
Section 2.5.1.
5.4 FLIR COMMON STOCK OUTSTANDING
The authorized capital stock of FLIR consists of 30,000,000 shares of Common
Stock, $0.01 par value, of which 5,559,724 shares are outstanding as of the
date hereof, and 10,000,000 shares of Preferred Stock, $0.01 par value, of
which no shares are outstanding as of the date hereof. All such shares of FLIR
Stock outstanding were duly authorized, validly issued, fully paid and
nonassessable. No shares of FLIR's capital stock are held in FLIR's treasury.
As of the date hereof, there are no bonds, debentures, notes or other
evidences of indebtedness having the right to vote on any matters on which any
shareholders of FLIR may vote issued or outstanding. Except as disclosed in
Section 5.4 of the FLIR Disclosure Schedule, there are no subscriptions,
options, warrants, calls, or other rights (including, but not limited to,
preemptive rights), agreements or commitments outstanding which obligate FLIR
to issue, deliver, sell or otherwise cause to become outstanding any of its
capital stock or debt securities, or which obligate FLIR to grant, extend or
enter into any such option, warrant, call or other such right, agreement or
commitment. Except as disclosed in Section 5.4 of the FLIR Disclosure
Schedule, there are no outstanding or authorized stock appreciation, phantom
stock, profit participation or similar rights with respect to FLIR.
5.5 SUBSIDIARIES
FLIR has no Subsidiaries, except for the FLIR Subsidiaries. Neither FSII nor
Xxxxxx own or lease any real or other property, including inventory,
equipment, hardware or tools, or any assets (except for the minimum amount of
assets necessary for FSII to qualify for business in Barbados), has any
liabilities or employees, agents, or independent contractors or conducts any
business operations, provided, however that FSII acts as a facilitator for the
transfer to the United States of foreign currency generated by FLIR and the
FLIR Subsidiaries in their non-United States business operations. The FLIR
Companies have no equity investment or other interest in, or have made no
advances to, any Person.
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5.6 SEC FILINGS; FINANCIAL STATEMENTS
5.6.1 FLIR has made available to the Spectra Companies copies of all
registration statements, reports, statements and documents required to be
filed by FLIR with the SEC since December 31, 1992 (collectively, the "FLIR
SEC Reports"). The FLIR SEC Reports (i) at the time filed, complied in all
material respects with the applicable requirements of the Securities Act and
the Exchange Act, as the case may be, and (ii) did not at the time they were
filed (or if amended or superseded by a filing prior to the Closing Date, then
on the date of such filing) contain any untrue statement of a material fact or
omit to state a material fact required to be stated in such FLIR SEC Reports
or necessary in order to make the statements in such FLIR SEC Reports, in the
light of the circumstances under which they were made, not misleading.
5.6.2 The consolidated financial statements (including, in each case, any
related notes) contained in the FLIR SEC Reports, including any FLIR SEC
Reports filed after the date of this Agreement until the Closing (the "FLIR
Consolidated Financial Statements"), complied as to form in all material
respects with the applicable published rules and regulations of the SEC with
respect thereto, were prepared in accordance with GAAP applied on a consistent
basis throughout the periods involved (except as may be indicated in the notes
to such financial statements or, in the case of unaudited statements, as
permitted by Form 10-Q of the SEC) and are in accordance with the books and
records of the FLIR Companies and fairly present the consolidated financial
position of FLIR as at the respective dates and the consolidated results of
its operations and cash flows for the periods indicated, except that the
unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments which do not or are not expected to be material
in amount.
5.7 ABSENCE OF CERTAIN CHANGES OR EVENTS
Since December 31, 1996, except as disclosed in Section 5.7 of the FLIR
Disclosure Schedule, there has not been:
5.7.1 any material adverse change in the business, financial condition,
liabilities (net of any corresponding increase in assets), results of
operations or, to the FLIR Companies' Knowledge, prospects of any of the FLIR
Companies, other than changes in laws or regulations of general applicability;
5.7.2 any damage, destruction or loss, whether covered by insurance or not,
materially and adversely affecting the financial condition, prospects,
properties or businesses of any of the FLIR Companies;
5.7.3 any declaration, payment or setting aside for payment of any dividend
or other distribution (whether in cash, stock or property) with respect to the
capital stock of FLIR or any direct or indirect redemption, purchase or other
acquisition of any shares of capital stock of FLIR;
5.7.4 any accrual or arrangement for or payment by any of the FLIR Companies
of severance bonuses or special compensation of any kind to any director,
officer or Employee of any of the FLIR Companies;
5.7.5 any sale or other transfer by any of the FLIR Companies of any
material tangible or intangible asset, any granting of a Lien relating to any
such material asset, any lease of real property or equipment, or any
cancellation of any debt or claim, except in the ordinary course of business;
5.7.6 any incurrence by any of the FLIR Companies of any obligation or
liability (absolute or contingent), except current obligations and liabilities
incurred in the ordinary course of business in amounts and on terms consistent
with past practices;
5.7.7 any material change in accounting methods or principles or any
revaluation of any of the assets of any of the FLIR Companies (including,
without limitation, any change in depreciation or amortization policies or
rates);
20
5.7.8 any amendment or termination of any Contract or Permit to which any of
the FLIR Companies is a party, except in the ordinary course of business or
where the same could not reasonably be expected to have a FLIR Material
Adverse Effect;
5.7.9 any loan by any of the FLIR Companies to any Person or guaranty by any
of the FLIR Companies of any loan, other than advances made in the ordinary
course of business and of an amount consistent with past practices;
5.7.10 any waiver or release of any material right or claim of any of the
FLIR Companies, except in the ordinary course of business;
5.7.11 any commencement or notice or, to the FLIR Companies' Knowledge,
threat of commencement of any Proceeding against or investigation of any of
the FLIR Companies; or
5.7.12 any actual or threatened strike or other labor trouble or dispute or
claim of wrongful discharge or other unlawful labor practice or action
involving any of the FLIR Companies which could reasonably be expected to have
a FLIR Material Adverse Effect.
5.8 LITIGATION
Except as disclosed in Section 5.8 of the FLIR Disclosure Schedule, there is
no Proceeding pending or, to the FLIR Companies' Knowledge, threatened against
any of the FLIR Companies which, either alone or in the aggregate, could
reasonably be expected to have a FLIR Material Adverse Effect, nor is there
any Order outstanding against any of the FLIR Companies having, or which in
the future could reasonably be expected to have, either alone or in the
aggregate, any FLIR Material Adverse Effect.
5.9 TAXES
5.9.1 The FLIR Companies have accurately prepared and timely filed all
material Tax Returns required to be filed with respect to the FLIR Companies
at or before the Effective Time and such Tax Returns are true and correct in
all material respects and have been completed in all material respects in
accordance with applicable law.
5.9.2 The FLIR Companies as of the Effective Time: (i) will have paid all
Taxes they are required to pay (including, but not limited to, all estimated
Taxes due) with respect to the FLIR Companies prior to the Effective Time and
(ii) will have withheld with respect to the FLIR Companies' employees all
Taxes required to be withheld, except where any failure to make such payment
or withholding would not be reasonably likely to have a FLIR Material Adverse
Effect.
5.9.3 There is no material Tax deficiency outstanding, proposed in writing
or assessed against any of the FLIR Companies that is not reflected as a
liability on the most recent balance sheet contained in the FLIR Consolidated
Financial Statements nor has any of the FLIR Companies executed any waiver of
any statute of limitations on or extending the period for the assessment or
collection of any Tax.
5.9.4 None of the FLIR Companies has any material liabilities for unpaid
Taxes that have not been accrued for or reserved on the FLIR Consolidated
Financial Statements, whether asserted or unasserted, contingent or otherwise.
5.10 COMPLIANCE WITH PERMITS, APPLICABLE LAWS AND AGREEMENTS
5.10.1 To the FLIR Companies' Knowledge, except as disclosed in Section 5.10
of the FLIR Disclosure Schedule, each of the FLIR Companies holds all Permits,
the failure of which to hold would have a FLIR Material Adverse Effect (the
"FLIR Material Permits"). Each of the FLIR Companies is in compliance with the
terms of the FLIR Material Permits, except for such failures to comply which,
individually or in the aggregate, would not have a FLIR Material Adverse
Effect.
21
5.10.2 To the FLIR Companies' Knowledge, except as disclosed in Section 5.10
of the FLIR Disclosure Schedule, the business of the FLIR Companies are being
conducted in compliance with all laws, ordinances and regulations of all
Governmental Authorities (including, but not limited to, laws pertaining to
customs and duties, employment and employment practices, terms and conditions
of employment, wages and hours, safety, health, fire prevention and other
matters), except for possible violations which individually or in the
aggregate do not and would not have a FLIR Material Adverse Effect.
5.10.3 To the FLIR Companies' Knowledge, except as disclosed in Section 5.10
of the FLIR Disclosure Schedule, none of the FLIR Companies is in default (and
not in a circumstance which, with notice or lapse of time, or both, would
constitute a default) under any agreement or instrument to which such FLIR
Companies is a party, whether or not such default has been waived, except for
any such default which, alone or in the aggregate with other such defaults,
would not have a FLIR Material Adverse Effect.
5.10.4 The provisions of this Section shall not be construed or applied to
narrow or otherwise restrict the scope of any other representations and
warranties in this Article 5.
5.11 EMPLOYEE PLANS AND BENEFIT ARRANGEMENTS
5.11.1 FLIR has set forth in the FLIR SEC Reports or Section 5.11 of the
FLIR Disclosure Schedule all Plans for the benefit of, or relating to, any
current or former employee of any of the FLIR Companies or any ERISA Affiliate
of any of the FLIR Companies.
