Item 1.01 Entry into a Material Definitive Agreement.
As previously reported, on June 1, 2016, FLIR Systems, Inc. (FLIR) entered into an Underwriting Agreement (the Underwriting
Agreement) with Merrill Lynch, Pierce, Fenner & Smith Incorporated and J.P. Morgan Securities LLC, as representatives of the several underwriters named therein (the Underwriters), pursuant to which FLIR agreed to issue and sell
to the Underwriters $425,000,000 aggregate principal amount of its 3.125% notes due 2021 (the Notes).
On June 10, 2016, the
parties completed the offering, and the Notes were issued pursuant to a fourth supplemental indenture (the Supplemental Indenture), which supplements an indenture entered into on August 19, 2011 (the Base Indenture and
referred to together with the Supplemental Indenture as the Indenture) with U.S. Bank National Association, as trustee. The Notes are general unsecured senior obligations of FLIR and rank equally with all of FLIRs other unsecured
and unsubordinated indebtedness from time to time outstanding.
The Notes bear interest at a rate of 3.125% per year. Interest is payable
on the Notes semi-annually in arrears on June 15 and December 15 of each year, commencing December 15, 2016.
FLIR may redeem
the Notes in whole, at any time, or in part, from time to time, at a redemption price equal to the greater of:
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100% of the principal amount of the Notes to be redeemed, and
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the sum of the present values of the remaining scheduled payments of principal and interest in respect of the Notes to be redeemed (not including any interest accrued as of the date of redemption) from the date of
redemption through the May 15, 2021 (the date that is one month prior to the stated maturity date), in each case discounted to the date of redemption on a semi-annual basis (assuming a 360 day year consisting of twelve 30 day months) at the Treasury
Rate (as defined in the Supplemental Indenture) plus 30 basis points, plus accrued and unpaid interest on the principal amount being redeemed to the date of redemption.
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In addition, FLIR may redeem the Notes in whole, at any time, or in part, from time to time, from and after May 15, 2021 (the date that is one
month prior to the stated maturity date) at a redemption price equal to 100% of the principal amount of the Notes to be redeemed plus accrued and unpaid interest, if any, on such Notes to, but excluding the Redemption Date (as defined in the
Supplemental Indenture).
If FLIR experiences a Change of Control Triggering Event (as defined in the Supplemental Indenture)
with respect to the Notes, unless FLIR has exercised its right to redeem the Notes, each holder of Notes will have the right to require FLIR to repurchase all or a portion of such holders Notes at a price equal to 101% of the aggregate
principal amount of the Notes repurchased plus accrued and unpaid interest, if any, as provided in the Indenture.
The Indenture contains
covenants that, among other things, restrict the ability of FLIR and its subsidiaries to create or secure certain liens; enter into certain sale and leaseback transactions; and enter into certain mergers, consolidations and transfers of
substantially all of FLIRs assets. The above restrictions are subject in each case to important limitations and exceptions as specified in the Indenture.
The Indenture contains customary event of default provisions. If an event of default occurs and is continuing other than an event of default
regarding certain events of bankruptcy, insolvency or reorganization relating to FLIR, the Trustee or the holders of at least 25% in principal amount of the Notes may declare the Notes to be immediately due and payable. In the case of an event of
default resulting from certain events of bankruptcy, insolvency or reorganization relating to FLIR, the Notes will become immediately due and payable without any declaration or other act on the part of the Trustee or any holder of Notes.
The public offering price of the Notes was 99.931% of the principal amount. The Company received net proceeds of approximately $421 million,
after deducting underwriting discounts and estimated offering expenses. FLIR intends to use the net proceeds to repay $250 million aggregate principal amount of its 3.75% senior unsecured notes due September 1, 2016 and for general corporate
purposes, which may include working capital, investments in or extensions of credit to our subsidiaries, capital expenditures, acquisitions and stock repurchases.
The Notes were offered and sold pursuant to FLIRs automatic shelf registration statement on Form S-3 (Registration No. 333-211275) under
the Securities Act of 1933, as amended, which became effective upon filing with the Securities and Exchange Commission (the SEC) on May 11, 2016. The Company has filed with the SEC a prospectus supplement dated June 1, 2016, together
with the accompanying prospectus, dated June 1, 2016, relating to the offering and sale of the Notes.
The foregoing description of the Indenture and the Notes does not purport to be complete and is
qualified in its entirety by reference to the full text of the Base Indenture, Supplemental Indenture and the form of Note, copies of which are attached to this Current Report on Form 8-K as Exhibits 4.1, 4.2 and 4.3, respectively, and are
incorporated herein by reference.
The Trustee and its affiliates have engaged in and may continue to engage in certain banking and other
commercial dealings in the ordinary course of business with FLIR and its affiliates. It has received, or may in the future receive, customary fees and commissions for these transactions.