<PAGE>
================================================================================
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
FLIR SYSTEMS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
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Notes:
<PAGE>
[FLIR SYSTEMS LOGO]
16505 S.W. 72nd Avenue
Portland, Oregon 97224
(503) 684-3731
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 2, 1999
----------------
To the Shareholders of FLIR Systems, Inc.:
NOTICE IS HEREBY GIVEN that the annual meeting of shareholders (the "Annual
Meeting") of FLIR Systems, Inc. (the "Company") will be held on Wednesday,
June 2, 1999, at 2:00 p.m., at the World Trade Center, 25 S.W. Salmon Street,
Portland, Oregon 97204 for the following purposes:
1. Election of Directors. To elect two directors, each for a three-year
term;
2. Approval of 1999 Employee Stock Purchase Plan. To approve the FLIR
Systems, Inc. 1999 Employee Stock Purchase Plan;
3. Ratification of Appointment of Auditors. To ratify the appointment by
the Board of Directors of PricewaterhouseCoopers LLP as independent
auditors of the Company for the fiscal year ending December 31, 1999;
and
4. Other Business. To transact such other business as may properly come
before the meeting or any adjournments thereof.
The Board of Directors of the Company has fixed the close of business on
April 12, 1999 as the record date for the determination of shareholders
entitled to notice of and to vote at the Annual Meeting. Only shareholders of
record at the close of business on that date will be entitled to notice of and
to vote at the Annual Meeting or any adjournments thereof.
By Order of the Board,
/s/ Robert P. Daltry
Robert P. Daltry
Chairman of the Board of Directors
Portland, Oregon
April 30, 1999
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, WHETHER OR
NOT YOU PLAN TO BE PRESENT IN PERSON AT THE ANNUAL MEETING, PLEASE DATE,
SIGN AND COMPLETE THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE,
WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE>
FLIR SYSTEMS, INC.
16505 S.W. 72nd Avenue
Portland, OR 97224
(503) 684-3731
----------------
PROXY STATEMENT
for the
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 2, 1999
----------------
INTRODUCTION
General
This Proxy Statement is being furnished to the shareholders of FLIR Systems,
Inc., an Oregon corporation ("FLIR" or the "Company"), as part of the
solicitation of proxies by the Company's Board of Directors (the "Board of
Directors") from holders of the outstanding shares of FLIR common stock, par
value $0.01 per share (the "Common Stock"), for use at the Company's Annual
Meeting of Shareholders to be held on June 2, 1999, and at any adjournments or
postponements thereof (the "Annual Meeting"). At the Annual Meeting,
shareholders will be asked to elect two members of the Board of Directors,
approve the Company's 1999 Employee Stock Purchase Plan, ratify the
appointment by the Board of Directors of PricewaterhouseCoopers LLP as
independent auditors of the Company for the fiscal year ending December 31,
1999, and transact such other business as may properly come before the meeting
or any adjournments thereof. This Proxy Statement, together with the enclosed
proxy card, is first being mailed to shareholders of FLIR on or about May 3,
1999.
Solicitation, Voting and Revocability of Proxies
The Board of Directors has fixed the close of business on April 12, 1999 as
the record date for the determination of the shareholders entitled to notice
of and to vote at the Annual Meeting. Accordingly, only holders of record of
shares of Common Stock at the close of business on such date will be entitled
to vote at the Annual Meeting, with each such share entitling its owner to one
vote on all matters properly presented at the Annual Meeting. On the record
date, there were approximately 3,000 beneficial holders of the 14,145,704
shares of Common Stock then outstanding. The presence, in person or by proxy,
of a majority of the total number of outstanding shares of Common Stock
entitled to vote at the Annual Meeting is necessary to constitute a quorum at
the Annual Meeting.
If the enclosed form of proxy is properly executed and returned in time to
be voted at the Annual Meeting, the shares represented thereby will be voted
in accordance with the instructions marked thereon. Executed but unmarked
proxies will be voted FOR the election of the two nominees for election to the
Board of Directors, FOR approval of the Company's 1999 Employee Stock Purchase
Plan and FOR the ratification of the appointment of PricewaterhouseCoopers LLP
as the Company's independent auditors for the fiscal year ending December 31,
1999. The Board of Directors does not know of any matters other than those
described in the Notice of Annual Meeting that are to come before the Annual
Meeting. If any other matters are properly brought before the Annual Meeting,
the persons named in the proxy will vote the shares represented by such proxy
upon such matters as determined by a majority of the Board of Directors.
The presence of a shareholder at the Annual Meeting will not automatically
revoke such shareholder's proxy. A shareholder may, however, revoke a proxy at
any time prior to its exercise by filing a written notice of revocation with,
or by delivering a duly executed proxy bearing a later date to, Corporate
Secretary, FLIR Systems, Inc., 16505 S.W. 72nd Avenue, Portland, Oregon 97224,
or by attending the Annual Meeting and
1
<PAGE>
voting in person. However, a shareholder who attends the meeting need not
revoke a previously executed proxy and vote in person unless such shareholder
wishes to do so. All valid, unrevoked proxies will be voted at the Annual
Meeting.
ELECTION OF DIRECTORS
At the Annual Meeting two directors will be elected, each for a three-year
term. Unless otherwise specified on the proxy, it is the intention of the
persons named in the proxy to vote the shares represented by each properly
executed proxy for the election as directors of the persons named below as
nominees. The Board of Directors believes that the nominees will stand for
election and will serve if elected as directors. However, if any of the
persons nominated by the Board of Directors fails to stand for election or is
unable to accept election, the number of directors constituting the Board of
Directors may be reduced prior to the Annual Meeting or the proxies may be
voted for the election of such other person as the Board of Directors may
recommend.
Under the Company's articles of incorporation and bylaws, the directors are
divided into three classes. The term of office of only one class of directors
expires in each year, and their successors are elected for terms of three
years and until their successors are elected and qualified. There is no
cumulative voting for election of directors.
In December 1997, the Company acquired all of the outstanding shares of
capital stock of AGEMA Infrared Systems AB, a corporation organized under the
laws of Sweden, and certain of its affiliates ("AGEMA") in exchange for a
total of 4,162,000 shares of the Company's Common Stock (the "Acquisition").
The Acquisition was completed effective as of December 1, 1997 pursuant to the
terms of a Combination Agreement dated as of October 6, 1997 (the "Combination
Agreement") by and among FLIR, Spectra-Physics AB, a corporation organized
under the laws of Sweden ("Spectra") and certain of Spectra's affiliates
(together, the "Spectra Companies"). Pursuant to the terms of the Combination
Agreement, FLIR agreed to use its reasonable best efforts to cause three
persons designated by Spectra to be elected to the Board of Directors, and to
cause the number of designees of Spectra serving on the Board of Directors to
be maintained at the number described below: (i) three designees if on the
date of mailing of the notice for the annual shareholder meeting where such
directors shall be up for election, the Spectra Companies own thirty percent
(30%) or more of the then issued and outstanding shares of Common Stock, (ii)
two designees if on the date of mailing of the notice for the annual
shareholder meeting where such directors shall be up for election, the Spectra
Companies own less than thirty percent (30%) but more than or equal to twenty
percent (20%) of the then issued and outstanding shares of Common Stock, and
(iii) one designee if on the date of mailing of the notice for the annual
shareholder meeting where such directors shall be up for election, the Spectra
Companies own less than twenty percent (20%) but more than or equal to ten
percent (10%) of the then issued and outstanding shares of Common Stock. If at
some point in the future the Spectra Companies own less than ten percent (10%)
of the then issued and outstanding shares of Common Stock, the Spectra
Companies shall no longer be entitled to the rights described above. Lars
Spongberg, Patrick L. Edsell and Egon Linderoth were elected to the Board of
Directors at the 1998 Annual Meeting as designees of Spectra.
In February 1999, Thermo Instrument Systems, Inc., a majority-owned,
publicly traded subsidiary of Thermo Electron Corporation, a Delaware
corporation ("Thermo Electron"), acquired substantially all of the outstanding
capital stock of Spectra. As a result of such acquisition, Thermo Electron
became the beneficial owner of the 4,162,000 shares of Common Stock owned by
Spectra and its affiliates. These shares represent approximately 29.4% of the
shares of Common Stock outstanding as of April 12, 1999. By virtue of its
stock ownership position and Board representation, Thermo Electron will be
able to significantly influence the direction and policies of FLIR, the
election of the FLIR Board of Directors and the outcome of any other matter
requiring shareholder approval, including any merger, consolidation, sale of
substantially all of the assets of FLIR and other change of control
transaction.
Information as to Nominees and Continuing Directors. The following table
sets forth the names of the Board of Directors' nominees for election as a
director and those directors who will continue to serve after the
2
<PAGE>
Annual Meeting. Also set forth is certain other information with respect to
each such person's age at April 12, 1999, principal occupation or employment
during the past five years, the periods during which he has served as a
director of FLIR, the expiration of his term as a director and the positions
currently held with FLIR.
<TABLE>
<CAPTION>
Director Expiration
Nominees: Age Since of Term Position Held with FLIR
--------- --- -------- ---------- -----------------------
<S> <C> <C> <C> <C>
Robert P. Daltry 55 1987 1999 Chairman of the Board of
Directors
John C. Hart 65 1987 1999 Director
Continuing Directors:
---------------------
Patrick L. Edsell 51 1998 2000 Director
Egon Linderoth 62 1998 2000 Director
Ronald L. Turner 52 1993 2000 Director
W. Allen Reed 51 1992 2001 Director
Lars Spongberg 54 1998 2001 Director
J. Kenneth Stringer III 46 1993 2001 President, Chief Executive
Officer and Director
</TABLE>
Robert P. Daltry. Mr. Daltry joined the Company in 1987 as President and
Chief Executive Officer and a member of the Board of Directors. He was elected
Chairman of the Board of Directors in April 1993. He served as Chief Executive
Officer until December 1998. From 1984 to 1987, Mr. Daltry was employed by
Lear Siegler, Inc., an aerospace company, where he served as Vice President of
Marketing for the Instrument and Avionics Systems Division. From 1981 to 1984,
Mr. Daltry served as Regional Manager for Singer-Kearfott, an aerospace
company. Mr. Daltry holds a B.A. in Accounting from Grove City College.