5.11.2 With respect to each such Plan, FLIR has made available to
Stockholders, a true and correct copy of (i) the most recent annual report
filed with the applicable Governmental Authority, (ii) such Plan, (iii) each
trust agreement and group annuity contract, if any, relating to such Plan and
(iv) the most recent actuarial report or valuation relating to such Plan.
5.11.3 With respect to such Plans, individually and in the aggregate, no
event has occurred, and to the FLIR Companies' Knowledge, there exists no
condition or set of circumstances in connection with which any of the FLIR
Companies could be subject to any liability that is reasonably likely to have
a FLIR Material Adverse Effect under ERISA, the Code or any other applicable
law.
5.11.4 With respect to such Plans, individually and in the aggregate, there
are no funded benefit obligations for which contributions have not been made
or properly accrued and there are no unfunded benefit obligations which have
not been accounted for by reserves, or otherwise properly footnoted in
accordance with United States generally accepted accounting principles, on the
FLIR Consolidated Financial Statements, which obligations are reasonably
expected to have a FLIR Material Adverse Effect.
5.11.5 Except as disclosed in Section 5.11 of the FLIR Disclosure Schedule,
there are no pending petitions for recognition of a labor union, confederation
or association as the exclusive bargaining agent for any of the Employees of
any of the FLIR Companies; no such petitions have been pending at any time
within two years of the date of this Agreement, and, to the FLIR Companies'
Knowledge, there has not been any organizing effort by any union,
confederation or association or other group seeking to represent any Employees
of any of the FLIR Companies as their exclusive bargaining agent at any time
within two years of the date of this Agreement. There are no labor strikes,
work stoppages or other labor troubles, other than routine grievance matters,
now pending or, to FLIR's Knowledge, threatened against any of the FLIR
Companies.
5.11.6 FLIR has performed its duty to inform its employees about the
Transaction in accordance with applicable law, if any, concerning the
employees' right to participate in the decision making process.
5.12 TITLE TO ASSETS
Each of the FLIR Companies has good and marketable title to all of its
leasehold interests and other assets as described in the most recent balance
sheet contained in the FLIR Consolidated Financial Statements, except
22
for such assets that have been disposed of in the ordinary course of business
since the date of such balance sheet or report, free and clear of all Liens,
except (i) the Lien for current taxes, payments of which are not yet
delinquent, (ii) such imperfections in title and easements and encumbrances,
if any, as are not substantial in character, amount or extent and do not
materially detract from the value or interfere with the present use of the
property subject thereto or affected thereby, or otherwise materially impair
any of the FLIR Companies' business operations, or (iii) as otherwise set
forth in Section 5.12 of the FLIR Disclosure Schedule, and except for such
matters which, individually or in the aggregate, could not reasonably be
expected to have a FLIR Material Adverse Effect. All leases under which any of
the FLIR Companies lease any real or personal property are in good standing,
valid and effective in accordance with their respective terms, and there is
not, under any of such leases, any existing default or event which with notice
or lapse of time or both would become a default other than failures to be in
good standing, valid and effective and defaults under such leases which in the
aggregate will not have a FLIR Material Adverse Effect. FLIR does not own any
real property, of record or beneficially.
5.13 INTANGIBLE PROPERTY
5.13.1 The FLIR Companies own, or are licensed or otherwise possesses
legally enforceable rights to use, all patents, trademarks, trade names,
service marks, copyrights, and any applications for such patents, trademarks,
trade names, service marks and copyrights, processes, formulae, methods,
schematics, technology, know-how, computer software programs or applications
and tangible or intangible proprietary information or material that are
necessary to conduct the business of the FLIR Companies as currently
conducted, or proposed to be conducted, the absence of which would be
reasonably likely to have a FLIR Material Adverse Effect (the "FLIR
Intellectual Property Rights"). Section 5.13 of the FLIR Disclosure Schedule
lists (i) all patents and patent applications and all trademarks, registered
copyrights, trade names and service marks, material to the FLIR Companies'
business and included in the FLIR Intellectual Property Rights, including the
jurisdictions in which each such FLIR Intellectual Property Right has been
issued or registered or in which any such application for such issuance and
registration has been filed, (ii) all material licenses, sublicenses and other
agreements as to which any of the FLIR Companies is a party and pursuant to
which any person is authorized to use any FLIR Intellectual Property Rights,
and (iii) all material licenses, sublicenses and other agreements as to which
any of the FLIR Companies is a party and pursuant to which any of the FLIR
Companies is authorized to use any third-party patents, trademarks or
copyrights, including software ("FLIR Third Party Intellectual Property
Rights") which are incorporated in, are, or form a part of any product of any
of the FLIR Companies that is material to their business.
5.13.2 None of the FLIR Companies is, nor will it be as a result of the
execution and delivery of this Agreement or the performance of its obligations
under this Agreement, in breach of any license, sublicense or other agreement
relating to the FLIR Intellectual Property Rights or FLIR Third Party
Intellectual Property Rights, the breach of which would be reasonably likely
to have a FLIR Material Adverse Effect.
5.13.3 To the FLIR Companies' Knowledge, all patents, registered trademarks,
service marks and copyrights held by the FLIR Companies are valid and
subsisting. Except as set forth in Section 5.13 of the FLIR Disclosure
Schedule, FLIR (i) has not been sued in any suit, action or proceeding which
involves a claim of infringement of any patents, trademarks, service marks,
copyrights or violation of any trade secret or other proprietary right of any
third party; and (ii) has no knowledge that the manufacturing, marketing,
licensing or sale of its products infringes any patent, trademark, service
xxxx, copyright, trade secret or other proprietary right of any third party,
which such infringement would reasonably be expected to have a FLIR Material
Adverse Effect.
5.14 ENVIRONMENTAL MATTERS
5.14.1 To the FLIR Companies' Knowledge, each of the FLIR Companies, and
each of such company's assets, properties and operations are now and at all
times have been in compliance in all material respects with all applicable
Environmental Laws. To the FLIR Companies' Knowledge, there has not been and
any Release or threatened Release of any Hazardous Material at, on, under, in,
to or from any of the FLIR Companies' Real
23
Property which relates to such companies operations and activities at such
Real Property or otherwise. None of the FLIR Companies has received any notice
of alleged, actual or potential responsibility for, or any Proceeding
regarding, the presence, Release or threatened Release of any Hazardous
Material at any location, whether at the FLIR Companies' Real Property or
otherwise, which Hazardous Materials were allegedly manufactured, used,
generated, processed, treated, stored, disposed or otherwise handled at or
transported from the FLIR Companies' Real Property or otherwise.
5.14.2 None of the FLIR Companies has received any notice of any Proceeding
by any Person alleging any actual or threatened injury or damage to any
Person, property, natural resource or the environment arising from or relating
to the presence, Release or threatened Release of any Hazardous Materials at,
on, under, in, to or from the FLIR Companies' Real Property or in connection
with any operations or activities thereat, or at, on, under, in, to or from
any other property. To the FLIR Companies' Knowledge, neither the FLIR
Companies' Real Property nor any operations or activities thereat is or has
been subject to any Proceeding, Order or Lien relating to any applicable
Environmental Laws.
5.14.3 To the FLIR Companies' Knowledge, there are no underground storage
tanks presently located at the FLIR Companies' Real Property and there have
been no Releases of any Hazardous Materials from any underground storage tanks
or related piping at the FLIR Companies' Real Property. To the FLIR Companies'
Knowledge, there are no PCBs located at, on or in the FLIR Companies' Real
Property. To the FLIR Companies' Knowledge, there is no asbestos or asbestos-
containing material located at, on or in the FLIR Companies' Real Property.
5.15 ABSENCE OF CERTAIN PAYMENTS
To the FLIR Companies' Knowledge, none of the FLIR Companies nor any of
their Employees nor other Persons acting on behalf of the FLIR Companies, or
any Affiliate of any of the foregoing, have with respect to the FLIR
Companies' businesses, (i) engaged in any activity, prohibited by the United
States Foreign Corrupt Practices Act of 1977 or any other similar law,
regulation or Order of any Governmental Authority or (ii) without limiting the
generality of the preceding clause (i), used any corporate or other funds for
unlawful contributions, payments, gifts or entertainment, or made any unlawful
expenditures relating to political activity to officials of any Governmental
Authority. To the FLIR Companies' Knowledge, none of the FLIR Companies nor
any of the FLIR Companies' shareholders, Employees or other Persons acting on
behalf of the FLIR Companies, or any Affiliate of any of the foregoing, has
accepted or received any unlawful contributions, payments, gifts or
expenditures.
5.16 NO BROKER, ETC.
No broker, finder or investment banker is entitled to any brokerage,
finder's or other fee or commission in connection with the Transaction based
upon arrangements made by or on behalf of any of the FLIR Companies.
5.17 OTHER NEGOTIATIONS
Except for the Transaction and as disclosed in the FLIR Disclosure Schedule,
there is no existing commitment or offer by FLIR to sell all or any of the
FLIR Stock or all or a significant part of the assets of FLIR or to merge or
consolidate FLIR with or into any other Person, and there are no pending
negotiations for any such sale, exchange, merger or consolidation.
5.18 BUSINESS
Since December 31, 1996, the business of the FLIR Companies has been
conducted in the normal course, consistent with past practices of the FLIR
Companies. Without limiting the foregoing, since December 31, 1996, the FLIR
Companies have paid in a manner consistent with past practices all liabilities
of the FLIR Companies, including, without limitation, all accounts payable.
