<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934 for the quarterly period ended September 30, 1999.
Commission file number: 0-20206
PERCEPTRON, INC.
(Exact name of registrant as specified in its charter)
Michigan 38-2381442
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
47827 Halyard Drive, Plymouth, Michigan 48170-2461
(Address of principal executive offices)
(734) 414-6100
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the proceeding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
---------- -----------
The number of shares outstanding of each of the issuer's classes of common stock
as of November 4, 1999, was:
Common Stock, $0.01 par value 8,169,152
----------------------------- --------------------------
Class Number of shares
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PERCEPTRON, INC. AND SUBSIDIARIES
INDEX TO FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
PAGE
NUMBER
------
<S> <C>
COVER 1
INDEX 2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements 3
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 9
Item 3. Quantitative and Qualitative Disclosures About Market Risk 14
PART II. OTHER INFORMATION
Item 5. Other Information 15
Item 6. Exhibits and Reports on Form 8-K 15
SIGNATURES 16
</TABLE>
2
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PERCEPTRON, INC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30, JUNE 30,
(In Thousands) 1999 1999
------------------ -------------------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 5,534 $ 4,205
Receivables:
Billed receivables, net of allowance for doubtful accounts 24,896 21,128
of $321,000 and $218,000, respectively
Unbilled and other receivables 5,215 4,611
Inventories, net of reserves of $646,000 and $600,000, respectively 13,283 12,323
Deferred taxes and other current assets 2,978 1,307
----------------- ------------------
Total current assets 51,906 43,574
----------------- ------------------
PROPERTY AND EQUIPMENT
Building and land 5,990 5,990
Machinery and equipment 10,092 9,774
Furniture and fixtures 1,469 1,469
----------------- ------------------
17,551 17,233
Less - Accumulated depreciation and amortization (6,686) (6,121)
----------------- ------------------
Net property and equipment 10,865 11,112
----------------- ------------------
OTHER ASSETS
Intangible assets, net of accumulated amortization 1,595 1,692
of $373,000 and $279,000, respectively
Deferred tax asset 3,232 4,956
----------------- ------------------
Total other assets 4,827 6,648
----------------- ------------------
TOTAL ASSETS $ 67,598 $ 61,334
================= ==================
LIABILITIES AND COMMON SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 4,011 $ 3,550
Accrued liabilities and expenses 4,651 4,619
Income taxes payable 1,090 633
Accrued compensation and stock option expense 860 203
----------------- ------------------
Total current liabilities 10,612 9,005
----------------- ------------------
LONG-TERM LIABILITIES
Notes payable 7,340 4,265
----------------- ------------------
Total long-term liabilities 7,340 4,265
----------------- ------------------
Total liabilities 17,952 13,270
------------------ ------------------
SHAREHOLDERS' EQUITY
Preferred stock - no par value, authorized 1,000,000 shares, issued none - -
Common stock, $0.01 par value, authorized 19,000,000 shares, issued
and outstanding 8,169,000 at September 30, 1999 and
June 30, 1999, respectively 82 82
Accumulated other comprehensive income (loss) (2,886) (3,340)
Additional paid-in capital 40,979 40,979
Retained earnings 11,471 10,343
----------------- ------------------
Total shareholders' equity 49,646 48,064
----------------- ------------------
TOTAL LIABILITIES AND COMMON SHAREHOLDERS' EQUITY $ 67,598 $ 61,334
================= ==================
</TABLE>
The notes to the consolidated financial statements are an integral part of these
statements.
3
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PERCEPTRON, INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30,
(In Thousands, Except Per Share Amounts) 1999 1998
-------------------- --------------------
<S> <C> <C>
NET SALES $ 18,471 $ 14,482
COST OF SALES 8,089 6,439
------------------- -------------------
GROSS PROFIT 10,382 8,043
------------------- -------------------
OPERATING EXPENSES
Selling, general and administrative 5,345 5,022
Engineering, research and development 2,987 2,542
------------------- -------------------
Total operating expenses 8,332 7,564
------------------- -------------------
OPERATING INCOME 2,050 479
------------------- -------------------
OTHER INCOME AND (DEDUCTIONS)
Interest income (expense), net (82) 91
Foreign currency and other (81) 14
------------------- -------------------
Total other income and (deductions) (163) 105
------------------- -------------------
INCOME BEFORE INCOME TAXES 1,887 584
INCOME TAX EXPENSE 759 195
------------------- -------------------
NET INCOME $ 1,128 $ 389
=================== ===================
EARNINGS PER SHARE
BASIC $ 0.14 $ 0.05
DILUTED $ 0.14 $ 0.05
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
BASIC 8,169 8,236
DILUTED 8,181 8,240
</TABLE>
The notes to the consolidated financial statements are an integral part of these
statements.