John C. Hart. Mr. Hart has served as a Director of the Company since
February 1987 and as Chairman of the Board of Directors from 1987 to April
1993. From 1982 until his retirement in 1993, Mr. Hart served as Vice
President of Finance, Treasurer and a member of the Board of Directors of
Louisiana-Pacific Corporation.
Patrick L. Edsell. Mr. Edsell was elected to the Board of Directors in
December 1997 in connection with the Company's acquisition of AGEMA. Mr.
Edsell is currently President and Chief Executive Officer of Spectra-Physics
Lasers, Inc., formerly the U.S. subsidiary of Spectra-Physics AB, and has
served in that capacity since 1990. Mr. Edsell also served as Vice President
of Finance and Chief Financial Officer of Spectra-Physics AB from 1984 to
1991. A graduate of the U.S. Air Force Academy with a B.S. in Economics, Mr.
Edsell received an M.A. in Economics from Ohio State University and an MBA
from the University of New Mexico.
Egon Linderoth. Mr. Linderoth was elected to the Board of Directors in
December 1997 in connection with the Company's acquisition of AGEMA. Mr.
Linderoth is President of Ostermans Aero AB, an aerospace company in Sweden.
Prior to joining Ostermans, Mr. Linderoth served as President and Chief
Executive Officer of Celsius Industries AB from 1995 to 1996, and President
and Chief Executive Officer of Bofors AB from 1992 to 1995. Mr. Linderoth
currently serves on the Board of Directors of Spectra-Physics AB, the Swedish
Industrial Development Fund, Faufoss AS, Karlskoga Invest AB and is a member
of the Swedish Royal Academy of War Science. Mr. Linderoth received his
Baccalaureate in 1958 and an MBA from the Stockholm School of Economics.
Ronald L. Turner. Mr. Turner was elected to the Board of Directors in 1993.
Mr. Turner is President and Chief Operating Officer of Ceridian Corporation.
Mr. Turner also served as Executive Vice President, Operations from 1997 to
1998. From 1993 to 1997, Mr. Turner served as President and Chief Executive
Officer of Computing Devices International, an aerospace company, which was a
division of Ceridian Corporation. From 1987 to 1993, Mr. Turner was President
and Chief Executive Officer of GEC-Marconi Electronic Systems Corporation, a
defense electronic company. Prior to 1987, Mr. Turner worked for Martin
Marietta Corporation for 14 years in a variety of executive positions. Mr.
Turner serves on the Board of Directors of Ceridian Corporation, BTG, Inc.,
Government Electronics and Information Technology Association and on the Board
of
3
<PAGE>
Governors and Executive Committee of the Electronic Industries Alliance. He is
also a past President and a member of the Board of Governors of the
Massachusetts Institute of Technology Society of Sloan Fellows.
W. Allen Reed. Mr. Reed has served as a Director of the Company since April
1992. Mr. Reed is President of General Motors Investment Management
Corporation. From 1991 to 1994, Mr. Reed was Vice President and Treasurer of
GM Hughes Electronics Corporation and Hughes Aircraft Company ("Hughes"). From
1984 to 1991, Mr. Reed was President of the Hughes Investment Management
Company, a wholly-owned subsidiary of Hughes. Prior to joining Hughes, Mr.
Reed was Vice President and Portfolio Manager for Allen & Associates
Investment Management Company. Mr. Reed serves on the Boards of Directors of
Westrec Financial Corporation, General Motors Acceptance Corporation, Motors
Insurance Corp., Taubman Centers, Inc. and Foreign Fund, Inc. Mr. Reed also
serves as Chairman of the Investment Advisory Committee for the Howard Hughes
Medical Institute.
Lars Spongberg. Mr. Spongberg was elected to the Board of Directors in
December 1997 in connection with the Company's acquisition of AGEMA. Mr.
Spongberg has served as President of Spectra-Physics AB, the parent company of
AGEMA, since 1997 and a member of the Board of Directors since April 1997.
From 1995 to 1996, he was Senior Vice President of Autoliv AB, an automotive
parts manufacturer, and was previously Senior Vice President of Svenska
Handelsbaken, a Swedish commercial bank, from 1993 to 1995.
J. Kenneth Stringer III. Mr. Stringer joined the Company in 1984 as Vice
President of Finance and Chief Financial Officer and was appointed Executive
Vice President in 1990. Mr. Stringer was elected to the Board of Directors in
April 1993. In April 1995, Mr. Stringer was appointed President and Chief
Operating Officer. In December 1998, Mr. Stringer was appointed Chief
Executive Officer. Prior to joining the Company, Mr. Stringer spent six years
with Evans Products Company, Portland, Oregon, as Director of Financial
Reporting. He started his career with Touche Ross and Company (which
subsequently became Deloitte & Touche). Mr. Stringer received his B.S. degree
from the University of Oregon.
Board of Directors Committees and Nominations by Shareholders. The Board of
Directors acts as a nominating committee for selecting nominees for election
as directors. The Company's bylaws also permit shareholders to make
nominations for the election of directors, if such nominations are made
pursuant to timely notice in writing to the Company's Secretary. To be timely,
notice must be delivered to, or mailed to and received at, the principal
executive offices of the Company not less than 60 days nor more than 90 days
prior to the date of the meeting, provided that at least 60 days notice or
prior public disclosure of the date of the meeting is given or made to
shareholders. If less than 60 days notice or prior public disclosure of the
date of the meeting is given or made to shareholders, notice by the
shareholder to be timely must be received by the Company not later than the
close of business on the tenth day following the date on which such notice of
the date of the meeting was mailed or such public disclosure was made. A
shareholder's notice of nomination must also set forth certain information
specified in the Company's bylaws concerning each person the shareholder
proposes to nominate for election and the nominating shareholder.
The Board of Directors has appointed a standing Audit Committee. The members
of the Audit Committee currently are Messrs. Reed and Edsell. The Audit
Committee reviews the scope of the independent annual audit, the independent
public accountants' letter to the Board of Directors concerning the
effectiveness of the Company's internal financial and accounting controls and
management's response to that letter, if deemed necessary. The audit committee
met twice during the fiscal year ended December 31, 1998. The Board of
Directors also has appointed a Compensation Committee which reviews executive
compensation and makes recommendations to the full Board regarding changes in
compensation, and also administers the Company's stock option plans. During
the fiscal year ended December 31, 1998, the Compensation Committee held two
meetings. The members of the Compensation Committee currently are Messrs.
Hart, Spongberg and Turner.
During 1998 the Company's Board of Directors held seven meetings. Each
incumbent director attended more than 75% of the aggregate of the total number
of meetings held by the Board of Directors and the total number of meetings
held by all committees of the Board on which he served during the period that
he served.
4
<PAGE>
See "Management--Executive Compensation" for certain information regarding
compensation of directors.
The Board of Directors unanimously recommends that shareholders vote FOR the
election of its nominees for director. If a quorum is present, the Company's
bylaws provide that directors are elected by a plurality of the votes cast by
the shares entitled to vote. Abstentions and broker non-votes are counted for
purposes of determining whether a quorum exists at the Annual Meeting, but are
not counted and have no effect on the determination of whether a plurality
exists with respect to a given nominee.
MANAGEMENT
Executive Officers
The executive officers of the Company are as follows:
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Robert P. Daltry........ 55 Chairman of the Board of Directors
J. Kenneth Stringer III. 46 President and Chief Executive Officer
Arne Almerfors.......... 54 Executive Vice President
James A. Fitzhenry...... 43 Vice President, General Counsel and Secretary
Dr. J. Richard Kerr..... 61 Vice President, Advanced Technology Business Development
William N. Martin....... 43 Vice President, Sales
Steven R. Palmquist..... 48 Vice President, Operations
J. Mark Samper.......... 38 Vice President, Finance and Chief Financial Officer
David Smith............. 39 Vice President, International Sales
William A. Sundermeier.. 35 Vice President, Product Strategy
</TABLE>
Information concerning the principal occupation of Messrs. Daltry and
Stringer is set forth under "Election of Directors." Information concerning
the principal occupation during the last five years of the executive officers
of the Company who are not also directors of the Company is set forth below.
Arne Almerfors. Mr. Almerfors joined the Company in December 1997 in
connection with the Company's acquisition of AGEMA, and currently serves as
Executive Vice President. From 1995 to 1997, Mr. Almerfors was President and
Chief Executive Officer of AGEMA. He also served as President and Chief
Executive Officer of CE Johansson AB, a manufacturer of coordinate measuring
devices, from 1989 to 1995. Mr. Almerfors received his B.S. and MBA degrees
from the University of Stockholm. Mr. Almerfors received a Masters in
Political Science in addition to post-graduate courses in corporate finance
and accounting from the University of Stockholm.
James A. Fitzhenry. Mr. Fitzhenry joined the Company in 1993 as Corporate
Counsel and Director of Administration, and was appointed Vice President,
General Counsel and Secretary in 1995. From 1990 to 1993, Mr. Fitzhenry served
in the White House during the Bush Administration in the Office of Policy
Development and the Office of Cabinet Affairs. Previously, he served as legal
counsel and legislative director to Senator Mark O. Hatfield (R-Ore.) and
practiced law in Portland, Oregon. Mr. Fitzhenry received his B.A. from the
University of Oregon and received his J.D. and MBA degrees from Willamette
University.
Dr. J. Richard Kerr. Dr. Kerr joined the Company in 1987 as Vice President
for Engineering and Product Development. In 1995, Dr. Kerr was appointed Vice
President of Advanced Development. Previously he acted as a consultant with
several venture capital firms and start-up high technology businesses for four
years. He was Vice President for Marketing of Flight Dynamics, an aviation
electronics company, from 1979 to 1984. Dr. Kerr also served as President,
Vice President and Professor of the Oregon Graduate Center. Dr. Kerr received
his Ph.D., M.S. and B.S. in Electrical Engineering from Stanford University.
5
<PAGE>
William N. Martin. Mr. Martin joined the Company in 1994 as Director of
Sales and was appointed Vice President, Sales for the Company in 1995. Prior
to joining the Company, Mr. Martin was employed by AGEMA Infrared Systems,
Inc., where he initially served as Western Regional Sales Manager and then
National Sales Manager. Prior to joining AGEMA, Mr. Martin served as Regional
Manager for Hughes Aircraft Company. Mr. Martin, who is an instrument multi-
engine commercial pilot, attended Wichita State University, majoring in speech
and communications.