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5.19 SECURITIES ACT REPRESENTATIONS
FLIR (i) understands that the Target Stock has not been, and will not prior
to the Closing be, registered under the Securities Act, or under any state or
foreign securities laws (and that the certificates representing the Target
Stock may be legended to reflect this), and is being offered and sold in
reliance upon federal, state and foreign exemptions for transactions not
involving any public offering, (ii) is acquiring the Target Stock solely for
its own account for investment purposes, and not with a view to the
distribution thereof in violation of the Securities Act, (iii) is a
sophisticated investor with knowledge and experience in business and financial
matters, (iv) has received certain information concerning the XXXXX Companies
and has had the opportunity to obtain additional information as desired in
order to evaluate the merits and the risks inherent in holding the Target
Stock, (v) is able to bear the economic risk and lack of liquidity inherent in
holding the Target Stock, and (vi) is an Accredited Investor. The foregoing
notwithstanding, nothing contained in this Section 5.19 shall limit FLIR's
rights with respect to any breach by the Spectra Companies of any
representation, warranty or covenant by the Spectra Companies contained in
this Agreement, or shall prevent FLIR from enforcing such rights.
5.20 PROXY STATEMENT
Other than the information supplied by the Spectra Companies in writing
specifically for inclusion in the Proxy Statement, the Proxy Statement shall
not, on the date the Proxy Statement is first mailed to stockholders of FLIR,
at the time of the FLIR Stockholders' Meeting and at the Effective Time,
contain any statement which, at such time and in light of the circumstances
under which it shall be made, is false or misleading with respect to any
material fact, or omit to state any material fact necessary in order to make
the statements made in the Proxy Statement not false or misleading, or omit to
state any material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies for the FLIR
Stockholders' Meetings which has become false or misleading. If at any time
prior to the Effective Time any event relating to the FLIR Companies or any of
their Affiliates, officers or directors should be discovered by FLIR which
should be set forth in a supplement to the Proxy Statement, FLIR shall
promptly inform the Spectra Companies.
5.21 NO UNTRUE STATEMENT OR OMISSION
No representation or warranty made by FLIR contained in this Agreement and
no statement of FLIR and/or any Authorized Representative of FLIR contained in
this Agreement or the FLIR Disclosure Schedule, contains (or will contain when
made) any untrue statement of a material fact or omits (or will omit when
made) to state a material fact necessary to make the statements contained
therein, in light of the circumstances under which they were (or will be
made), not misleading.
ARTICLE 6
TAX MATTERS
6.1 TAX PAYMENT AND TAX RETURN FILING RESPONSIBILITIES
6.1.1 Taxes on Exchange and Sale of Companies Stock
The Spectra Companies shall be solely responsible for, and shall timely pay,
all Taxes related to the ownership of the XXXXX Companies Stock at and prior
to the Closing and the exchange and transfer, pursuant to this Agreement, of
(i) the European Subsidiaries Stock to XXXXX and (ii) the Target Stock to
FLIR, including, without limitation, applicable interest and penalties.
Without limiting the foregoing, on or before Closing, the Spectra Companies
shall comply with all requirements of applicable Tax treaties, and shall file
all forms required to be filed under such Tax treaties, to ensure that no
withholding tax is required to be withheld by FLIR, and that no Tax is
required to be paid with respect to the delivery of the shares of FLIR Stock
to the Stockholders as described in Section 2.5.1 above that would otherwise
not be required to be withheld or paid if the Spectra Companies had complied
with such tax treaties, and the Spectra Companies shall be solely responsible
for, and shall timely pay, all such Taxes and withholding taxes, including,
without limitation, applicable interest and penalties.
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6.1.2 FLIR's Tax Return Filing Responsibilities
(a) FLIR shall be responsible for, and shall timely file, all Tax Returns of
the XXXXX Companies that are required to be filed after the Closing Date
(taking into account extensions) other than the Tax Returns for which the
Spectra Companies are responsible under Section 6.1.3(a).
(b) With respect to any Tax Return for the XXXXX Companies to be filed by
FLIR or the XXXXX Companies for a Taxable Period beginning on or before the
Closing Date, FLIR or the XXXXX Companies shall deliver, at least 10 business
days prior to the earlier of the actual filing date or the due date for filing
of such Tax Return (including extensions), to Spectra a statement setting
forth the amount of Tax for which the Spectra Companies are responsible
pursuant to this Agreement, and copies of such Tax Return. Spectra shall have
the right to review such Tax Return and, in the case of Tax Returns that
relate to periods ending on or before the Closing Date, to direct FLIR to make
any changes to such Tax Returns for which there is a reasonable basis.
6.1.3 Spectra Companies' Tax Return Filing Responsibilities
(a) The Spectra Companies shall be responsible for, shall prepare or cause
to be prepared, and shall timely file or cause to be timely filed, all Tax
Returns of the XXXXX Companies that are required to be filed for Taxable
Periods ending on or before the Closing Date (taking into account extensions).
(b) To the extent permitted by law and consistent with the prior year's
practice or required by law, the Spectra Companies shall include, or cause to
be included, the XXXXX Companies in the Spectra Companies' consolidated income
Tax Returns of the Spectra Companies or any of their Affiliates and all other
consolidated, combined or unitary Tax Returns for all Taxable Periods of the
XXXXX Companies ending on or prior to the Closing Date.
(c) The Spectra Companies shall deliver to FLIR a copy of each Tax Return
prepared by or on behalf of the XXXXX Companies for which the Spectra
Companies are responsible to file under this Section 6.1.3 within 10 business
days prior to the earlier of the actual filing date or the due date for filing
such Tax Return (including extensions). FLIR shall have the right to review
each such Tax Return and to direct the Spectra Companies to make any changes
to each such Tax Return for which there is a reasonable basis.
(d) In the case of all Tax Returns for which the Spectra Companies are
responsible under Section 6.1.3(a), FLIR shall deliver to the Spectra
Companies, at the Spectra Companies' request, a tax information package or pro
forma Tax Return consistent with past practices so as to enable the Spectra
Companies to prepare such Tax Returns.
6.2 TAX SHARING AND INDEMNIFICATION
6.2.1 Taxable Periods Ending on or Before the Closing Date
The Spectra Companies shall be liable for, shall pay or cause to be paid,
and shall indemnify and hold the XXXXX Companies, FLIR and FLIR's Tax
Affiliates, and all of their respective directors, officers, employees and
agents, harmless from: (a) any unpaid or unaccrued Taxes (including, but not
limited to, estimated Taxes due) with respect to the XXXXX Companies for any
Tax Period ending on or before the Closing Date; (b) that portion of the
Spectra Companies' liability determined under Section 6.2.3; and (c) the XXXXX
Companies' inclusion in any consolidated, combined, or unitary Tax Return
(including, but not limited to, any liability of any Tax Affiliate for any Tax
Period ending on or before the Closing Date).
6.2.2 Taxable Periods Commencing after the Closing Date
FLIR shall be liable for, shall pay or cause to be paid, and shall indemnify
and hold the Spectra Companies, all Tax Affiliates of the Spectra Companies,
and their respective directors, officers, employees and agents, harmless from:
(a) Taxes with respect to the XXXXX Companies for any Taxable Period
commencing after the Closing Date (excluding any income Taxes with respect to
actual or deemed dividends or distributions by FLIR to its shareholders
occurring or deemed to have occurred in the ordinary course of business after
the Closing Date and not as a consequence of the Transaction); (b) that
portion of FLIR's liability determined under
26
Section 6.2.3; and (c) any Taxes attributable to transactions that occur or
are deemed to occur on the Closing Date and that arise on account of actions
(including Tax elections, such as elections under Section 338 of the Code)
taken or caused to be taken by FLIR other than those Taxes which are
contemplated by operation of Section 6.1.1.
6.2.3 Taxable Periods Commencing before the Closing Date and Ending After
the Closing Date
The XXXXX Companies shall close their books and records as of the Effective
Time. The Spectra Companies and FLIR will, to the extent permitted by
applicable law, elect with the relevant Governmental Authority to close the
Taxable Periods of the XXXXX Companies as of the Effective Time (or, as of the
Closing Date if a Taxable Period is not permitted to be closed as of the
Effective Time). In any case where applicable law does not permit the XXXXX
Companies to close their Taxable Period as of the Effective Time (or as of the
Closing Date), Taxes for such Taxable Periods shall be allocated between the
Spectra Companies and FLIR as follows: (a) with respect to Taxes based on
income, in accordance with taxable income and losses of the XXXXX Companies,
as applicable, for such portions of such period as determined from the XXXXX
Companies' books and records, (b) with respect to Taxes based on sales or
similar transactions, in accordance with the sales by the XXXXX Companies for
such portions of such period as determined from the XXXXX Companies books and
records, determined in accordance with applicable tax law, (c) with respect to
ad valorem Taxes, based on the number of days in the applicable Tax Period
that the asset was owned by the XXXXX Companies before the Effective Time and
after the Effective Time and (d) with respect to any other Taxes not described
in (a), (b) or (c) above, based on a method mutually acceptable to the Spectra
Companies and FLIR.
6.3 TAX SHARING AGREEMENTS
All Tax sharing agreements and similar agreements (other than the provisions
of this Agreement) between the XXXXX Companies, on the one hand, and the
Spectra Companies and/or the Spectra Companies' Tax Affiliates (other than the
XXXXX Companies), on the other hand, shall be terminated as of the Closing
Date, and there will be no liability to the XXXXX Companies or FLIR under any
such agreement following the Closing Date.
6.4 NET OPERATING LOSS CARRYFORWARD
Any net operating losses of the XXXXX Companies not utilized by the Spectra
Companies in filing their consolidated income Tax Returns for any Taxable
Periods ending on, or including, the Closing Date shall be retained by the
XXXXX Companies to the extent allowed under applicable law. The Spectra
Companies shall make available to FLIR prior to the Closing Date all relevant
schedules and worksheets which calculate any net operating losses attributable
to the XXXXX Companies during any Period for which the Spectra Companies have
filed a consolidated Tax Return which included any of the XXXXX Companies.
