Exhibit 10.2

 

FIRST AMENDMENT TO

CREDIT AGREEMENT

 

This First Amendment to Credit Agreement (“Amendment”) is made as of June 5,
2003, by and among the following parties:

 

Bank of America, N.A., in its capacity as Administrative Agent (“Bank of
America” and “Administrative Agent”)

 

Bank of America, N.A. (“Bank of America” and a “Lender, L/C Issuer and Swing
Line Lender”)

 

KeyBank, N.A. (“KeyBank” and a “Lender”)

 

Union Bank of California, N.A. (“Union Bank” and a “Lender”)

 

FLIR Systems, Inc., an Oregon corporation (“Borrower”)

 

RECITALS

 

A. Borrower, Administrative Agent and Lenders are parties to that certain Credit
Agreement entered into as of March 22, 2002, effective March 27, 2002 (the
“Credit Agreement”).

 

B. Borrower, Administrative Agent and Lenders desire to amend the Credit
Agreement as set forth below.

 

NOW THEREFORE, the parties agree as follows:

 

AGREEMENT

 

1. Recitals. The Recitals are true.

 

2. Definitions. Capitalized terms used herein and not otherwise defined shall
have the meaning given in the Credit Agreement.

 

3. Amendment to the definition of “Applicable Rate”. The definition of
“Applicable Rate” in Section 1.01 of the Credit Agreement is amended in its
entirety to read:

 

“‘Applicable Rate’ means, from time to time, the following percentages per
annum, based upon the Leverage Ratio as set forth below:

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Applicable Rate Per Annum

 

  Pricing
Level

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  Leverage
Ratio

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  Base Rate
+

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    Eurodollar
Rate +

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    Standby
Letters of
Credit

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    Commitment
Fee

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1

  >2.00:1   .50 %   2.25 %   2.25 %   0.45 %

2

 

>1.50:1 but

£2.00:1

  .25 %   2.00 %   2.00 %   0.40 %

3

 

>1.00:1 but

£1.50:1

  .125 %   1.75 %   1.75 %   0.35 %

4

  <1.00:1   0.00 %   1.50 %   1.50 %   0.35 %

 

Any increase or decrease in the Applicable Rate resulting from a change in the
Leverage Ratio shall become effective as of the first day of the month
immediately following the date a Compliance Certificate is delivered pursuant to
Section 6.02(b); provided, however, that if no Compliance certificate is
delivered during a fiscal quarter when due in accordance with such Section, then
Pricing Level 1 shall apply as of the first day of such following fiscal
quarter. Any change in the Applicable Rate shall be applicable to all existing
Committed Loans as well as to new Committed Loans. The Applicable Rate in effect
from the date of this Amendment through the receipt of the Compliance
Certificate following the quarter ending June 30, 2003 shall be determined based
upon Pricing Level 4.”

 

4. Amendment to the definition of “Leverage Ratio”. The definition of “Leverage
Ratio” in Section 1.01 of the Credit Agreement is amended in its entirety to
read:

 

“‘Leverage Ratio’ means, as of any date of determination, for the Borrower and
its Subsidiaries on a consolidated basis, the ratio of (a) Consolidated Funded
Indebtedness as of such date to (b) Consolidated EBITDA for the period of the
four fiscal quarters ending on such date. For the purpose of computing Leverage
Ratio, there shall be deducted from Consolidated Funded Indebtedness the amount
of cash held by Borrower and its Subsidiaries on the date of determination in
excess of $10,000,000.”

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5. Amendment to Section 2.01(b) of the Credit Agreement. Section 2.01(b) of the
Credit shall be amended to substitute the date of September 27, 2004 for the
date of two years following the Closing Date before which Borrower may seek to
increase the Aggregate Commitments.