Steven R. Palmquist. Mr. Palmquist joined the Company in January of 1997 as
Vice President of Engineering and was named Vice President of Operations in
January 1998. Since 1988, Mr. Palmquist has held several management positions
with Tektronix, Inc., including Product Definition and Development Manager,
Business Unit Manager for the Color Printer Division, and Vice President of
Engineering. From 1983 to 1988 he was the founder, President and Chief
Executive Officer of Integrated Measurement Systems, Inc. Mr. Palmquist
received a B.S. in Electrical Engineering from Washington State University and
a M.S. in Electrical Engineering from the University of Illinois.
J. Mark Samper. Mr. Samper joined the Company in 1990 as Corporate
Controller and was appointed Vice President of Finance and Chief Financial
Officer in March 1995. Prior to joining the Company, Mr. Samper spent six
years with Price Waterhouse where he served as an Audit Manager. Mr. Samper
received his B.S. degree from Oregon State University, with a major in
accounting. He is also a Certified Public Accountant.
David Smith. Mr. Smith joined the Company in December of 1997 in connection
with the Company's acquisition of AGEMA and currently serves as Vice President
of International Sales. Since 1996, Mr. Smith has served as President of AGEMA
Infrared Systems, Inc., the U.S. subsidiary of AGEMA. From 1993 to 1996,
Mr. Smith served as the UK Sales Director for AGEMA Infrared Systems, Ltd.,
the British subsidiary of AGEMA. Mr. Smith received his national diploma from
Wetford Technical College, England and his engineering degree from the
Hatfield Polytechnic Institute, England.
William A. Sundermeier. Mr. Sundermeier joined the Company in 1994 as
Product Marketing Manager and was appointed Director of Product Marketing in
1995. Mr. Sundermeier currently serves as the Vice President of Product
Strategy. Prior to joining the Company, Mr. Sundermeier was a founder of
Quality Check Software, Inc. (QCS) in 1993. From 1985 to 1993, Mr. Sundermeier
served as Product Line Manager at Cadre Technologies, Inc. Mr. Sundermeier
also served as Software/Hardware Engineer at Tektronix, Inc. from 1980 to
1985. Mr. Sundermeier received his B.S. in Computer Science from Oregon State
University.
6
<PAGE>
EXECUTIVE COMPENSATION
Summary of Cash and Certain Other Compensation
The following table provides information concerning the compensation of the
Company's Chief Executive Officer and each of the four other most highly
compensated executive officers of the Company (the "named executive officers")
for the fiscal years ending December 31, 1998, 1997 and 1996 or such periods
as the named executive officer was an officer of the Company.
<TABLE>
<CAPTION>
Long-term
Annual Compensation Compensation
---------------------- ----------------------
Stock Long-term
Name and Principal Options Incentive Plan All
Position Year Salary Bonus Granted Payouts(1) Other(2)
- ------------------ ---- -------- -------- ------- -------------- --------
<S> <C> <C> <C> <C> <C> <C>
Robert P. Daltry........ 1998 $271,202 $230,000 30,000 $320,065 $5,000
Chairman of the Board of 1997 252,872 122,500 25,000 607,500 4,750
Directors 1996 227,846 130,000 10,000 183,315 5,550
J. Kenneth Stringer III. 1998 225,726 180,000 25,000 240,049 5,000
President, Chief 1997 216,292 99,000 20,000 455,625 4,750
Executive Officer 1996 183,125 100,000 8,000 137,486 5,775
and Director
Steven R. Palmquist..... 1998 184,750 67,500 12,000 80,016 5,000
Vice President, 1997 163,596 50,000 15,000 151,875 1,031
Operations
William N. Martin....... 1998 178,500 40,000 12,000 80,016 --
Vice President, Sales 1997 174,484 50,000 11,000 151,875 --
1996 175,956 35,000 5,000 45,829 --
James A. Fitzhenry...... 1998 159,579 55,000 12,000 80,016 5,000
Vice President, General 1997 149,391 40,000 11,000 151,875 4,750
Counsel and 1996 134,584 35,000 5,000 45,829 5,113
Secretary
</TABLE>
- --------
(1) The amounts set forth under Long-term Incentive Plan Payouts represent
the dollar value of shares of restricted stock that were earned in 1996,
1997 and 1998 based upon achievement of specified performance goals. The
value of these shares was calculated based upon the closing price of the
Common Stock on December 31, 1996, February 3, 1998 and October 7, 1998,
respectively.
(2) The amounts set forth under All Other Compensation represent matching
amounts contributed on behalf of the named executive officers to the
Company sponsored 401(k) employee savings and retirement plan covering
all of the Company's employees.
Stock Options
The following table sets forth information concerning options granted to the
named executives during the year ended December 31, 1998 under the Company's
stock options plans:
<TABLE>
<CAPTION>
Potential
Realizable Value
at Assumed Annual
Percent of Rates of Stock
Number of Total Price
Securities Options Appreciation for
Underlying Granted to Exercise Option Term (2)
Options Employees Price Expiration -----------------
Name Granted (1) in 1998 Per Share Date 5% 10%
- ---- ---------- ---------- --------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Robert P. Daltry........ 30,000 8.2% $16.88 02/03/08 $318,378 $806,832
J. Kenneth Stringer III. 25,000 6.8% $16.88 02/03/08 265,315 672,360
Steven R. Palmquist..... 12,000 3.3% $16.88 02/03/08 127,351 322,733
William N. Martin....... 12,000 3.3% $16.88 02/03/08 127,351 322,733
James A. Fitzhenry...... 12,000 3.3% $16.88 02/03/08 127,351 322,733
</TABLE>
7
<PAGE>
- --------
(1) Options granted in 1998 become exercisable starting 12 months after the
grant date, with one-third of the options becoming exercisable at that
time and with an additional one-third of the options becoming exercisable
on the second and third anniversary dates of the option grant,
respectively.
(2) The amounts shown are hypothetical gains based on the indicated assumed
rates of appreciation of the Common Stock compounded annually for a ten
year period. Actual gains, if any, on stock option exercises are
dependent on the future performance of the Common Stock and overall stock
market conditions. There can be no assurance that the Common Stock will
appreciate at any particular rate or at all in future years.
Options Exercised in Last Fiscal Year and Fiscal Year End Option Values
The following table sets forth, for each of the named executive officers,
the shares acquired during 1998 and the related value realized, and the number
and value of unexercised options as of December 31, 1998.
<TABLE>
<CAPTION>
Options Exercised Number of Securities Value of Unexercised
in Last Fiscal Underlying Unexercised In-the-Money Options
Year(1) Options at December 31, 1998 at December 31, 1998(2)
------------------ -------------------------------- -------------------------
Number of Value
Shares Realized Exercisable Unexercisable Exercisable Unexercisable
--------- -------- -------------- --------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert P. Daltry........ 9,600 $176,400 129,000 50,000 $1,821,917 $393,333
J. Kenneth Stringer III. 6,000 88,650 77,850 41,000 1,011,530 321,042
Steven R. Palmquist..... 0 0 5,000 22,000 40,938 158,375
William N. Martin....... 5,334 30,087 5,000 21,000 54,374 168,042
James A. Fitzhenry...... 6,167 44,305 1,666 21,000 15,825 168,042
</TABLE>
- --------
(1) The value realized is based on the difference between the market price at
the time of exercise of the options and the applicable exercise price.
(2) The value of unexercised in-the-money options is based on the difference
between $23.25, which was the closing price of the Common Stock on
December 31, 1998, and the applicable exercise price.
Restricted Stock Awards
The following table sets forth information concerning outstanding restricted
stock awards for each of the named executive officers:
<TABLE>
<CAPTION>
Estimated Future Payouts
under Non-Stock Price Based
Plans(1)
---------------------------
Maximum
Performance or Other Threshold Target Number
Number Period Until Number Number of
Name of Shares Maturation or Payout of Shares of Shares Shares
- ---- --------- -------------------- --------- --------- -------
<S> <C> <C> <C> <C> <C>
Robert P. Daltry........ -- -- -- -- --
J. Kenneth Stringer III. 6,000 1/1/99-12/31/99 0 4,905 6,000
6,000 1/1/00-12/31/00 0 4,905 6,000
6,000 1/1/01-12/31/01 0 4,905 6,000
Steven R. Palmquist..... 4,000 1/1/99-12/31/99 0 3,270 4,000
4,000 1/1/00-12/31/00 0 3,270 4,000
4,000 1/1/01-12/31/01 0 3,270 4,000
William N. Martin....... 4,000 1/1/99-12/31/99 0 3,270 4,000
4,000 1/1/00-12/31/00 0 3,270 4,000
4,000 1/1/01-12/31/01 0 3,270 4,000
James A. Fitzhenry...... 4,000 1/1/99-12/31/99 0 3,270 4,000
4,000 1/1/00-12/31/00 0 3,270 4,000
4,000 1/1/01-12/31/01 0 3,270 4,000
</TABLE>
8
<PAGE>
- --------
(1) Payouts of awards are tied to the Company's achievement of specified
levels of pretax earnings growth, pretax return on equity and stock price
appreciation. No payouts are made if the Company does not achieve at
least 10% growth in pretax earnings and pretax return on equity, and
stock price appreciation at least equal to that of a pre-selected index
during the performance period. The maximum payout is made if pretax
earnings growth exceeds 25%, pretax return on equity exceeds 17.5% and
stock price appreciation exceeds the performance of the index by more
than 20%. A cash payment representing 80% of the value of the shares
earned will be paid to each of the named executive officers to cover the
tax consequences of the total award.
(2) The target number of shares payable with respect to the 1999, 2000 and
2001 performance periods are not presently determinable. As required by
the regulations of the Securities and Exchange Commission, the target
number of shares shown for such performance periods represent the number
of shares that would be earned for each period based on the Company's
actual performance in 1998.
Employment Agreements
FLIR has entered into employment agreements (the "Employment Agreements")
with certain of its executive officers, including Robert P. Daltry, J. Kenneth
Stringer III, Arne Almerfors, James A. Fitzhenry, William N. Martin, Steven R.