6.5 COOPERATION
The Spectra Companies and FLIR shall reasonably cooperate, and shall cause
their respective Tax Affiliates, officers, employees, agents, auditors, and
representatives reasonably to cooperate, in preparing and filing all Tax
Returns (including amended returns and claims for refund), including
maintaining and making available to each other all records necessary in
connection with Taxes and in resolving all disputes and audits with respect to
all Taxable Periods relating to Taxes.
ARTICLE 7
ADDITIONAL AGREEMENTS AND COVENANTS
7.1 CONDUCT OF BUSINESS OF FLIR AND THE XXXXX COMPANIES
During the period from the date of this Agreement to the Closing Date, FLIR
shall and shall cause the FLIR Subsidiaries to comply, and the Spectra
Companies shall cause the XXXXX Companies to comply, fully with each of the
covenants set forth in this Section 7.1:
27
7.1.1 Each of the FLIR Companies and the XXXXX Companies will: (i) conduct
its operations in compliance with all applicable laws and according to its
ordinary course of business consistent with past practice, (ii) not enter into
any material transaction other than in the ordinary course of business
consistent with past practice, (iii) with no less diligence and effort than
would be applied in the absence of this Agreement, seek to preserve intact its
assets and current business organizations, keep available the service of its
current officers and employees and preserve its relationships with customers,
suppliers and others having business dealings with it with the objective that
their goodwill and ongoing businesses shall be unimpaired at the Closing Date,
and (iv) subject to applicable law, consult with the other parties hereto on a
regular basis concerning the management of its assets, properties and business
generally, any material new contracts, agreements, commitments or transactions
proposed to be entered into or employees proposed to be engaged in by it and
any other material developments relating to its assets, properties or
business.
7.1.2 Except as otherwise permitted in this Agreement, prior to the Closing
Date, none of the FLIR Companies or the XXXXX Companies will, without the
prior written consent of the other parties hereto:
(i) Issue, deliver, sell, dispose or, pledge or otherwise encumber, or
authorize or propose the issuance, delivery, sale, disposition or pledge or
other encumbrance of (a) any additional shares of its capital stock of any
class, or any securities or rights convertible into, exchangeable for or
evidencing the right to subscribe for any shares of its capital stock, or
any rights, warrants, options, calls, commitments or any other agreements
of any character to purchase or acquire any shares of its capital stock or
any securities or rights convertible, into, exchangeable for or evidencing
the right to subscribe for any shares of its capital stock (provided,
however, that FLIR shall not be prohibited from issuing shares of its
capital stock upon the exercise of stock options outstanding under its
stock option plans or from granting additional stock options under existing
stock option plans in amounts consistent with past practices) or (b) any
other securities in respect of, in lieu of or in substitution for any
shares of its capital stock outstanding on the date hereof;
(ii) Redeem, purchase or otherwise acquire, or propose to redeem,
purchase or otherwise acquire, any of its outstanding securities;
(iii) Split, combine, subdivide or reclassify any shares of its capital
stock or declare, set aside for payment or pay any dividend, or make any
other actual, constructive or deemed distribution in respect of any shares
of its capital stock or otherwise make any payments to shareholders in
their capacity as such;
(iv) (a) Grant any increases in the compensation of any of its directors,
officers or Employees, (b) pay or agree to pay any pension, retirement
allowance or other material employee benefit not required or contemplated
by any Plan covering such party as in effect on the date hereof to any such
director, officer or Employee, whether past or present, (c) except as
otherwise provided herein, enter into any new or amend any existing
employment agreement with any such director, officer or Employee, (d) enter
into any new or amend any existing severance agreement with any such
director, officer or Employee or (e) except as may be required to comply
with applicable law, amend any existing, or become obligated under any new,
Plan covering such party;
(v) Dispose of, or grant Liens on, any of its assets outside the ordinary
course of its business consistent with past practice, or adopt a plan of
complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization (other than the
Transaction);
(vi) Make any acquisition, by means of merger, consolidation or
otherwise, of (i) any direct or indirect ownership interest in, or assets
comprising, any business enterprise or operation, or (ii) except in the
ordinary course and consistent with past practice, any other assets;
(vii) Adopt any amendments to its articles of incorporation, bylaws or
any other organizational document;
(viii) Other than borrowings under existing credit facilities, renewals
thereof or other borrowings in the ordinary course, incur any indebtedness
for borrowed money or guarantee any such indebtedness or, except in the
ordinary course of business consistent with past practice, make any loans,
advances or capital contributions to, or investments in, any other Person;
28
(ix) Engage in the conduct of any business, the nature of which is
different than the business such entity is currently engaged in;
(x) Enter into any agreement providing for acceleration of payment or
performance or other consequence as a result of a change of control of FLIR
or any of the XXXXX Companies;
(xi) Enter into any contract, arrangement or understanding requiring the
purchase of equipment, materials, supplies or services over a period
greater than 12 months, except in the ordinary course of business for the
distribution of products or the production of inventory; or
(xii) Authorize or announce an intention to do any of the foregoing, or
enter into any contract, agreement, commitment or arrangement to do any of
the foregoing.
7.2 NOTICE OF BREACH
Each party to this Agreement shall promptly give written notice to the other
party upon becoming aware of the occurrence or, to its Knowledge, impending or
threatened occurrence, of any event which would cause any of its
representations or warranties to be untrue on the Closing Date or cause a
breach of any covenant contained or referenced in this Agreement and will use
its best reasonable efforts to prevent or promptly remedy the same. Any such
notification shall not be deemed an amendment of the Spectra Disclosure
Schedule or the FLIR Disclosure Schedule.
7.3 REASONABLE EFFORTS
Each party shall, and shall use all reasonable efforts to cause their
respective Subsidiaries to: (a) seek to make all filings and obtain all
Permits and Consents required with respect to the Transaction, and the parties
will cooperate with each other with respect thereto; (b) use all reasonable
efforts to promptly take, or cause to be taken, all other actions (including
but not limited to the execution, delivery and filing of documents) and do, or
cause to be done, all other things necessary, proper or appropriate to satisfy
the conditions set forth in Article 8 and to consummate and make effective the
Transaction on the terms and conditions set forth herein; and (c) not take any
action which might reasonably be expected to impair the ability of the parties
to consummate the Transaction (regardless of whether such action would
otherwise be permitted or not prohibited hereunder).
7.4 OTHER TRANSACTIONS
Prior to the Closing, none of FLIR, the Spectra Companies, the XXXXX
Companies nor any of their respective directors, officers, employees,
representatives, agents or Affiliates will, directly or indirectly, encourage,
solicit or engage in discussions or negotiations with any Person (other than
the parties hereto) concerning any merger, consolidation, share exchange or
similar transaction involving any of the FLIR Companies, the XXXXX Companies,
or any purchase of all or a significant portion of the assets of or stock in
any of the FLIR Companies or any of the XXXXX Companies, or any other
transaction that would involve the transfer or potential transfer of control
of any of the FLIR Companies or any of the XXXXX Companies, other than the
Transaction. FLIR, the Spectra Companies and the XXXXX Companies will notify
the other parties hereto immediately of any inquiries or proposals with
respect to any such transaction that are received by, or any such negotiations
or discussions that are sought to be initiated with, any of the FLIR
Companies, the Spectra Companies or the XXXXX Companies. Until the Closing or
the termination of this Agreement under Article 9, the parties shall suspend
and not resume any discussions or negotiations described above which were
initiated prior to the execution of this Agreement.
7.5 ACCESS TO INFORMATION
Subject to currently existing contractual and legal restrictions applicable
to each of the parties (which each of the parties represent and warrant are
not material) and upon reasonable notice, each of the parties shall during
normal business hours throughout the period prior to the Closing Date or until
this Agreement is terminated (a) afford to the other parties' Authorized
Representatives access to the properties, books and records (including,
29
without limitation, the work papers of independent accountants of the
parties); and (b) furnish promptly to the other parties' Authorized
Representatives all information concerning its business, properties and
personnel as may reasonably be requested, provided that no investigation
pursuant to this Section shall affect or be deemed to modify any of the
respective representations or warranties made by the parties. The use and
protection of all information provided by one party to another pursuant to
this Section shall be governed by Paragraph 9 of the Letter of Intent dated
August 1, 1997 (the "Letter of Intent") among FLIR, Spectra and XXXXX. Section
11.12 of this Agreement notwithstanding, Paragraph 9 of the Letter of Intent
shall survive the execution and delivery of this Agreement and shall remain in
full force and effect until the Closing. Notwithstanding the foregoing, the
Spectra Companies shall be entitled to review all work papers of FLIR's
accountants, Price Waterhouse LLP, in connection with the financial statements
of FLIR included in the Proxy Statement.
7.6 EMPLOYEE MATTERS
FLIR intends to review each Plan covering any of the XXXXX Companies or
their Employees for compatibility with similar programs maintained by FLIR for
its employees. FLIR may decide to have the XXXXX Companies continue in effect,
amend, modify or terminate in their entirety any one or more of such Plans, or
merge any of such Plans into a comparable program maintained by FLIR and
adopted by the XXXXX Companies. Any such amendment, modification or
termination shall not deprive any Person who is an Employee of the XXXXX
Companies on the Closing Date ("Affected Employee") of any accrued benefit
payment to which the Affected Employee has become entitled prior to the
Effective Time.
7.7 ACCESS TO RECORDS AND PERSONNEL AFTER CLOSING
7.7.1 For a period of six (6) years after the Closing Date, the Spectra
Companies and the Spectra Companies' Authorized Representatives shall have
access to all books and records of the XXXXX Companies, and to all Employees
of the XXXXX Companies having knowledge with respect thereto, to the extent
that such access may be required in connection with matters relating to
matters as to which the Spectra Companies are required to provide
indemnification under this Agreement. Such access shall be afforded by FLIR
and the XXXXX Companies upon receipt of reasonable advance notice and during
normal business hours, provided such access does not unduly disrupt such
parties' normal business operations. The Spectra Companies shall be solely
responsible for any costs or expenses incurred by the Spectra Companies
pursuant to this Section. If FLIR or the XXXXX Companies shall desire to
dispose of any of such books and records prior to the expiration of such six-
year period, such party shall, prior to such disposition, give the Spectra
Companies a reasonable opportunity, at its expense, to segregate and remove
such books and records as the Spectra Companies may select.