 

6. Addition of new Section 5.17 to the Credit Agreement. Section 5.17 is added
to the Credit Agreement as follows:

 

“5.17 Tax Shelter Regulations. Borrower does not intend to treat the Loans
and/or Letters of Credit and related transactions as being a “reportable
transaction” (within the meaning of Treasury Regulation Section 1.6011-4). In
the event Borrower determines to take any action inconsistent with such
intention, it will promptly notify the Administrative Agent thereof. If Borrower
so notifies the Administrative Agent, Borrower acknowledges that one or more of
the Lenders may treat its Committed Loans and/or its interest in Swing Line
Loans and/or Letters of Credit as part of a transaction that is subject to
Treasury Regulation Section 301.6112-1, and such Lender or Lenders, as
applicable, will maintain the lists and other records required by such Treasury
Regulation.”

 

7. Amendment to Section 6.03 of the Credit Agreement. Section 6.03(f) is added
to the Credit Agreement as follows:

 

“(f) of any intention by Borrower to treat Loans and/or Letters of Credit and
related transactions as being a ‘reportable transaction’(within the meaning of
Treasury Regulation Section 1.6011-4), and will deliver a duly completed copy of
IRS form 8886 or any successor form.

 

8. Amendment to Section 7.01(i) of the Credit Agreement. Section 7.01(i) of the
Credit Agreement is amended in its entirety to read:

 

“(i) Liens securing Indebtedness permitted under Section 7.03(e) or Section
7.03(i); provided, however, that (i) such Liens do not at any time encumber any
property other than the property financed by such Indebtedness and (ii) the
Indebtedness secured thereby does not exceed the cost or fair market value,
whichever is lower, of the property being acquired on the date of acquisition.”

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9. Amendment to Section 7.03(e) of the Credit Agreement. Section 7.03(e) of the
Credit Agreement is amended in its entirety to read:

 

“(e) Indebtedness in respect of capital leases, Synthetic Lease Obligations and
purchase money obligations for fixed or capital assets within the limitations
set forth in Section 7.01(i); provided, however, that the aggregate amount of
all such Indebtedness at any one time outstanding shall not exceed $5,000,000;
and provided further that such Indebtedness shall not be Indebtedness secured by
real property.”

 

10. Amendment to Section 7.03 of the Credit Agreement. The following subsections
are added to the end of Section 7.03 of the Credit Agreement:

 

“(h) A one-time issuance of up to $200,000,000 of unsecured convertible
Indebtedness convertible into the common capital stock of Borrower.

 

(i) Indebtedness on real property owned by Borrower; provided, however, that the
aggregate amount of all of such Indebtedness at any one time outstanding shall
not exceed $15,000,000; and provided further that the real property which
secures such Indebtedness shall have been acquired by Borrower after June 1,
2003.”

 

11. Amendment to Section 7.11 of the Credit Agreement. Section 7.11 of the
Credit Agreement is amended in its entirety to read:

 

“Make or become legally obligated to make any expenditure in respect of the
purchase or other acquisition of any fixed or capital asset (excluding normal
replacements and maintenance which are properly charged to current operations),
except for capital expenditures in the ordinary course of business not exceeding
$20,000,000 in the aggregate for the Borrower and it Subsidiaries during each
fiscal year; provided, however, that unexpended amounts in any fiscal year may
not be carried over for expenditure in any succeeding fiscal year. Fixed or
Capital Assets acquired pursuant to a transaction permitted by Section 7.04(c)
shall not be counted against the $20,000,000 limit described herein.”

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12. Amendment to Section 7.14(a) of the Credit Agreement. Section 7.14(a) of the
Credit Agreement is amended in its entirety to read:

 

“(a) Minimum Consolidated EBITDA. Permit the Consolidated EBITDA for any period
of four consecutive fiscal quarters to be less than $50,000,000.”

 

13. Amendment to Section 7.14(d) of the Credit Agreement. Section 7.14(d) of the
Credit Agreement is amended in its entirety to read:

 

“(d) Leverage Ratio. Permit the Leverage Ratio as of the end of any fiscal
quarter to be greater than 3.00:1.”