Palmquist, David Smith and J. Mark Samper. Each of the Employment Agreements
is for a term ending December 31, 2001, provided that if a Change of Control
(as defined) occurs before December 31, 2001, the Employment Agreements will
continue in effect until two years after the Change in Control. If the
executive officer resigns voluntarily or is properly terminated for Cause (as
defined) all pay and benefits under the Employment Agreement will cease as of
the effective date of the termination or resignation. In the event of the
death of an executive officer, the designated beneficiary of the executive
officer would receive a lump sum payment equal to twelve months base salary at
the then current rate. With respect to Messrs. Daltry and Stringer, in the
event that the employment of such executive officer is terminated by the
Company without cause, such executive officer would be entitled to receive a
lump sum payment in an amount equal to two year's base salary plus bonuses
earned through the date of termination. For a period of two years following
the Change of Control, each executive officer would have the right to
terminate his employment for Good Reason (as defined), and to receive upon
such termination a lump sum payment in an amount equal to two times (three
times in the case of Messrs. Daltry and Stringer) their average annualized
compensation during the five year period preceding the Change of Control. In
addition, the executive officers would be entitled to the continuation of
health and insurance benefits for certain periods. For purposes of the
Employment Agreements, a "Change of Control" includes (i) any merger or
consolidation transaction that results in the shareholders of the Company
immediately before such transaction owning less than 50 percent of the total
combined voting power of the surviving corporation in the transaction, (ii)
the acquisition by any person of 20 percent or more of the Company's total
combined voting power, (iii) the liquidation of the Company of the sale of
substantially all of its assets, and (iv) a change in the composition of the
Board of Directors during any 24 month period such that the directors in
office at the beginning of the period and/or their successors who were elected
by or on the recommendation of the directors in office at the beginning of the
period do not constitute at least a 70 percent majority of the Board. In
connection with the Company's acquisition of AGEMA, the Employment Agreements
were amended to provide that the consummation of that transaction would not
constitute a Change of Control for purposes of the Employment Agreements. This
amendment to the Employment Agreements will terminate and become null and void
upon the acquisition by Spectra-Physics AB and/or its affiliates of any shares
of Common Stock if at the time of such acquisition Spectra and its affiliates
would beneficially own more than 45 percent of the issued and outstanding
shares of Common Stock. In connection with the acquisition by an affiliate of
Thermo Electron Corporation of substantially all of the outstanding capital
stock of Spectra, the Employment Agreements were amended to provide that the
consummation of that transaction would not constitute a Change of Control for
purposes of the Employment Agreements. This amendment to the Employment
Agreements will terminate and become null and void if (i) Thermo Electron
Corporation acquires any shares of Common Stock in excess of those shares held
by Spectra, or (ii) asserts any right to representation on the Board of
Directors. For purposes of the Employment Agreements, "Cause" means the
failure to satisfactorily perform
9
<PAGE>
the duties assigned to the executive officer within a certain period after
notice of such failure is given and commission of certain illegal or wrongful
acts.
Director Compensation
The members of the Company's Board of Directors are not compensated for
their service on the Board, but are reimbursed for out-of-pocket and travel
expenses incurred in attending Board meetings. Under the Company's 1993 Stock
Option Plan for Nonemployee Directors, as amended, an option to purchase 6,000
shares of Common Stock is automatically granted to each nonemployee director
each year on the day of the Annual Meeting.
Compensation Committee Report
Under rules established by the Securities and Exchange Commission (the
"SEC"), the Company is required to provide certain data and information in
regard to the compensation and benefits provided to the Company's Chairman of
the Board of Directors and Chief Executive Officer and the four other most
highly compensated executive officers. In fulfillment of this requirement, the
Compensation Committee, at the direction of the Board of Directors, has
prepared the following report for inclusion in this Proxy Statement.
Executive Compensation Philosophy. The Compensation Committee of the Board
of Directors is composed entirely of outside directors. The Compensation
Committee is responsible for setting and administering the policies and
programs that govern both annual compensation and stock ownership programs for
the executive officers of the Company. The Company's executive compensation
policy is based on principles designed to ensure that an appropriate
relationship exists between executive pay and corporate performance, while at
the same time motivating and retaining executive officers.
Executive Compensation Components. The key components of the Company's
compensation program are base salary, an annual incentive award, and equity
participation. These components are administered with the goal of providing
total compensation that is competitive in the marketplace, rewards successful
financial performance and aligns executive officers' interests with those of
stockholders. The Compensation Committee reviews each component of executive
compensation on an annual basis.
Base Salary. Base salaries for executive officers are set at levels believed
by the Compensation Committee to be sufficient to attract and retain qualified
executive officers. Base pay increases are provided to executive officers
based on an evaluation of each executive's performance, as well as the
performance of the Company as a whole. In establishing base salaries, the
Compensation Committee not only considers the financial performance of the
Company, but also the success of the executive officers in developing and
executing the Company's strategic plans, developing management employees and
exercising leadership. The Compensation Committee believes that executive
officer base salaries for 1998 were reasonable as compared to amounts paid by
companies of similar size.
Annual Incentive. The Compensation Committee believes that a significant
proportion of total cash compensation for executive officers should be subject
to attainment of specific Company earnings criteria. This approach creates a
direct incentive for executive officers to achieve desired performance goals
and places a significant percentage of each executive officer's compensation
at risk. Consequently, each year the Compensation Committee establishes
potential bonuses for executive officers based on the Company's achievement of
certain earnings criteria. For 1998 annual bonuses equal to 0% to 85% of base
salaries were paid to executive officers based on the Company's achievement of
such predetermined earnings criteria.
Stock Options. The Compensation Committee believes that equity participation
is a key component of its executive compensation program. Stock options are
granted to executive officers primarily based on the officer's actual and
potential contribution to the Company's growth and profitability and
competitive marketplace practices. Option grants are designed to retain
executive officers and motivate them to enhance stockholder value
10
<PAGE>
by aligning the financial interests of executive officers with those of
stockholders. Stock options also provide an effective incentive for management
to create shareholder value over the long term since the full benefit of the
compensation package cannot be realized unless an appreciation in the price of
the Company's Common Stock occurs over a number of years.
Options to purchase 137,000 shares of the Company's Common Stock were
granted to the Company's executive officers (including the Company's Chief
Executive Officer) for 1998 on March 5, 1999 with an exercise price equal to
the fair market value of the underlying Common Stock on the date of grant
$17.125. These options vest cumulatively in three annual installments of 33%
and expire ten years from the date of grant.
Compensation of Chief Executive Officer. Consistent with the executive
compensation policy and components described above, the Compensation Committee
determined the salary, bonus and stock options received by Robert P. Daltry,
the Chairman of the Board of Directors and Chief Executive Officer of the
Company, for services rendered in 1998. Mr. Daltry received a base salary of
$271,202 for 1998. He also earned a $230,000 bonus and a grant of 16,351
shares of the Company's Common Stock, and received a cash payment of $142,251
to cover the income tax consequences of the stock grant. Mr. Daltry received
the bonus and the stock grant based upon achieving particular financial
performance goals specified in advance by the Compensation Committee. On March
5, 1999, Mr. Daltry also received options to purchase 30,000 shares of the
Company's Common Stock.
COMPENSATION COMMITTEE
John C. Hart
Lars Spongberg
Ronald L. Turner
Compensation Committee Interlocks and Insider Participation
The members of the Compensation Committee during the fiscal year ended
December 31, 1998, were Messrs. Hart, Spongberg and Turner.
11
<PAGE>
Stock Performance Graph
The following graph compares the monthly return for the Company, the
Standard & Poors Mid-Cap 400 Index and the Hambrecht & Quist Technology Index.
COMPARISON OF MONTHLY RETURN*
AMONG FLIR SYSTEMS, INC., THE S & P MIDCAP 400 INDEX
AND THE HAMBRECHT & QUIST TECHNOLOGY INDEX
[PERFORMANCE GRAPH APPEARS HERE]
PERFORMANCE GRAPH DATA
<TABLE>
<CAPTION>
S&P Midcap 400
Dates FLIR Systems H&Q Technology Index Returns
----- ------------ -------------- --------------
<S> <C> <C> <C>
Dec-93 100.00 100.00 100.00
Mar-94 141.03 103.69 96.21
Jun-94 132.05 94.85 92.70
Sep-94 125.64 108.17 98.98
Dec-94 133.33 120.12 96.42
Mar-95 158.97 134.52 104.31
Jun-95 146.15 167.80 113.41
Sep-95 125.64 189.64 124.47
Dec-95 125.64 179.61 126.26
Mar-96 125.64 183.07 134.03
Jun-96 125.64 196.11 137.89
Sep-96 134.62 208.18 141.90
Dec-96 141.03 223.23 150.50
Mar-97 166.67 212.78 151.75
Jun-97 161.54 256.11 176.15
Sep-97 203.85 310.39 202.04
Dec-97 212.82 261.72 199.04
Mar-98 207.69 316.89 220.96
Jun-98 176.92 324.43 216.23
Sep-98 135.90 288.39 184.95
Dec-98 238.46 407.08 237.07
</TABLE>
- --------
* The monthly return on investment (change in stock price plus reinvested
dividends) for each of the periods for the Company, the Standard & Poors
Mid-Cap 400 Index and the Hambrecht & Quist Technology Index is based on
the stock price on June 22, 1993, the date of the Company's initial public
offering.
Section 16 Reports
Section 16(a) of the Securities Exchange Act of 1934, as amended (the "1934
Act") requires the Company's directors and officers, and persons who own more
than 10% of a registered class of the Company's equity securities, to file
initial reports of ownership and reports of changes in ownership with the SEC.
Such persons also are required to furnish the Company with copies of all
Section 16(a) reports they file.
Based solely on its review of the copies of such reports received by it with
respect to fiscal 1998, or written representations from certain reporting
persons, the Company believes that all filing requirements applicable to its
directors, officers and persons who own more than 10% of a registered class of
the Company's equity securities have been complied with for fiscal 1998,
except for Messrs. Daltry, Stringer, Fitzhenry, Martin, Palmquist and Samper,
each of whom inadvertantly filed a Form 4 late.
12
<PAGE>
CERTAIN TRANSACTIONS AND RELATIONSHIPS
The Company and Hughes Aircraft Company ("Hughes") were related parties as a
result of Hughes' stock ownership interest in the Company. The Company
purchased inventory parts from Hughes and its subsidiaries during the year
ended December 31, 1998 in the amount of $659,000. Sales of the Company's
products to Hughes amounted to $211,000 for the year ended December 31, 1998.