7.7.2 For a period of six (6) years after the Closing Date, FLIR and its
Authorized Representatives shall have access to all of the Spectra Companies
books and records relating to the XXXXX Companies which the Spectra Companies,
or any of its Authorized Representatives, may retain after the Closing Date.
Such access shall be afforded by the Spectra Companies and its Authorized
Representatives upon receipt of reasonable advance notice and during normal
business hours. FLIR shall be solely responsible for any costs and expenses
incurred by it pursuant to this Section. If the Spectra Companies shall desire
to dispose of any of such books and records prior to the expiration of such
six-year period, the Spectra Companies shall, prior to such disposition, give
FLIR a reasonable opportunity, at FLIR's expense to segregate and remove such
books and records as FLIR may select.
7.8 PURCHASES OF FLIR COMMON STOCK
During the twelve (12) month period following the Closing Date, the Spectra
Companies agree that none of the Spectra Companies nor any of their Affiliates
shall acquire or agree to acquire any interest in any FLIR Common Stock, other
than the acquisition of FLIR Common Stock in connection with (i) a dividend
on, subdivision of or other pro rata distribution in respect of, any security
issued by FLIR, (ii) a merger, consolidation or other transaction, or (iii) an
offering by FLIR to the extent necessary to allow Stockholders to
30
maintain the same percentage ownership in FLIR as Stockholders shall have
immediately after delivery to Stockholders of the FLIR Stock as described in
Section 2.5.1.
7.9 DIRECTORS
Upon consummation of the Transaction, FLIR shall (i) cause one (1) of its
existing members of its Board of Directors to resign, (ii) increase the size
of such Board to a total of nine (9) members, (iii) appoint Xxxx Xxxxxxxxx to
the Board of Directors of FLIR, and (iv) appoint three (3) designees of
Spectra to become members of the Board of Directors of FLIR for a term
expiring at the next annual meeting of the stockholders of FLIR. Thereafter,
FLIR shall use its reasonable best efforts to cause the number of designees of
Spectra who are serving on the Board of Directors of FLIR to be maintained at
the number described below: (i) three (3) designees if on the date of mailing
of the notice for the annual shareholder meeting where such directors shall be
up for election and on the date the election is held, Stockholders hold of
record and beneficially more than or equal to thirty percent (30%) of the then
issued and outstanding shares of FLIR Common Stock, (ii) two (2) designees if
on the date of mailing of the notice for the annual shareholder meeting where
such directors shall be up for election and on the date the election is held,
Stockholders hold of record and beneficially less than thirty percent (30%)
but more than or equal to twenty percent (20%) of the then issued and
outstanding shares of FLIR Common Stock, and (iii) one (1) designee if on the
date of mailing of the notice for the annual shareholder meeting where such
directors shall be up for election and on the date the election is held,
Stockholders hold of record and beneficially less than twenty percent (20)%)
but more than or equal to ten (10%) percent of the then issued and outstanding
shares of FLIR Common Stock. If at some point in the future Stockholders hold
of record and beneficially less than ten percent (10%) of the then issued and
outstanding shares of FLIR Common Stock, Stockholders shall no longer be
entitled to the rights described above in this Section. While he remains
employed by FLIR as Vice Chairman, FLIR shall use its reasonable best efforts
to cause Xxxx Xxxxxxxxx to be appointed to the Board of Directors of FLIR.
7.10 XXXXX AND EUROPEAN SUBSIDIARIES STOCK
Before Closing, Spectra shall cause Spectra Industri to transfer to Spectra
100% of the issued and outstanding capital stock of XXXXX, so that before and
at Closing, Spectra will be the record and beneficial owner of 100% of the
issued and outstanding shares of capital stock of XXXXX. Before the Closing,
Stockholders shall cause the European Subsidiaries Stock to be transferred to
XXXXX, so that before and at Closing, the European Subsidiaries shall be
wholly-owned subsidiaries of XXXXX. Before Closing, Spectra shall cause XXXXX
to form XXXXX Italy as an Italian corporation and wholly-owned subsidiary of
Spectra, into which Spectra shall contribute before Closing those assets and
employees necessary to allow XXXXX Italy to conduct the business of design,
manufacture and distribution of thermal imaging devices conducted by Spectra
in Italy.
7.11 TAX TREATMENT OF EXCHANGE OF XXXXX USA STOCK
Each party agrees to report the exchange of the XXXXX USA Stock for certain
shares of FLIR Stock under Section 2.4 above on all tax returns and other
filings as a tax-free reorganization under Section 368(b) of the Code except
where, in the opinion of tax counsel to such party, there is not "substantial
authority," as defined in Section 6662 of the Code, to support such a
position.
7.12 CONFIDENTIALITY
The Spectra Companies have had access to, and have gained knowledge with
respect to the XXXXX Companies, and their trade secrets, financial results and
information, processes and techniques, plans, research, designs, concepts,
methods of doing business and information concerning customers and suppliers,
and other valuable and confidential information, which is not generally known
to the public (the "XXXXX Confidential Information"). The parties acknowledge
that unauthorized disclosure or misuse of the Confidential Information
following the date of this Agreement may cause irreparable damage to FLIR
and/or the XXXXX Companies.
31
The parties also agree that covenants by the Spectra Companies not to make
unauthorized disclosures of the XXXXX Confidential Information are essential
to the growth and stability of the XXXXX Companies. Accordingly, the Spectra
Companies agree that the Spectra Companies shall not use or disclose directly
or indirectly or cause or permit to be used or disclosed any XXXXX
Confidential Information obtained by the Spectra Companies while they were
Affiliates of the XXXXX Companies. Nothing in this Section 7.12 shall prevent
the Spectra Companies from using or disclosing any such XXXXX Confidential
Information as counsel to the Spectra Companies advises must be used or
disclosed in connection with ongoing litigation or pursuant to applicable law,
notice of which disclosure shall be promptly delivered to FLIR.
7.13 PROXY STATEMENT
As promptly as practical after the execution of this Agreement, FLIR and the
Spectra Companies shall prepare and FLIR shall file with the SEC the Proxy
Statement. FLIR shall make all necessary filings with respect to the
Transaction under the Securities Act and the Exchange Act and applicable rules
and regulations thereunder.
7.14 STOCKHOLDERS' MEETING
FLIR shall call a meeting of its stockholders to be held as promptly as
practicable after execution of this Agreement, however, in no event later than
December 30, 1997, for the purpose of voting upon the issuance of shares of
FLIR Stock pursuant to the Transaction.
7.15 HSR ACT FILINGS
Each of the Spectra Companies and FLIR shall (i) promptly make or cause to
be made the filings required of such party or any of its Affiliates under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act") with respect to the Transaction and the other transactions provided for
in this Agreement, (ii) comply at the earliest practicable date with any
request under the HSR Act for additional information, documents or other
material received by such party or any of its Affiliates from the Federal
Trade Commission or the Department of Justice or other Governmental Authority
in respect of such filings, the Transaction or such other transactions, and
(iii) cooperate with the other party in connection with any such filing and in
connection with resolving any investigation or other inquiry of any such
agency or other Governmental Authority under any applicable law with respect
to such filing, the Transaction or any such other transaction. Each party
shall promptly inform the other party of any material communication with, and
any proposed understanding, undertaking or agreement with, any Governmental
Authority regarding any such filings, the Transaction or any such other
transactions. Neither party shall participate in any meeting with any
Governmental Authority in respect of any such filings, investigation or other
inquiry without giving the other party notice of the meeting and, to the
extent permitted by such Governmental Authority, the opportunity to attend and
participate.
7.16 TRANSFERRED LIABILITIES
The following shall constitute Indebtedness or other liabilities of the
XXXXX Companies which may remain liabilities of the XXXXX Companies at and
after the time of Closing (the "Transferred Liabilities"): (i) Indebtedness
owed by XXXXX UK in an aggregate amount not to exceed 500,000 British Pounds;
(ii) an aggregate amount of XXXXX Net Intercompany Indebtedness, and (iii) the
aggregate pension liability of XXXXX'x PRI--pension plan not to exceed SEK
32,400,000 (the "Pension Liability"). If the XXXXX Net Intercompany
Indebtedness at the time of Closing exceeds $1,000,000, then the Spectra
Companies shall reimburse the XXXXX Companies fifty percent (50%) of the
difference between such excess XXXXX Net Intercompany Indebtedness and
$1,000,000, up to an amount not in excess of $1,000,000.
7.17 INTERIM FINANCIAL STATEMENTS
As soon as practical, the Spectra Companies shall deliver to FLIR year-to-
date combined unaudited interim balance sheets of the XXXXX Companies as of,
and statements of income, stockholders' equity and cash flows
32
of the XXXXX Companies for the nine-month period ending, September 30, 1997.
Upon delivery such interim financial statements shall automatically become and
be deemed to be XXXXX Combined Financial Statements for purposes of this
Agreement.
7.18 FURTHER ASSURANCES
Both before and after the Closing Date, each party will cooperate in good
faith with each other party and will take all appropriate action and execute
any agreement, instrument or other writing of any kind which may be reasonably
necessary or advisable to carry out and confirm the transactions contemplated
by this Agreement (including, but not limited to, obtaining Consents from any
Person from whom a Consent is not obtained on or before the Closing).