 

14. Amendment to Section 10.08 of the Credit Agreement. Section 10.08 of the
Credit Agreement is amended by adding the following language to the end of such
Section:

 

“Notwithstanding anything herein to the contrary, “Information” shall not
include, and Administrative Agent and each Lender may disclose to any and all
Persons without limitation of any kind, any information with respect to the “tax
treatment” and “tax structure” (in each case, within the meaning of Treasury
Regulation Section 1.6011-4) of the transactions contemplated hereby and all
materials of any kind (including opinions or other tax analyses) that are
provided to Administrative Agent or such Lender relating to such tax treatment
and tax structure; provided that with respect to any document or similar item
that in either case contains information concerning the tax treatment or tax
structure of the transaction as well as other information, this sentence shall
only apply to such portions of the document or similar item that relate to the
tax treatment or tax structure of the Loans, Letters of Credit and transactions
contemplated hereby.”

 

15. Release. Borrower hereby releases Administrative Agent, Lenders and their
officers, agents, successors and assigns from all claims of every nature known
or unknown arising out of or related to the Loans which exist, or but for the
passage of time, could be asserted, on the date Borrower signs this Amendment.

 

16. Amendment Fee. Borrower will pay Administrative Agent for the benefit of
Lenders an amendment fee for the amendments set forth herein. The amount of such
fee, the allocation of it, and the payment date is set forth in a separate fee
letter dated the same date as this Amendment.

 

17. No Further Amendment, Expenses. Except as expressly modified by this
Amendment, the Credit Agreement and the other Loan Documents shall remain
unmodified in full force and effect and the parties hereby ratify their
respective obligations thereunder.

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Without limiting the foregoing, Borrower expressly reaffirms and ratifies its
obligation to pay or reimburse Lender on request for all reasonable expenses,
including legal fees actually incurred by Lender in connection with the
preparation of this Amendment, any other amendment documents and the closing of
the transaction contemplated hereby and thereby.

 

  18.   Miscellaneous.

 

(a) Counterparts. This Amendment may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original, and all of which taken together
shall constitute one and the same Amendment.

 

(b) Governing Law. This Amendment and the other agreements provided for herein
and the rights and obligations of the parties hereto and thereto shall be
construed and interpreted in accordance with the laws of the State of Oregon.

 

(c) Certain Agreements Not Enforceable. UNDER OREGON LAW, MOST AGREEMENTS,
PROMISES AND COMMITMENTS MADE BY THE LENDERS AFTER OCTOBER 3, 1989, CONCERNING
LOANS AND OTHER CREDIT EXTENSIONS WHICH ARE NOT FOR PERSONAL, FAMILY OR
HOUSEHOLD PURPOSES OR SECURED SOLELY BY THE BORROWER’S RESIDENCE MUST BE IN
WRITING, EXPRESS CONSIDERATION, AND BE SIGNED BY THE LENDERS TO BE ENFORCEABLE.

 

EXECUTED AND DELIVERED by the duly authorized officers of the parties as of the
date first above written.

 

FLIR SYSTEMS, INC., as Borrower

By:

 

/s/    STEPHEN M. BAILEY

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Name:

  Stephen M. Bailey

Title:

  Senior Vice President

BANK OF AMERICA, N.A., as

Administrative Agent

By:

 

/s/    DORA A. BROWN

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Name:

  Dora A. Brown

Title:

  Vice President

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BANK OF AMERICA, N.A., as a Lender,

L/C Issuer and Swing Line Lender

By:

 

/s/    ERIC EIDLER

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Name:

  Eric Eidler

Title:

  Senior Vice President

KEYBANK, N.A., as a Lender

By:

 

/s/    ROBERT W. BOSWELL

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Name:

  Robert W. Boswell

Title:

  Vice President

UNION BANK OF CALIFORNIA, N.A., as a Lender

By:

 

/s/    THOMAS MARKS

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Name:

  Thomas Marks

Title:

  Vice President