Hughes is a wholly-owned subsidiary of Raytheon Company. Sales of the
Company's products to Raytheon for the year ended December 31, 1998 amounted
to $8,824,000. All transactions with Hughes and Raytheon were on terms no more
favorable then those available to unaffiliated third parties. During 1998,
Hughes disposed of its stock in the Company and accordingly was no longer a
related party at December 31, 1998.
Spectra-Physics AB and subsidiaries ("Spectra") and the Company are related
parties as a result of Spectra's representation on the Board of Directors and
stock ownership interest in the Company. During 1998, the Company was indebted
to Spectra in the maximum amount of $5,031,000 as a result of debt assumed by
the Company in connection with the acquisition of AGEMA. This amount was
repaid in July 1998.
STOCK OWNED BY MANAGEMENT AND PRINCIPAL SHAREHOLDERS
The following table sets forth certain information known to the Company with
respect to the beneficial ownership of the Company's Common Stock as of April
12, 1999 by: (i) each person known by the Company to beneficially own more
than 5% of the outstanding shares of Common Stock, (ii) each of the Company's
directors, (iii) each of the Company's named executive officers, and (iv) all
directors and executive officers as a group. Except as otherwise indicated,
the Company believes that each of the following shareholders has sole voting
and investment power with respect to the shares beneficially owned by such
shareholder.
<TABLE>
<CAPTION>
Shares of
Common Stock Percent
Beneficially Common Stock
Name and Address of Beneficial Owner Owned(1) Outstanding
- ------------------------------------ ------------ ------------
<S> <C> <C>
Thermo Electron Corporation(2)....................... 4,162,000 29.4%
81 Wyman Street
Waltman, MA 02454
Franklin Resources, Inc.(3).......................... 1,295,730 9.2%
777 Mariners Island Blvd.
San Mateo, CA 94404
Advent International Corporation(4).................. 996,524 7.0%
75 State Street
Boston, MA 02109
Robert P. Daltry..................................... 291,146 2.0%
Patrick L. Edsell(5)................................. 12,000 *
John C. Hart......................................... 39,000 *
Egon Linderoth(6).................................... 12,000 *
W. Allen Reed........................................ 39,000 *
Lars Spongberg(7).................................... 12,000 *
J. Kenneth Stringer III.............................. 169,585 1.2%
Ronald L. Turner..................................... 39,000 *
James A. Fitzhenry................................... 22,920 *
William N. Martin.................................... 26,754 *
Steven R. Palmquist.................................. 23,088 *
Directors and Executive Officers as a group (16
persons)(8)......................................... 769,940 5.3%
</TABLE>
- --------
* Less than one percent (1%).
(1) Applicable percentage of ownership is based on 14,145,704 shares of FLIR
Common Stock outstanding as of April 12, 1999. Beneficial ownership is
determined in accordance with rules of the SEC, and includes voting power
and investment power with respect to shares. Shares issuable upon the
exercise of outstanding
13
<PAGE>
stock options that are currently exercisable or become exercisable within
60 days from April 12, 1999 are considered outstanding for the purpose of
calculating the percentage of Common Stock owned by such person, but not
for the purpose of calculating the percentage of Common Stock owned by any
other person. The number of shares that are issuable upon the exercise of
options that are currently exercisable or exercisable within 60 days of
April 12, 1999 is as follows: Mr. Daltry -- 150,667; Mr. Hart -- 39,000;
Mr. Reed -- 39,000; Mr. Stringer -- 95,517; Mr. Turner -- 39,000; Mr.
Edsell--12,000; Mr. Linderoth -- 12,000; Mr. Spongberg -- 12,000; Mr.
Martin -- 14,333; Mr. Fitzhenry -- 10,999; Mr. Palmquist -- 14,000; and
all officers and directors as a group -- 495,010.
(2) This information as to beneficial ownership is based on a Schedule 13D
filed by Thermo Electron Corporation with the Securities and Exchange
Commission on March 3, 1999. The Schedule 13D states that (i) Thermo
Electron Corporation is the beneficial owner of 4,162,000 shares of
Common Stock as to which it has sole voting and dispositive power, and
(ii) the 4,162,000 shares of Common Stock as to which beneficial
ownership is reported are held by Spectra-Physics AB, which is a
majority-owned subsidiary of Thermo Instrument Systems, Inc., a majority-
owned publicly traded subsidiary of Thermo Electron Corporation.
(3) This information as to beneficial ownership is based on a Schedule 13G/A
filed by Franklin Resources, Inc. with the Securities and Exchange
Commission on January 28, 1999. The Schedule 13G states that Franklin
Resources and its affiliates are the beneficial owners of 1,295,730
shares of Common Stock as to which certain affiliates of Franklin
Resources have sole voting and dispositive power.
(4) This information as to beneficial ownership is based on a Schedule 13G/A
filed with the Securities and Exchange Commission on April 9, 1999 by
Global Private Equity II Limited Partnership, Advent Direct Investment
Program Limited Partnership, Advent Israel Limited Partnership, Advent
Israel (Bermuda) Limited Partnership, EnviroTech Investment Fund I
Limited Partnership (together the "Advent Partnerships"), Advent
International Corporation ("AIC") and Advent International Limited
Partnership ("AILP"). The Schedule 13G/A states that AIC is the General
Partner of AILP which in turn is the General Partner of each of the
Advent Partnerships and, as such, that AIC has sole voting and sole
dispositive power with respect to the 996,524 shares of Common Stock as
to which beneficial ownership is reported.
(5) Mr. Edsell is President of Spectra-Physics Lasers, Inc., a U.S.
subsidiary of Spectra-Physics AB, and serves on the Company's Board of
Directors as a designee of Spectra-Physics AB. Mr. Edsell disclaims
beneficial ownership of the 4,162,000 shares of Common Stock held by
Spectra-Physics AB and beneficially owned by Thermo Electron Corporation.
(6) Mr. Linderoth serves on the Company's Board of Directors as a designee of
Spectra-Physics AB. Mr. Linderoth disclaims beneficial ownership of the
4,162,000 shares of Common Stock held by Spectra-Physics AB and
beneficially owned by Thermo Electron Corporation.
(7) Mr. Spongberg is President of Spectra-Physics AB. Mr. Spongberg disclaims
beneficial ownership of the 4,162,000 shares of Common Stock held by
Spectra-Physics AB and beneficially owned by Thermo Electron Corporation.
(8) Does not include the 4,162,000 shares of Common Stock held by Spectra-
Physics AB, as to which all directors and executive officers disclaim
beneficial ownership.
14
<PAGE>
APPROVAL OF 1999 EMPLOYEE STOCK PURCHASE PLAN
On January 28, 1999 the Board of Directors adopted, subject to shareholder
approval, the FLIR Systems, Inc. 1999 Employee Stock Purchase Plan (the
"ESPP"). The Company has reserved a total of 1,500,000 shares of Common Stock
for issuance under the ESPP. The purpose of the ESPP is to provide a
convenient and practical means by which employees may participate in stock
ownership of the Company. The Board of Directors believes that the opportunity
to acquire a proprietary interest in the success of the Company through the
acquisition of shares of Common Stock pursuant to the ESPP is an important
aspect of the Company's ability to attract and retain highly qualified and
motivated employees. The following is a summary of the basic terms and
provisions of the ESPP, a complete copy of which is attached to this Proxy
Statement as Exhibit A.
The ESPP is administered by the Compensation Committee of the Board of
Directors. The Compensation Committee has the power to make and interpret all
rules and regulations it deems necessary to administer the ESPP and has broad
authority to amend the ESPP, subject to certain amendments requiring
shareholder approval.
All regular status employees of the Company and its subsidiaries, including
the Company's officers, are eligible to participate in the ESPP if they: (i)
are customarily employed in a position with regular hours of more than 20
hours a week, and (ii) are customarily employed more than five months in any
calendar year. Eligible employees may elect to contribute from 1% to 10% of
their cash compensation during each pay period. The ESPP provides for two
annual six-month offering periods, with enrollment dates (the "Enrollment
Dates") on the first day of each offering period. During the offering periods,
participants accumulate funds in an account via payroll deduction. At the end
of each six-month offering period, the purchase price is determined and the
accumulated funds are used to automatically purchase shares of Common Stock.
The purchase price per share is equal to 85% of the lower of (a) the fair
market value of the Common Stock on the Enrollment Date of the offering period
or (b) the fair market value on the date of purchase. Unless a participant
files a withdrawal notice before the beginning of the next offering period,
such participant will automatically be re-enrolled for the next offering
period.
Neither payroll deductions credited to a participant's account nor any
rights with regard to the purchase of shares under the ESPP may be assigned,
transferred, pledged or otherwise disposed of in any way by the participant.
Upon termination of a participant's employment for any reason the payroll
deductions credited to the participant's account will be returned to the
participant.
As of April 12, 1999, there were 850 employees of the Company eligible to
participate in the ESPP. Participation in the ESPP is voluntary and is
dependent on each eligible employee's election to participate and his or her
determination as to the level of payroll deductions. Accordingly, the names or
positions of the participants and the amounts of future purchases under the
ESPP are not determinable at this time. As of the date of this Proxy
Statement, no options to purchase shares of Common Stock have been granted
under the ESPP.
The ESPP shall continue in effect for a term of ten years from the earlier
of its adoption by the Board of Directors or approval by the shareholders of
the Company, unless earlier terminated by the Board of Directors.
The ESPP is intended to qualify as an "employee stock purchase plan" within
the meaning of Section 423 of the Code. Under the Code, no taxable income is
recognized by the participant with respect to shares purchased under the ESPP
either at the time of enrollment or at any purchase date within an offering
period.
If the participant disposes of shares purchased pursuant to the ESPP more
than two years from the Enrollment Date and more than one year from the date
on which the shares were purchased, the participant will recognize ordinary
income equal to the lesser of (1) the excess of the fair market value of the
shares at the time of disposition over the purchase price, or (2) 15% of the
fair market value of the shares on the Enrollment Date. Any gain on the
disposition in excess of the amount treated as ordinary income will be capital
gain. The Company is not entitled to take a deduction for the amount of the
discount in circumstances indicated above.