ARTICLE 8
CONDITIONS PRECEDENT
8.1 CONDITIONS TO OBLIGATIONS OF FLIR
The obligation of FLIR to consummate the Transaction is subject to the
fulfillment at or prior to the Closing Date of each of the following
conditions, any or all of which may be waived in whole or part by FLIR to the
extent permitted by applicable law.
8.1.1 Representations and Warranties True
The representations and warranties of the Spectra Companies contained in
this Agreement (or otherwise required hereby to be made after the date hereof
in a writing expressly referred to herein by or on behalf of the Spectra
Companies or the XXXXX Companies pursuant to this Agreement) shall have been
true in all material respects when made and shall be true in all material
respects on and as of the Closing Date as if made on and as of such date
(except to the extent they relate to the date of this Agreement or any other
particular date).
8.1.2 Performance
The Spectra Companies and the XXXXX Companies shall have each performed or
complied in all material respects with all agreements and conditions contained
herein required to be performed or complied with by each such party prior to
or at the time of Closing, including, but not limited to, execution and/or
delivery of the documents specified in Section 3.2.
8.1.3 No Material Adverse Change
There shall have been no changes since the date of this Agreement in the
business, operations, prospects, condition (financial or otherwise),
properties, assets or liabilities of the XXXXX Companies (regardless of
whether or not such events or changes are inconsistent with the
representations and warranties given herein by the Spectra Companies), except
changes contemplated by this Agreement and changes in the ordinary course of
business which would not be considered to have individually an XXXXX Material
Adverse Effect.
8.1.4 Bring-Down Certificate
The Spectra Companies shall have delivered to FLIR a certificate, dated the
Closing Date, signed by an authorized officer of each of the Spectra
Companies, certifying as to the fulfillment of the conditions specified in
Sections 8.1.1, 8.1.2 and 8.1.3 ("Spectra's Bring-Down Certificate").
8.1.5 Corporate Actions
All action necessary under applicable law, NASD bylaws and rules and the
applicable articles of incorporation, bylaws and similar organizational
documents to approve the consummation of the Transaction shall have been taken
by the Spectra Companies, the XXXXX Companies, and FLIR, including but not
limited to the approval of this Agreement and the Transaction and the issuance
by FLIR of the shares of FLIR Stock
33
described in Sections 2.1, 2.2, 2.3 and 2.4 by the Board of Directors and
shareholders of the Spectra Companies and FLIR.
8.1.6 No Order or Proceeding
No Order shall be outstanding, and no Proceeding shall be pending or
threatened (which threat (i) shall constitute the recommendation that a
Proceeding be commenced (and not the mere request for data) and (ii) shall be
immediately communicated to, and is subject to confirmation by, the other
party) against any of the FLIR Companies, XXXXX Companies, Spectra Companies
or their respective Affiliates, officers, directors or employees which would
restrain, prohibit, invalidate or attempt to restrain or enjoin, or materially
adversely affect, the Transaction.
8.1.7 Permits and Consents
All Permits and Consents, including, but not limited to, all filings with
and notifications to all Governmental Authorities, necessary for the
consummation by the Spectra Companies and the XXXXX Companies and FLIR of the
Transaction, including, but not limited to, those described in Spectra
Disclosure Schedule with reference to Section 4.2.6 shall have been obtained
or effected, other than routine post closing notifications or filings.
8.1.8 Termination of All Agreements Between the Spectra Companies and the
XXXXX Companies
Except for those agreements described on Schedule 8.1.8 hereto which shall
remain in full force and effect after the Closing, all agreements between or
among any of the Spectra Companies or any of their Affiliates (other than the
XXXXX Companies), on the one hand, and the XXXXX Companies, on the other hand,
including, but not limited to, all tax sharing or tax allocation agreements,
all cash pooling agreements and all forward rate agreements, shall have been
terminated, and there will be no liability to any party under any such
terminated agreements following the Effective Time.
8.1.9 No Liens or Indebtedness
Except for the Transferred Liabilities and the other Indebtedness and Liens
described on Schedule 8.1.9 hereto, all Liens on the assets of the XXXXX
Companies shall be terminated prior to Closing at the expense of the Spectra
Companies and at Closing none of the XXXXX Companies shall have any
Indebtedness. FLIR shall have received appropriate documentation evidencing
such termination, in form and substance satisfactory to FLIR.
8.1.10 XXXXX Minimum Share Capital
FLIR shall have received evidence satisfactory to FLIR that the minimum
registered share capital of XXXXX has been increased to SEK 100,000 in
satisfaction of the requirements under Swedish law.
8.1.11 Other Agreements and Documents
FLIR shall have received the agreements and documents described in Section
3.2.
8.2 CONDITIONS TO OBLIGATIONS OF STOCKHOLDERS
The obligations of Stockholders to consummate the Transaction are subject to
the fulfillment at or prior to the Closing Date of each of the following
conditions, any or all of which may be waived in whole or in part by
Stockholders to the extent permitted by applicable law.
8.2.1 Representations and Warranties True
The representations and warranties of FLIR contained in this Agreement (or
otherwise required hereby to be made after the date hereof in a writing
expressly referred to herein by or on behalf of FLIR pursuant to this
Agreement) shall have been true in all material respects when made and shall
be true in all material respects on and as of the Closing Date as if made on
and as of such date (except to the extent they relate to the date of this
Agreement or any other particular date).
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8.2.2 Performance
FLIR shall have performed or complied in all material respects with all
agreements and conditions contained herein required to be performed or
complied with by FLIR prior to or at the time of the Closing including, but
not limited to, execution and/or delivery of the documents specified in
Section 3.3.
8.2.3 No Material Adverse Change
There shall have been no changes since the date of this Agreement in the
business, operations, prospects, condition (financial or otherwise),
properties, assets or liabilities of the FLIR Companies (regardless of whether
or not such events or changes are inconsistent with the representations and
warranties given herein by FLIR), except changes contemplated by this
Agreement and changes in the ordinary course of business which would not be
considered to have individually a FLIR Material Adverse Effect.
8.2.4 FLIR's Bring-Down Certificate
FLIR shall have delivered to Stockholders a certificate, dated the Closing
Date, signed by an authorized officer of FLIR certifying as to the fulfillment
by FLIR of the conditions specified in Sections 8.2.1, 8.2.2 and 8.2.3
("FLIR's Bring-Down Certificate").
8.2.5 Corporate Actions
All action necessary under applicable law, NASD bylaws and rules and the
applicable articles of incorporation, bylaws and similar organizational
documents to approve the consummation of the Transaction shall have been taken
by the Spectra Companies, the XXXXX Companies, and FLIR, including but not
limited to the approval of this Agreement and the Transaction and the issuance
by FLIR of the shares of FLIR Stock described in Sections 2.1, 2.2, 2.3 and
2.4 by the Board of Directors and shareholders of the Spectra Companies and
FLIR.
8.2.6 No Order or Proceeding
No Order shall be outstanding, and no Proceeding shall be pending or
threatened (which threat (i) shall constitute the recommendation that a
Proceeding be commenced (and not the mere request for data) and (ii) shall be
immediately communicated to, and is subject to confirmation by, the other
party) in writing against any of FLIR, the XXXXX Companies, the Spectra
Companies or their respective Affiliates, officers, directors or employees
which would restrain, prohibit, invalidate or attempt to restrain or enjoin,
or materially adversely affect, the Transaction.
8.2.7 Permits and Consents
All Permits and Consents, including, but not limited to, all filings with
and notifications to all Governmental Authorities, necessary for the
consummation by the Spectra Companies, the XXXXX Companies and FLIR of the
Transaction, including, but not limited to, those described in the FLIR
Disclosure Schedule with reference to Section 5.2.6 shall have been obtained
or effected, other than routine post closing notifications or filings.
8.2.8 Employment Agreements
FLIR shall amend the Employment Agreements in a form satisfactory to the
Spectra Companies so that the Transaction does not constitute a Change of
Control (as defined therein), provided, however, that if the Spectra Companies
and their Affiliates ownership of FLIR Stock exceeds forty-five percent (45%)
of the total issued and outstanding FLIR Stock at any time as a result of
purchases of FLIR Stock by the Spectra Companies or their Affiliates (other
than the FLIR Stock issued under Section 2.5 above), such amendment by its
terms shall become immediately and automatically null and void.
8.2.9 Director Resignation
FLIR shall have received a letter of resignation from one (1) of the members
of the Board of Directors of FLIR, such resignation to be effective upon
consummation of the Closing.
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8.2.10 Increase in Size of Board
The Board of Directors of FLIR shall have adopted resolutions increasing the
size of such Board from six (6) to nine (9) members and electing to fill
vacancies created thereby and pursuant to Section 8.2.9 above with the
nominees of Spectra previously provided to the Board, such actions to be
effective upon consummation of the Closing.
8.2.11 Release of Guarantees
The Spectra Companies and their affiliates shall have received releases, in
form and substance satisfactory to the Spectra Companies, releasing such
companies and their affiliates from any and all obligations as guarantors
under (i) the banking facility with Midland Bank of the United Kingdom and
(ii) XXXXX'X PRI-pension plan; provided, however, that if any of such releases
are not obtained by FLIR on or before Closing after the exercise by FLIR of
reasonable best efforts to obtain the same, FLIR covenants to obtain such
releases within sixty (60) days after the Closing, and FLIR shall indemnify
the Spectra Companies and their affiliates for any demand made during such
sixty (60) day period for payments with respect to the banking facility with
Midland Bank of the United Kingdom or XXXXX'X PRI-pension plan
8.2.12 Other Agreements and Documents
Stockholders shall have received the agreements and documents described in
Section 3.3.
ARTICLE 9
TERMINATION, AMENDMENT AND WAIVER
9.1 TERMINATION
This Agreement may be terminated at any time prior to the Closing Date:
9.1.1 By mutual consent of the Board of Directors of FLIR and the Board of
Directors of Spectra;
9.1.2 By either FLIR or the Spectra if Closing of the Transaction shall not
have occurred on or before March 31, 1998 (provided the terminating party is
not otherwise in material breach of its representations, warranties, covenants
or agreements under this Agreement);
9.1.3 By FLIR if any of the conditions specified in Section 8.1 has not been
met or waived by FLIR at such time as such condition is no longer capable of
satisfaction (provided FLIR is not otherwise in material breach of its
representations, warranties, covenants or agreements under this Agreement,
which breach is the direct and proximate cause of the failed condition);
9.1.4 By Spectra if any of the conditions specified in Section 8.2 has not
been met or waived by Stockholders at such time as such condition is no longer
capable of satisfaction (provided none of the Spectra Companies is otherwise
in material breach of its respective representations, warranties, covenants or
agreements under this Agreement, which breach is the direct and proximate
cause of the failed condition);
9.1.5 By FLIR if there has been a material breach on the part of the Spectra
Companies of any representation, warranty, covenant or agreement by the
Spectra Companies set forth in this Agreement, which breach, if capable of
cure, has not been cured within fifteen (15) business days following receipt
by Spectra of written notice of such breach;
9.1.6 By Spectra if there has been a material breach on the part of FLIR of
any representation, warranty, covenant or agreement by FLIR set forth in this
Agreement, which breach, if capable of cure, has not been cured within fifteen
(15) business days following receipt by FLIR of written notice of such breach;
36
9.1.7 By either FLIR or Spectra upon written notice given in compliance with
Section 11.3 below if any Governmental Authority of competent jurisdiction
shall have issued a final permanent Order enjoining or otherwise prohibiting
the consummation of the Transaction and, in any such case the time for appeal
or petition for reconsideration of such Order shall have expired without such
appeal or petition being granted.
9.2 EFFECT OF TERMINATION
In the event of termination of this Agreement by either FLIR or Spectra as
provided above, this Agreement shall forthwith become void and, except for
termination pursuant to Section 9.1.5 or 9.1.6, there shall be no liability on
the part of FLIR or the Spectra Companies or their respective officers or
directors; provided that Sections 4.19 and 5.16, the penultimate sentence of
Section 7.5, this Section 9.2 and the provisions of Article 11 shall survive
the termination.
9.3 AMENDMENT
This Agreement may not be amended except by an instrument in writing signed
on behalf of each of the parties hereto.
9.4 WAIVER
At any time prior to the Closing Date, the parties hereto may (i) extend the
time for the performance of any of the obligations or other acts of the other
parties hereto, (ii) waive any inaccuracies in the representations and
warranties of any other party contained herein or in any documents delivered
pursuant hereto by any other party and (iii) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of a
party hereto to any such extension or waiver shall be valid only if set forth
in an instrument in writing signed on behalf of such party. Any such extension
or waiver shall be effective only in the particular instance in which it is
given.
ARTICLE 10
SURVIVAL AND INDEMNIFICATION
10.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS
10.1.1 All representations and warranties by the Spectra Companies contained
in this Agreement shall survive the Closing Date for the duration of the
Claims Period, except that the representations and warranties in the following
Sections shall survive until the expiration of the applicable statue of
limitations or for six (6) years from the Closing Date, whichever is longer:
4.1, 4.2, 4.3, 4.4, 4.5, 4.6, 4.8, 4.19 and 4.22.
10.1.2 All covenants and agreements by the Spectra Companies contained in
this Agreement including, without limitation, the indemnification obligations
contained in this Article, shall survive the Closing Date until fully
performed or discharged.
10.1.3 All representations and warranties by FLIR contained in this
Agreement shall survive the Closing Date for the duration of the Claims
Period, except that the representations and warranties in the following
Sections shall survive until the expiration of the applicable statute of
limitations or for six (6) years from the Closing Date, whichever is longer:
5.1, 5.2, 5.3, 5.4, 5.16 and 5.19.
10.1.4 All covenants and agreements by FLIR contained in this Agreement
including, without limitation, the indemnification obligations contained in
this Article, shall survive the Closing Date until fully performed or
discharged.
10.1.5 Any claim by the Spectra Companies, FLIR or the XXXXX Companies with
respect to representations, warranties, covenants and agreements must be
initiated during the Claims Period or such other
37
applicable period as is specified above in this Section 10.1 by submission of
a written demand in accordance with the provisions of Section 10.4.1.
10.1.6 All statements contained in the Spectra Disclosure Schedule or in any
certificate or other instrument delivered by or on behalf of the Spectra
Companies pursuant to or in connection with the Transaction shall be deemed
representations, warranties and covenants by the Spectra Companies hereunder.
All statements contained in the FLIR Disclosure Schedule or in any certificate
or other instrument delivered by or on behalf of FLIR pursuant to or in
connection with the Transaction shall be deemed representations, warranties
and covenants by FLIR hereunder.
10.2 INDEMNIFICATION BY THE SPECTRA COMPANIES
The Spectra Companies, jointly and severally, hereby agree to defend,
indemnify and hold harmless FLIR (before and after the Closing) and the XXXXX
Companies (after the Closing) from, against and in respect to any Loss
suffered or incurred by FLIR or any of the XXXXX Companies by reason of (i) a
breach of any representation or warranty by the Spectra Companies contained in
this Agreement, (ii) the nonfulfillment of any covenant or agreement by the
Spectra Companies contained in this Agreement, or (iii) any of the matters
described in Section 4.11 of the Spectra Disclosure Schedule to the extent
that the Losses to FLIR and/or the XXXXX Companies exceed $90,000 in the
aggregate, and (iv) all Proceedings incident to any of the foregoing.
10.3 INDEMNIFICATION BY FLIR
FLIR hereby agrees to defend, indemnify and hold harmless the Spectra
Companies (before and after the Closing) from, against and in respect of any
Loss suffered or incurred by the Spectra Companies after the Closing by reason
of (i) a breach of any representation or warranty by FLIR contained in this
Agreement, (ii) the nonfulfillment of any covenant or agreement by FLIR
contained in this Agreement, or (iii) any of the matters described in Section
5.8 of the FLIR Disclosure Schedule to the extent that the Losses to the
Spectra Companies exceed $90,000 in the aggregate, and (iv) all Proceedings
incident to any of the foregoing.
10.4 NOTIFICATION AND DEFENSE OF CLAIMS OR ACTIONS
10.4.1 As used in this Section, any party seeking indemnification pursuant
to this Section is referred to as an "Indemnified Party" and any party from
whom indemnification is sought pursuant to this Section is referred to as an
"Indemnity Obligor." An Indemnified Person which proposes to assert the right
to be indemnified under this Article shall, pursuant to the notice provisions
of this Agreement, submit a written demand for indemnification setting forth
in summary form the facts as then known which form the basis for the claim for
indemnification. The parties agree that, for purposes of indemnification
claims arising under this Article after Closing, FLIR shall be authorized to
act on behalf of the XXXXX Companies.
10.4.2 With respect to claims based on actions by third parties, an
Indemnified Party shall, within twenty (20) days after the receipt of notice
of the commencement of any Proceeding against it in respect of which a claim
for indemnification is to be made against an Indemnity Obligor, notify the
Indemnity Obligor in writing of the commencement of such Proceeding, enclosing
a copy of all papers served; provided, however, that the failure to so notify
the Indemnity Obligor of any such Proceeding shall not relieve the Indemnity
Obligor from any liability which it may have to the Indemnified Party, except
to the extent that the Indemnity Obligor is prejudiced thereby. Thereafter,
the Indemnified Party shall deliver to the Indemnity Obligor, within twenty
(20) days after receipt by the Indemnified Party, copies of all further
notices relating to such claim.
10.4.3 If a third-party claim is made for which an Indemnified Party is
entitled to indemnification pursuant to this Article, the Indemnity Obligor
will be entitled to participate in the defense of such claim and, if it so
chooses, and provided that it acknowledges its obligation to indemnify the
Indemnified Party, to assume primary responsibility for the defense of such
claim with counsel selected by the Indemnity Obligor and not reasonably
objected to by the Indemnified Party. Should the Indemnity Obligor assume the
defense of such claim, the
38
Indemnity Obligor will not be liable to the Indemnified Party for any legal
expenses subsequently incurred by the Indemnified Party in connection with the
defense of such claim.
10.4.4 If the Indemnity Obligor assumes the defense of a third-party claim
as set forth in Section 10.4.3, then (i) in no event will an Indemnified Party
admit any liability with respect to, or settle, compromise or discharge, any
such claim without the Indemnity Obligor's prior written consent and (ii) each
Indemnified Party shall be entitled to participate in, but not control, the
defense of such claim with its own counsel at its own expense. If the
Indemnity Obligor does not assume the defense of any such claim, an
Indemnified Party may defend such claim in a manner as it may deem appropriate
(including, but not limited to, settling such claim, after giving twenty (20)
days prior written notice of such settlement to the Indemnity Obligor, on such
terms as the Indemnified Party may deem appropriate).
10.4.5 In the event that any claim for indemnification is made with respect
to any third-party claim pursuant to this Article, (i) the party assuming
primary responsibility for the defense of such claim shall at all times keep
the other party informed as to the status of such claim and (ii) the party not
primarily responsible for the defense of such claim shall cooperate fully with
the other party in connection with such defense.
10.5 RELIANCE
No disclosure by any party ("Disclosing Party") to this Agreement nor any
investigation made by or in behalf of another party with respect to the
Disclosing Party shall be deemed to affect the other party's reliance on the
respective representations and warranties contained in this Agreement and
shall not effect a waiver of that party's rights to indemnity as herein
provided for the breach of any of said representations and warranties;
provided, however, to the extent that as a result of any such investigation,
an officer or director of the non-Disclosing Party has actual knowledge that
any representation or warranty is untrue and the Disclosing Party does not
have Knowledge that such representation or warranty is untrue, the Disclosing
Party shall have no liability with respect to such breach of representation or
warranty.