15
<PAGE>
If the participant disposes of shares purchased pursuant to the ESPP within
two years after the Enrollment Date or within one year after the purchase
date, the employee will recognize ordinary income on the excess of the fair
market value of the stock on the purchase date over the purchase price. Any
difference between the sale price of the shares and the fair market value on
the purchase date will be capital gain or loss. The Company is entitled to a
deduction from income equal to the amount the employee is required to report
as ordinary compensation income.
The federal income tax rules relating to employee stock purchase plans
qualifying under Section 423 of the Code are complex. Therefore, the foregoing
outline is intended to summarize only certain major federal income tax rules
concerning qualified employee stock purchase plans.
Board Recommendation
For reasons discussed above, the Board recommends a vote FOR approval of the
ESPP. If a quorum is present, this proposal will be approved if a majority of
the votes cast on the proposal are voted in favor of approval. Abstentions and
broker non-votes are counted for purposes of determining whether a quorum
exists at the Annual Meeting but will not be counted and will have no effect
on the determination of the outcome of this proposal. Proxies solicited by the
Board will be voted FOR approval of the ESPP unless a vote against the
proposal or abstention is specifically indicated.
The Board of Directors unanimously recommends a vote FOR this proposal.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed PricewaterhouseCoopers LLP to act as
independent auditors for the Company for the fiscal year ending December 31,
1999, subject to ratification of such appointment by the Company's
shareholders.
Unless otherwise indicated, properly executed proxies will be voted in favor
of ratifying the appointment of PricewaterhouseCoopers LLP to audit the books
and accounts of the Company for the fiscal year ending December 31, 1999. No
determination has been made as to what action the Board of Directors would
take if the shareholders do not ratify the appointment.
A representative of PricewaterhouseCoopers LLP is expected to be present at
the Annual Meeting and will be given an opportunity to make a statement if he
or she desires to do so and will be available to respond to appropriate
questions.
The Board of Directors unanimously recommends a vote FOR this proposal.
DATE FOR SUBMISSION OF SHAREHOLDER PROPOSALS
Any shareholder proposal intended for inclusion in the proxy statement and
form of proxy relating to the Company's 2000 Annual Meeting of Shareholders
must be received by the Company not later than December 31, 1999, pursuant to
the proxy soliciting regulations of the SEC. In addition, the Company's bylaws
require that notice of shareholder proposals and nominations for director be
delivered to the Secretary of the Company not less than 60 days nor more than
90 days prior to the date of an annual meeting, unless notice or public
disclosure of the date of the meeting occurs less than 60 days prior to the
date of such meeting, in which event, shareholders may deliver such notice not
later than the 10th day following the day on which notice of the date of the
meeting was mailed or public disclosure thereof was made. Nothing in this
paragraph shall be deemed to require the Company to include in its proxy
statement and form of proxy for such meeting any shareholder proposal which
does not meet the requirements of the SEC in effect at the time.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors does not know
of any other matters to be presented for action by the shareholders at the
1999 Annual Meeting. If, however, any other matters not now known are properly
brought before the meeting, the persons named in the accompanying proxy will
vote such proxy in accordance with the determination of a majority of the
Board of Directors.
16
<PAGE>
COST OF SOLICITATION
The cost of soliciting proxies will be borne by the Company. In addition to
use of the mails, proxies may be solicited personally or by telephone by
directors, officers and employees of the Company, who will not be specially
compensated for such activities. Also, W.F. Doring & Co. may solicit proxies
at an approximate cost of $2,500 plus reasonable expenses. Such solicitations
may be made personally, or by mail, facsimile, telephone, telegraph or
messenger. The Company will also request persons, firms and companies holding
shares in their names or in the name of their nominees, which are beneficially
owned by others, to send proxy materials to and obtain proxies from such
beneficial owners. The Company will reimburse such persons for their
reasonable expenses incurred in that connection.
ADDITIONAL INFORMATION
A copy of the Company's Annual Report to Shareholders for the fiscal year
ended December 31, 1998 accompanies this Proxy Statement. The Company is
required to file an Annual Report on Form 10-K for its fiscal year ended
December 31, 1998 with the Securities and Exchange Commission. Shareholders
may obtain, free of charge, a copy of the Form 10-K (without exhibits) by
writing to Investor Relations, FLIR Systems, Inc., 16505 S.W. 72nd Avenue,
Portland, Oregon 97224.
By Order of the Board of Directors
/s/ Robert P. Daltry
Robert P. Daltry
Chairman of the Board of Directors
Portland, Oregon
April 30, 1999
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EXHIBIT A
FLIR SYSTEMS, INC.
1999 EMPLOYEE STOCK PURCHASE PLAN
The following provisions constitute the FLIR Systems, Inc. 1999 Employee
Stock Purchase Plan.
1. Purpose. The purpose of the Plan is to provide employees of the Company
and its Designated Subsidiaries with an opportunity to purchase Common Stock
of the Company through accumulated payroll deductions. It is the intention of
the Company to have the Plan qualify as an "Employee Stock Purchase Plan"
under Section 423 of the Internal Revenue Code of 1986, as amended. The
provisions of the Plan, accordingly, shall be construed so as to extend and
limit participation in a manner consistent with the requirements of that
section of the Code.
2. Definitions.
2.1 "Account" shall mean each separate account maintained for a Participant
under the Plan, collectively or singly as the context requires. Each Account
shall be credited with a Participant's contributions, and shall be charged for
the purchase of Common Stock. A Participant shall be fully vested in the cash
contributions to his or her account at all times. The Plan Administrator may
create special types of accounts for administrative reasons, even though the
Accounts are not expressly authorized by the Plan.
2.2 "Board" shall mean the Board of Directors of the Company.
2.3 "Code" shall mean the Internal Revenue Code of 1986, as amended.
2.4 "Committee" shall mean the Compensation Committee of the Board.
2.5 "Common Stock" shall mean the Common Stock of the Company.
2.6 "Company" shall mean FLIR Systems, Inc., an Oregon corporation.
2.7 "Compensation" shall mean all base straight time gross earnings plus
payments for overtime, shift premiums and sales commissions, but excluding
incentive compensation, incentive payments, bonuses, awards, and other
compensation.
2.8 "Designated Subsidiary" shall mean each Subsidiary which has been
designated by the Board from time to time in its sole discretion as eligible
to participate in the Plan.
2.9 "Employee" shall mean an individual who renders services to the Company
or to a Designated Subsidiary pursuant to a regular-status employment
relationship with such employer. A person rendering services to the Company or
to a Designated Subsidiary purportedly as an independent consultant or
contractor shall not be an Employee for purposes of the Plan.
2.10 "Enrollment Date" shall mean the first day of each Offering Period.
2.11 "Fair Market Value"
2.11.1 If the Common Stock is listed on any established stock exchange or a
national market system, including without limitation the National Market
System of the National Association of Securities Dealers, Inc. Automated
Quotation ("NASDAQ") System, its Fair Market Value shall be the closing sale
price for the Common Stock (or the mean of the closing bid and asked prices,
if no sales were reported), as quoted on such exchange (or the exchange with
the greatest volume of trading in Common Stock) or system on the last Trading
Day prior to the day of such determination, as reported in The Wall Street
Journal or such other source as the Board deems reliable, or;
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2.11.2 If the Common Stock is quoted on the NASDAQ system (but not on the
National Market System thereof) or is regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market Value
shall be the mean of the closing bid and asked prices for the Common Stock on
the last Trading Day prior to the day of such determination, as reported in
The Wall Street Journal or such other source as the Board deems reliable, or;
2.11.3 In the absence of an established market for the Common Stock, the
Fair Market Value thereof shall be determined in good faith by the Board.
2.12 "NASDAQ" shall mean the National Association of Securities Dealers
Automated Quotation System or such other quotation system that supersedes it.
2.13 "Offering Period" shall mean the period of approximately six (6)
months, commencing on the first Trading Day on or after a date designated in
advance by the Board and terminating on the last Trading Day in the period
ending six months later, during which an option granted pursuant to the Plan
may be exercised. The duration of Offering Periods may be changed pursuant to
Section 4 of this Plan.
2.14 "Participant" shall mean any Employee who is participating in this Plan
by meeting the eligibility requirements of Section 3 and has completed a
Payroll Deduction Authorization Form.
2.15 "Payroll Participation Form" shall mean the form attached hereto as
Exhibit A (or such other form as may be provided by the Company) on which a
Participant shall elect to participate in the Plan and designate the
percentage of his or her Compensation to be contributed to his or her Account
through payroll deductions.
2.16 "Plan" shall mean this Employee Stock Purchase Plan.
2.17 "Purchase Date" shall mean the last day of each Offering Period.
2.18 "Purchase Price" shall mean an amount equal to 85% of the Fair Market
Value of a share of Common Stock (i) on the Enrollment Date or (ii) on the
Purchase Date, whichever is lower.
2.19 "Reserves" shall mean the number of shares of Common Stock covered by
each option under the Plan which have not yet been exercised and the number of
shares of Common Stock which have been authorized for issuance under the Plan
but not yet placed under option.
2.20 "Subsidiary" shall mean a corporation, domestic or foreign, of which
not less than 50% of the voting shares are held by the Company or a
Subsidiary, whether or not such corporation now exists or is hereafter
organized or acquired by the Company of a Subsidiary.
2.21 "Trading Day" shall mean a day on which national stock exchanges and
Nasdaq are open for trading.
3. Eligibility.
3.1 A person shall become eligible to participate in the Plan on the first
Enrollment Date on or after which he or she first meets all of the following
requirements; provided, however, that no one shall become eligible to
participate in the Plan prior to the Enrollment Date of the first Offering
Period provided for in Section 2.13:
3.1.1 The person's customary period of employment is for more than twenty
(20) hours per week;
3.1.2 The person's customary period of employment is for more than five (5)
months in any calendar year.
3.2 Any provisions of the Plan to the contrary notwithstanding, no Employee
shall be granted an option under the Plan (i) if, immediately after the grant,
such Employee (or any other person whose stock would be attributed to such
Employee pursuant to Section 424(d) of the Code) would own stock and/or hold
outstanding options to purchase stock possessing five percent (5%) or more of
the total combined voting power or value of
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all classes of stock of the Company or of any Subsidiary, or (ii) which
permits his or her rights to purchase stock under all employee stock purchase
plans (under Section 423 of the Code) of the Company and Subsidiaries to
accrue at a rate which exceeds Twenty-Five Thousand Dollars ($25,000) worth of
stock (determined at the fair market value of the shares at the time such
option is granted) for each calendar year in which such option is outstanding
at any time.
3.3 For purposes of the Plan, eligibility shall be treated as continuing
intact while the individual is on sick leave or other leave of absence
approved by the Company. Where the period of leave exceeds 90 days and the
individual's right to reemployment is not guaranteed either by statute or by
contract, eligibility to participate in the Plan will be deemed to have
terminated on the 91st day of such leave.
4. Offering Periods. The Plan shall be implemented by consecutive Offering
Periods with the first Offering Period commencing on a date designated in
advance by the Board, and continuing for six month periods thereafter until
terminated in accordance with Section 19 hereof. The Board shall have the
power to change the duration of Offering Periods (including the commencement
dates thereof) with respect to future offerings without shareholder approval
if such change is announced at least fifteen (15) days prior to the scheduled
beginning of the first Offering Period to be affected thereafter.
5. Participation.
5.1 An eligible Employee may become a Participant in the Plan by completing
a Payroll Participation Form and filing it with the Company's Administration
Department (as set forth in Section 20 below) at least fifteen (15) days prior
to the applicable Enrollment Date, unless a later time for filing the Payroll
Participation Form is set by the Board for all eligible Employees with respect
to a given Offering Period.
5.2 Payroll deductions for a Participant shall commence on the first payroll
period following the Enrollment Date and shall end on the last payroll period
in the Offering Period, unless sooner terminated by the Participant as
provided in Section 10 hereof.
6. Payroll Deductions.
6.1 At the time a Participant files his or her Payroll Participation Form,
he or she shall elect to have payroll deductions made on each payday during
the Offering Period in an amount not exceeding ten percent (10%) of the
Compensation which he or she receives on each payday during the Offering
Period, and the aggregate of such payroll deductions during the Offering
Period shall not exceed ten percent (10%) of the Participant's Compensation
during said Offering Period.
6.2 A Participant shall specify that he or she desires to make contributions
to the Plan in whole percentages not less than one percent (1%) and not more
than ten percent (10%) of the Participant's Compensation during each pay
period in the Offering Period, or such other minimum or maximum percentage as
the Board shall establish from time to time.
6.3 All payroll deductions made for a Participant shall be credited to his
or her Account under the Plan and will be withheld in whole percentages only.
A Participant may not make any additional payments into such Account.
6.4 A Participant may discontinue his or her participation in the Plan as
provided in Section 10 hereof, or may increase or decrease the rate of his or
her payroll deductions during the Offering Period by filing with the Company
(as set forth in Section 20 below) a new Payroll Participation Form
authorizing a change in payroll deduction rate. A Participant is limited to
making one change during an Offering Period. The change in rate shall be
effective with the first full payroll period following fifteen (15) days after
the Company's receipt of a new Payroll Participation Form unless the Company
elects to process a given change in participation more quickly. A
Participant's Payroll Participation Form shall remain in effect for successive
Offering Periods unless terminated as provided in Section 10.
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6.5 Notwithstanding the foregoing, to the extent necessary to comply with
Section 423(b)(8) of the Code and Section 3.2 hereof, a Participant's payroll
deductions shall be decreased to 0% at such time during any Offering Period
which is scheduled to end during the current calendar year (the "Current
Offering Period") that the aggregate of all payroll deductions which were
previously used to purchase stock under the Plan in a prior Offering Period
which ended during that calendar year plus all payroll deductions accumulated
with respect to the Current Offering Period equal $21,250 (85% of $25,000).
Payroll deductions shall recommence at the rate provided in such Participant's
Payroll Participation Form at the beginning of the first Offering Period which
is scheduled to end in the following calendar year, unless terminated by the
Participant as provided in Section 10.
6.6 At the time the option is exercised, or at the time some or all of the
Common Stock issued under the Plan is disposed of, the Participant must make
adequate provision for the Company's federal, state, or other tax withholding
obligations, if any, which arise upon the exercise of the option or the
disposition of the Common Stock. At any time, the Company may, but will not be
obligated to, withhold from the Participant's compensation the amount
necessary for the Company to meet applicable withholding obligations,
including any withholding required to make available to the Company any tax
deductions or benefit attributable to sale or early disposition of Common
Stock by the Employee.
7. Option to Purchase Common Stock. On the Enrollment Date of each Offering
Period, each eligible Employee participating in such Offering Period shall be
granted an option to purchase on the Purchase Date of such Offering Period (at
the applicable Purchase Price) up to a number of shares of the Common Stock
determined by dividing such Employee's payroll deductions accumulated prior to
such Purchase Date and retained in the Participant's account as of the
Purchase Date by the applicable Purchase Price; provided that in no event
shall an Employee be permitted to purchase during each Offering Period more
than a number of shares determined by dividing $12,500 by the Fair Market
Value of a share of the Common Stock on the Enrollment Date, and provided
further that such purchase shall be subject to the limitations set forth in
Sections 3.2 and 12 hereof. Purchase of the Common Stock shall occur as
provided in Section 8, unless the Participant has withdrawn pursuant to
Section 10, and the option shall expire on the last day of the Offering
Period.
8. Purchase of Common Stock. Unless a Participant withdraws from the Plan as
provided in Section 10.1 below, his or her option for the purchase of Common
Stock will be exercised automatically on the Purchase Date, and the maximum
number of full shares subject to option shall be purchased for such
Participant at the applicable Purchase Price with the accumulated payroll
deductions in his or her account. No fractional shares of Common Stock will be
purchased; any payroll deductions accumulated in a Participant's account which
are not sufficient to purchase a full share shall be retained in the
Participant's account for the subsequent Offering Period, subject to earlier
withdrawal by the Participant as provided in Section 10 hereof. During a
Participant's lifetime, a Participant's option to purchase shares of Common
Stock hereunder is exercisable only by him or her.
9. Delivery. As promptly as practicable after each Purchase Date, the
Company shall arrange the delivery to each Participant of a certificate for
the shares of Common Stock purchased with his or her payroll deductions.
10. Withdrawal; Termination of Employment.
10.1 A Participant may withdraw all but not less than all the payroll
deductions credited to his or her account and not yet used to purchase shares
of Common Stock under the Plan by giving written notice in the form of Exhibit
B to this Plan (or such other form as may be provided by the Company) to the
Company (as set forth in Section 20 below) no less than 15 days immediately
preceding a Purchase Date. All of the Participant's payroll deductions
credited to his or her Account will be paid to such Participant as soon as
practicable after receipt of notice of withdrawal and such Participant's
option for the Offering Period will be automatically terminated, and no
further payroll deductions for the purchase of shares will be made during the
Offering Period. If a Participant withdraws from an Offering Period, payroll
deductions will not resume at the beginning of the succeeding Offering Period
unless the Participant delivers to the Company a new Payroll Participation
Form.
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10.2 Upon termination of a Participant's employment for any reason,
including death, disability or retirement, or a Participant failing to remain
an Employee of the Company for at least twenty (20) hours per week during an
Offering Period in which the Employee is a Participant, he or she will be
deemed to have elected to withdraw from the Plan and the payroll deductions
credited to such Participant's Account shall be returned to the Participant;
or, in the case of death, to the persons entitled thereto under Section 14,
and such Participant's option shall be automatically terminated.
11. Interest. No interest shall accrue on the payroll deductions of a
Participant in the Plan.
12. Stock.
12.1 The maximum number of shares of the Company's Common Stock which shall
be made available for sale under the Plan shall be 1,500,000 shares, subject
to adjustment upon changes in capitalization of the Company as provided in
Section 18. If on a given Purchase Date the number of shares of Common Stock
eligible to be purchased exceeds the number of shares then available under the
Plan, the Company shall make a pro rata allocation of the shares remaining
available for purchase in as uniform a manner as shall be practicable and as
it shall determine to be equitable.
12.2 The Participant will have no interest or voting right in shares covered
by his or her option until such shares of Common Stock have been purchased.
12.3 Common Stock to be delivered to a Participant under the Plan will be
registered in the name of the Participant or in the name of the Participant
and his or her spouse.
13. Administration.
13.1 Administrative Body. The Plan shall be administered by the Committee.
Subject to the terms of the Plan, the Committee shall have the power to
construe the provisions of the Plan, to determine all questions arising
thereunder, and to adopt and amend such rules and regulations for
administering the Plan as the Committee deems desirable.
13.2 Rule 16b-3 Limitations. Notwithstanding the provisions of Subsection
13.1, in the event that Rule 16b-3 promulgated under the Securities Exchange
Act of 1934, as amended, or any successor provision ("Rule 16b-3") provides
specific requirements for the administrators of plans of this type, the Plan
shall be only administered by such a body and in such a manner as shall comply
with the applicable requirements of Rule 16b-3.
14. Designation of Beneficiary.
14.1 A Participant may file a written designation of a beneficiary who is to
receive any shares and cash, if any, from the Participant's account under the
Plan in the event of such Participant's death subsequent to a Purchase Date on
which the option is exercised but prior to delivery to such Participant of
such shares and cash. In addition, a Participant may file a written
designation of a beneficiary who is to receive any cash from the Participant's
account under the Plan in the event of such Participant's death prior to a
Purchase Date.
14.2 Such designation of beneficiary may be changed by the Participant at
any time by written notice as provided in Section 20 below. In the event of
the death of a Participant and in the absence of a beneficiary validly
designated under the Plan who is living at the time of such Participant's
death, the Company shall deliver such shares and/or cash to the executor or
administrator of the estate of the Participant, or if no such executor or
administrator has been appointed (to the knowledge of the Company), the
Company, in its discretion, may deliver such shares and/or cash to the spouse
or to any one or more dependents or relatives of the Participant, or if no
spouse, dependent or relative is known to the Company, then to such other
person as the Company may designate.
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15. Transferability. Neither payroll deductions credited to a Participant's
account nor any rights with regard to the exercise of an option or to receive
shares under the Plan may be assigned, transferred, pledged or otherwise
disposed of in any way (other than by will, the laws of descent and
distribution or as provided in Section 14 hereof) by the Participant. Any such
attempt at assignment, transfer, pledge or other disposition shall be without
effect, except that the Company may treat such act as an election to withdraw
funds from an Offering Period in accordance with Section 10.