ARTICLE 11
GENERAL PROVISIONS
11.1 EXPENSES
The XXXXX Companies shall bear all expenses incurred by the XXXXX Companies
or the Spectra Companies in connection with the Transaction, including the
fees and expenses of any attorneys, accountants, or other Persons engaged by
the XXXXX Companies or the Spectra Companies; provided, however, that the
Spectra Companies shall bear all brokerage, finder's or other fees or
commission or related expenses, if any, incurred by the Spectra Companies or
the XXXXX Companies, including the fees and expenses of any broker, finder or
investment banker engaged by the Spectra Companies or the XXXXX Companies.
FLIR shall bear all expenses incurred by FLIR in connection with the
Transaction, including the fees and expenses of any attorneys, accountants,
investment bankers, brokers, finders or other intermediaries or other Persons
engaged by FLIR.
11.2 PUBLIC ANNOUNCEMENTS
No announcement, discussion, press release or other publication of this
Agreement or the negotiations and discussions among the Spectra Companies, the
XXXXX Companies and FLIR may be made or issued by one party without the
written authorization of the other party, except that each party may seek the
advice of its counsel, accountants and other advisors with respect thereto.
Notwithstanding the foregoing, Neither Spectra nor FLIR shall be prohibited
from making any disclosure which is required in order to fulfill the
disclosure obligations imposed upon it by applicable law. If either party
proposes to make such disclosure, it will first notify the other party in
writing and both parties will use their best efforts to reach agreement on the
form and substance of the disclosure to be made. If the Closing does not
occur, the obligations of the parties under this Section 11.2
39
shall be binding upon the parties and remain in effect for a period of six (6)
months following termination of this Agreement. The Spectra Companies and FLIR
are aware and will advise their respective Affiliates and representatives who
are informed of the matters that are the subject of this Agreement of the
restrictions imposed by the United States and Swedish securities laws on the
purchase or sale of securities by any person who has received material, non-
public information from the issuer of such securities and on the communication
of such information to any other Person when it is reasonably foreseeable that
such other Person is likely to purchase or sell such securities in reliance
upon such information.
11.3 NOTICES, ETC.
All notices, requests, demands or other communications required by or
otherwise with respect to this Agreement shall be in writing and shall be
deemed to have been duly given to any party when delivered personally (by
courier service or otherwise), when delivered by facsimile and confirmed by
return facsimile, or seven days after being mailed by first-class mail,
postage prepaid and return receipt requested in each case to the applicable
addresses set forth below:
If to the Spectra Companies: With a Copy to:
Spectra-Physics XX Xxxxxxx Price & Xxxxxx 4000 Xxxx
Box 5226 Atlantic Towers 0000 Xxxx Xxxxxx
X-000 00 Xxxxxxxxxxxx, XX 00000
Stockholm, Sweden Attn: Xxxxxxxxxxx X. Xxxxxx
Attn: Xxxx Xxxxxxxxx Telephone: 000-000-0000
Telephone: 46-8-783 07 25 Facsimile: 000-000-0000
Facsimile: 46-8-660 92 26
If to FLIR (and the XXXXX
Companies after Closing): With a Copy to:
Xxxxx X. Xxxxxxxxx Xxxxxxx X. Xxxxxxxxx Xxxx Xxxxx
Vice President Xxxxxx Xxxxxx & Xxxxxxxx 222
and General Counsel S.W. Columbia, Suite 1800
FLIR Systems, Inc. Xxxxxxxx, XX 00000
00000 X.X. 00xx Xxxxxx Telephone: (000) 000-0000
Xxxxxxxx, XX 00000 Facsimile: (000) 000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
or to such other address as such party shall have designated by notice so
given to each other party.
11.4 ATTORNEYS' FEES
If a Proceeding is filed by any party to enforce this Agreement or otherwise
with respect to the subject matter of this Agreement, the prevailing party or
parties shall be entitled to recover reasonable attorneys' fees incurred in
connection with such Proceeding as fixed by the trial court, and if any appeal
is taken from the decision of the trial court, reasonable attorneys' fees as
fixed by the appellate court.
11.5 SEVERABILITY
If any one or more of the provisions contained in this Agreement shall be
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and
of the remaining provisions of this Agreement shall not be in any way
impaired.
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11.6 REMEDIES
11.6.1 In addition to any other remedies which FLIR may have at law or in
equity, including money damages, the Spectra Companies hereby agree that FLIR
shall have the right to have all obligations, undertakings, agreements,
covenants and other provisions of this Agreement specifically performed by the
Spectra Companies, as the case may be, and that subject to any provisions of
this Agreement relating to venue, FLIR shall have the right to obtain an order
or decree of such specific performance in any of the courts of the United
States or of any state or other political subdivision thereof.
11.6.2 In addition to any other remedies which the Spectra Companies, and
the XXXXX Companies (prior to Closing), may have at law or in equity,
including money damages, FLIR hereby agree that the Spectra Companies, and the
XXXXX Companies (prior to Closing), shall have the right to have all
obligations, undertakings, agreements, covenants and other provisions of this
Agreement specifically performed by FLIR, and that subject to any provisions
of this Agreement relating to venue, the Spectra Companies, and the XXXXX
Companies (prior to Closing), shall have the right to obtain an order or
decree of such specific performance in any of the courts of the United States
or of any state or other political subdivision thereof.
11.6.3 Except as expressly provided herein, all rights, powers and remedies
provided under this Agreement or otherwise available in respect hereof at law
or in equity shall be cumulative and not alternative, and the exercise or
beginning of the exercise of any right, power of remedy by any party shall not
preclude the simultaneous or later exercise of any other such right, power or
remedy by such party.
11.7 NO THIRD-PARTY BENEFICIARIES
Subject to Section 11.10.2 below, this Agreement is not intended to be for
the benefit of and shall not be enforceable by any Person who or which is not
a party hereto other than the XXXXX Companies, which shall have the right to
enforce the provisions of Article 10 as if they were parties hereto.
11.8 GOVERNING LAW
This Agreement and all disputes hereunder shall be governed by and construed
and enforced in accordance with the internal laws of the State of Oregon,
without regard to principles of conflict of laws.
11.9 JURISDICTION
Each party hereby irrevocably submits to the exclusive jurisdiction of the
United States District Court for the Western District of Washington or, if
such court does not have jurisdiction over such matter, to the applicable
state court in King County, Washington, in any Proceeding arising in
connection with this Agreement and agrees that any such Proceeding shall be
brought only in such court (and waives any objection based on forum non
conveniens or any other objection to venue therein); provided, however, that
such consent to jurisdiction is solely for the purpose referred to in this
Section and shall not be deemed to be a general submission to the jurisdiction
of said courts or the State of Oregon other than for such purpose. Each party
hereto consents to service of process in any Proceeding through the procedures
provided for notice in this Agreement.
11.10 ASSIGNMENT AND BINDING EFFECT
11.10.1 The Spectra Companies, the XXXXX Companies and FLIR shall not assign
this Agreement, in whole or in part, whether by operation of law or otherwise,
without the prior written consent of the other parties hereto, and any such
assignment contrary to the terms hereof shall be null and void and of no force
and effect. In no event shall the assignment by the Spectra Companies, the
XXXXX Companies or FLIR of its respective rights or obligations under this
Agreement, whether before or after the Closing, release the Spectra Companies,
the XXXXX Companies or FLIR from its respective liabilities and obligations
hereunder.
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11.10.2 Subject to any provisions hereof restricting assignment, this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors, legal representatives and assigns.
11.11 JOINT AND SEVERAL OBLIGATIONS
Each of the obligations and liabilities of the Spectra Companies and/or
Stockholders under this Agreement shall be joint and several obligations of
all of the Spectra Companies.
11.12 ENTIRE AGREEMENT
This Agreement (including the exhibits and schedules hereto and the
documents and instruments referred to herein) constitutes the entire agreement
and supersedes all other prior agreements and understandings, both written and
oral, among the parties, or any of them, with respect to the subject matter
hereof (other than as provided in the Confidentiality Agreement).
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11.13 COUNTERPARTS
This Agreement may be executed in any number of counterparts (including
counterparts delivered by facsimile), each of which shall be deemed to be an
original, but all of which together shall constitute one instrument. Each
counterpart may consist of a number of copies, each signed by less than all,
but together signed by all, the parties hereto.
IN WITNESS WHEREOF, this Agreement has been executed and delivered by the
parties set forth below.
FLIR: FLIR SYSTEMS, INC.
/s/ Xxxxxx X. Xxxxxx
By___________________________________
XXXXXX X. XXXXXX, Chairman and
Chief Executive Officer
SPECTRA COMPANIES: SPECTRA-PHYSICS AB
/s/ Xxxx Xxxxxxxxx
By___________________________________
XXXX XXXXXXXXX, President and CEO
/s/ Xxxxxxx Xxxxx
By___________________________________
XXXXXXX XXXXX, Senior Vice
President and Chief Operating
Officer
SPECTRA-PHYSICS HOLDINGS S.A.
/s/ Xxxx Aspinal
By___________________________________
XXXX ASPINAL, President and CEO
SPECTRA-PHYSICS HOLDINGS GMBH
/s/ Xxxxxxx Xxxxx
By___________________________________
XXXXXXX XXXXX, President and CEO
SPECTRA-PHYSICS HOLDINGS PLC
/s/ Xxxxxxx Xxxxx
By___________________________________
XXXXXXX XXXXX, President and CEO
PHAROS HOLDINGS, INC.
/s/ Xxxx X. Xxxxxx
By___________________________________
XXXX X. XXXXXX, President and CEO
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