16. Use of Funds. All payroll deductions received or held by the Company
under the Plan may be used by the Company for any corporate purpose, and the
Company shall not be obligated to segregate such payroll deductions.
17. Reports. Individual accounts will be maintained for each Participant in
the Plan. Statements of account will be given to participating Employees at
least annually, which statements will set forth the amounts of payroll
deductions, the Purchase Price, the number of shares purchased and the
remaining cash balance, if any.
18. Adjustments Upon Changes in Capitalization, Dissolution, Merger or Asset
Sale.
18.1 Changes in Capitalization. Subject to any required action by the
shareholders of the Company, the Reserves, as well as the price per share of
Common Stock covered by each option under the Plan which has not yet been
exercised, shall be proportionately adjusted for any increase or decrease in
the number of issued shares of Common Stock resulting from a stock split,
reverse stock split, stock dividend, combination or reclassification of the
Common Stock, or any other increase or decrease in the number of shares of
Common Stock effected without receipt of consideration by the Company;
provided, however, that conversion of any convertible securities of the
Company shall not be deemed to have been "effected without receipt of
consideration." Such adjustment shall be made by the Board, whose
determination in that respect shall be final, binding and conclusive. Except
as expressly provided herein, no issue by the Company of shares of stock of
any class, or securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason thereof shall be made with respect to, the
number or price of shares of Common Stock subject to an option. The Board may,
if it so determines in the exercise of its sole discretion, make provision for
adjusting the Reserves, as well as the price per share of Common Stock covered
by each outstanding option, in the event the Company effects one or more
reorganizations, recapitalizations, rights offerings or other increases or
reductions of shares of its outstanding Common Stock.
18.2 Dissolution or Liquidation. In the event of the proposed dissolution or
liquidation of the Company, the Offering Period will terminate immediately
prior to the consummation of such proposed action, unless otherwise provided
by the Board.
18.3 Merger or Asset Sale. In the event of a proposed sale of all or
substantially all of the assets of the Company, or the merger of the Company
with or into another corporation, each option under the Plan shall be assumed
or any equivalent option shall be substituted by such successor corporation or
a parent or subsidiary of such successor corporation, unless the Board
determines, in the exercise of its sole discretion and in lieu of such
assumption or substitution, to shorten the Offering Period then in progress by
setting a new Purchase Date (the "New Purchase Date") or to cancel each
outstanding right to purchase and refund all sums collected from Participants
during the Offering Period then in progress. If the Board shortens the
Offering Period then in progress in lieu of assumption or substitution in the
event of a merger or sale of assets, the Board shall notify each Participant
in writing, at least ten (10) business days prior to the New Purchase Date,
that the Purchase Date for his option has been changed to the New Purchase
Date and that his option will be exercised automatically on the New Purchase
Date, unless prior to such date he has withdrawn from the Offering Period as
provided in Section 10 hereof. For purposes of this paragraph, an option
granted under the Plan shall be deemed to be assumed if, following the sale of
assets or merger, the option confers the right to purchase, for each share of
option stock subject to the option immediately prior to the sale of assets or
merger, the consideration (whether stock, cash or other securities or
property) received in the sale of assets or merger by holders of Common Stock
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for each share of Common Stock held on the effective date of the transaction
(and if such holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding shares of
Common Stock); provided, however, that if such consideration received in the
sale of assets or merger was not solely common stock of the successor
corporation or its parent (as defined in Section 424(e) of the Code), the
Board may, with the consent of the successor corporation and the Participant,
provide for the consideration to be received upon exercise of the option to be
solely common stock of the successor corporation or its parent equal in fair
market value to the per share consideration received by holders of Common
Stock in the sale of assets or merger.
19. Amendment or Termination.
19.1 The Board may at any time and for any reason terminate or amend the
Plan. Except as provided in Section 18, no such termination can affect options
previously granted, provided that an Offering Period may be terminated by the
Board on any Purchase Date if the Board determines that the termination of the
Plan is in the best interests of the Company and its shareholders. Except as
provided in Section 18, no amendment may make any change in any option
theretofore granted which adversely affects the rights of any Participant.
19.2 Without shareholder consent and without regard to whether any
Participant rights may be considered to have been "adversely affected," the
Committee shall be entitled to change the Offering Periods, limit the
frequency and/or number of changes in the amount withheld during an Offering
Period, establish the exchange ratio applicable to amounts withheld in a
currency other than U.S. dollars, permit payroll withholding in excess of the
amount designated by a Participant in order to adjust for delays or mistakes
in the Company's processing of properly completed withholding elections,
establish reasonable waiting and adjustment periods and/or accounting and
crediting procedures to ensure that amounts applied toward the purchase of
Common Stock for each Participant properly correspond with amounts withheld
from the Participant's Compensation, and establish such other limitations or
procedures as the Board (or its committee) determines in its sole discretion
advisable which are consistent with the Plan.
19.3 The Company shall obtain shareholder approval of any Plan amendment to
the extent necessary and desirable to comply with Rule 16b-3 or with Section
423 of the Code (or any successor rule or statute or other applicable law,
rule or regulation, including the requirements of any exchange or quotation
system on which the Common Stock is listed or quoted). Such shareholder
approval, if required, shall be obtained in such a manner and to such a degree
as is required by the applicable law, rule or regulation.
20. Notices. All notices or other communications by a Participant to the
Company under or in connection with the Plan shall be deemed to have been duly
given when received in the form specified by the Company by the Company's
Chief Financial Officer at the Company's corporate headquarters.
21. Conditions Upon Issuance of Shares of Common Stock. Common Stock shall
not be issued with respect to an option unless the exercise of such option and
the issuance and delivery of such shares pursuant thereto shall comply with
all applicable provisions of law, domestic or foreign, including, without
limitation, the Securities Act of 1933, as amended, the Securities Exchange
Act of 1934, as amended, the rules and regulations promulgated thereunder, and
the requirements of any stock exchange upon which the shares may then be
listed, and shall be further subject to the approval of counsel for the
Company with respect to such compliance.
As a condition to the purchase of Common Stock, the Company may require the
person purchasing such Common Stock to represent and warrant at the time of
any such purchase that the shares are being purchased only for investment and
without any present intention to sell or distribute such shares if, in the
opinion of counsel for the Company, such a representation is required by any
of the aforementioned applicable provisions of law.
22. Term of Plan.
22.1 The Plan shall become effective upon the earlier to occur of its
adoption by the Board of Directors or its approval by the shareholders of the
Company. It shall continue in effect for a term of ten (10) years unless
sooner terminated pursuant to Section 19.
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22.2 Notwithstanding the above, the Plan is expressly made subject (i) to
the approval of the shareholders of the Company within 12 months after the
date the Plan is adopted and (ii) at its election, to the receipt by the
Company from the Internal Revenue Service of a ruling in scope and content
satisfactory to counsel to the Company, affirming the qualification of the
Plan within the meaning of Section 423 of the Code. Such shareholder approval
shall be obtained in the manner and to the degree required under applicable
federal and state law. If the Plan is not so approved by the shareholders
within 12 months after the date the Plan is adopted, and if, at the election
of the Company a ruling from the Internal Revenue Service is sought but is not
received on or before one year after the Plan's adoption by the Board, this
Plan shall not come into effect. In that case, the Account of each Participant
shall forthwith be paid to him or her.
23. Additional Restrictions of Rule 16b-3. The terms and conditions of
options granted hereunder to, and the purchase of shares by, persons subject
to Section 16 of the Exchange Act shall comply with the applicable provisions
of Rule 16b-3. This Plan shall be deemed to contain, and such options shall
contain, and the shares issued upon exercise thereof shall be subject to, such
additional conditions and restrictions as may be required by Rule 16b-3 to
qualify for the maximum exemption from Section 16 of the Exchange Act with
respect to Plan transactions.
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FLIR SYSTEMS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder of FLIR Systems, Inc., an Oregon corporation
(the "Company"), hereby appoints J. Kenneth Stringer III and Robert P. Daltry,
or either of them, with full power of substitution in each, as proxies to cast
all votes which the undersigned shareholder is entitled to cast at the Annual
Meeting of Shareholders (the "Annual Meeting") to be held at 2:00 p.m. on
Wednesday, June 2, 1999 at the World Trade Center, 25 S.W. Salmon Street,
Portland, Oregon 97204 and any adjournment or postponements thereof upon the
following matters.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. UNLESS DIRECTION IS GIVEN, THIS PROXY
WILL BE VOTED "FOR" THE ELECTION OF THE NOMINEES LISTED IN PROPOSAL 1, FOR
PROPOSALS 2 AND 3 AND IN ACCORDANCE WITH THE RECOMMENDATIONS OF A MAJORITY OF
THE BOARD OF DIRECTORS AS TO OTHER MATTERS. The undersigned hereby acknowledges
receipt of the Company's Proxy Statement and hereby revokes any proxy or proxies
previously given.
PLEASE SIGN, DATE AND RETURN THIS PROXY CARD TODAY, USING THE ENCLOSED
ENVELOPE.
(continued and to be signed and dated on reverse side)
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. FOLD AND DETACH HERE .
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Please mark
your votes [X]
as indicated
1. Election of two directors, each of a three-year term.
Nominees: Robert P. Daltry and John C. Hart
FOR the WITHHOLD
nominees listed AUTHORITY to vote
below (except as for all nominees
indicated below) listed below
[ ] [ ]
INSTRUCTION: To withhold authority to vote for any nominees write that
nominee's name(s) in this space:
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2. Approval of 1999 Employee Stock Purchase Plan.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. Ratification of appointment of auditors.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. In their discretion, the proxies are authorized to vote upon such other
matters as may properly come before the meeting or any adjournments or
postponements thereof.
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Typed or Printed name(s)
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Authorized Signature
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Title or authority, if applicable
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Date
Please sign exactly as your name appears
on this Proxy Card. If shares are
registered in more than one name, all
such persons should sign. A corporation
should sign in its full corporate name by
a duly authorized officer, stating
his/her title. Trustees, guardians,
executors and administrators should sign
in their official capacity, giving their
full title as such. If a partnership,
please sign in the partnership name by
authorized person(s).
If you receive more than one Proxy Card, please sign and return all such cards
in the accompanying envelope.
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. FOLD AND DETACH HERE .