4
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PERCEPTRON, INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30,
(In Thousands) 1999 1998
-------------------- ------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 1,128 $ 389
Adjustments to reconcile net income to net cash provided from
(used for) operating activities:
Depreciation and amortization 595 594
Deferred income taxes (83) (94)
Other 168 -
Changes in assets and liabilities, exclusive of changes shown
separately (3,218) (1,188)
------------------- -----------------
Net cash used for operating activities (1,410) (299)
------------------- -----------------
CASH FLOWS FROM FINANCING ACTIVITIES
Revolving credit borrowings 7,535 -
Revolving credit repayments (4,460) -
Repurchase of company stock - (201)
Proceeds from the exercise of stock options - 42
------------------- -----------------
Net cash provided from (used for) financing activities 3,075 (159)
------------------- -----------------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (317) (543)
------------------- -----------------
Net cash used for investing activities (317) (543)
------------------- -----------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (19) 280
------------------- -----------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,329 (721)
CASH AND CASH EQUIVALENTS, JULY 1 4,205 10,699
------------------- -----------------
CASH AND CASH EQUIVALENTS, SEPTEMBER 30 $ 5,534 $ 9,978
=================== =================
CHANGES IN ASSETS AND LIABILITIES, EXCLUSIVE OF CHANGES SHOWN SEPARATELY
Billed, unbilled and other receivables, net $ (4,003) $ (373)
Inventories (959) (2,040)
Accounts payable 461 639
Other current assets and liabilities 1,283 586
------------------- -----------------
$ (3,218) $ (1,188)
=================== =================
</TABLE>
The notes to the consolidated financial statements are an integral part of these
statements.
5
<PAGE> 6
PERCEPTRON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying consolidated financial statements should be read in conjunction
with Perceptron's 1999 Transition Report on Form 10-K. As a result of the fiscal
year change, any references herein to the six-month period ended June 30, 1999,
represent audited amounts. Certain reclassifications may have been made to the
prior year's financial statements to conform with the fiscal year 2000
presentation. In the opinion of management, the unaudited information furnished
herein reflects all adjustments necessary, consisting of normal recurring
adjustments, for a fair presentation of the financial statements for the periods
presented. The results of operations for any interim period are not necessarily
indicative of the results of operations for a full year.
2. INVENTORY
Inventory is stated at the lower of cost or market. The cost of inventory is
determined by the first in, first out (FIFO) method. Inventory, net of reserves,
is comprised of the following (in thousands):
<TABLE>
<CAPTION>
SEPTEMBER 30, JUNE 30,
1999 1999
---------------- ----------------
<S> <C> <C>
Component Parts $ 7,697 $ 6,553
Work In Process 1,890 1,683
Finished Goods 3,696 4,087
--------------- ---------------
Total $ 13,283 $ 12,323
=============== ===============
</TABLE>
3. CREDIT FACILITIES
The Company's principal bank has agreed to provide short-term unsecured credit
facilities of 1.0 million Deutsche marks and $1.0 million Canadian dollars. The
facilities may be used to finance working capital needs and equipment purchases
or capital leases. Any borrowings will bear interest at the bank's prime rate
(8.25% as of October 31, 1999). The credit facilities expire on May 31, 2000,
unless canceled earlier by the Company or the bank. The Company had no
borrowings outstanding under these credit facilities at September 30, 1999.
The Company has a long-term $15 million unsecured Revolving Credit Agreement
(Revolver) that expires on May 31, 2001. Proceeds under the Revolver may be used
for general corporate purposes and can be designated as a Floating Rate Loan or
as a Eurodollar Rate Loan. Interest on Floating Rate borrowings is calculated
daily at 1/2% below the bank's prime rate (8.25% as of October 31, 1999) and is
payable on the last day of each month. Interest on Eurodollar Rate borrowings is
calculated at a Eurodollar Rate for the period chosen (approximately 7% as of
October 31, 1999) and is payable on the last day of the applicable period.
Quarterly, the Company pays a commitment fee of 1/4% per annum on the daily
unused portion of the Revolver. The Revolver prohibits the Company from paying
dividends.
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In addition, the Revolver contains various financial covenants that, among other
things, restrict dividend payments by requiring the Company to maintain a Fixed
Charge Coverage Ratio and a Total Liabilities to Tangible Net Worth Ratio and
require the Company to maintain certain levels of earnings before interest,
depreciation and amortization, and taxes. The Company had $6.3 million
outstanding under the Revolver at September 30, 1999.
4. FOREIGN EXCHANGE CONTRACTS
The Company may use, from time to time, a limited hedging program to minimize
the impact of foreign currency fluctuations. As the Company exports products, it
may enter into limited hedging transactions relating to the accounts receivable
arising as a result of such shipments. These transactions involve the use of
forward contracts. At September 30, 1999 and 1998, the Company had no forward
contracts outstanding.
5. COMPREHENSIVE INCOME
Comprehensive income is defined as the change in common shareholder's equity
during a period from transactions and events from non-owner sources, including
net income. Other items of comprehensive income include revenues, expenses,
gains and losses that are excluded from net income. Total comprehensive income
for the applicable periods is as follows (in thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30, 1999 1998
--------------- ----------------
<S> <C> <C>
Net Income $ 1,128 $ 389
Other Comprehensive Income:
Foreign currency translation adjustments
454 1,002
--------------- ----------------
Total Comprehensive Income $ 1,582 $ 1,391
=============== ================
</TABLE>
6. EARNINGS PER SHARE
Basic earnings per share ("EPS") is calculated by dividing net income by the
weighted average number of common shares outstanding during the period. Other
obligations, such as stock options and warrants, are considered to be
potentially dilutive common shares. Diluted EPS assumes the issuance of
potential dilutive common shares outstanding during the period and adjusts for
any changes in income and the repurchase of common shares that would have
occurred from the assumed issuance unless such effect is anti-dilutive. A
reconciliation of both calculations is shown below (in thousands, except per
share amounts):
<TABLE>
<CAPTION>
WEIGHTED AVG. EARNINGS
NET INCOME COMMON SHARES PER SHARE
THREE MONTHS ENDED SEPT. 30, 1999 1998 1999 1998 1999 1998
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Basic EPS $ 1,128 $ 389 8,169 8,236 $ .14 $ .05
Effect of Dilutive Securities:
Stock options and warrants - - 12 4
------------ ------------ ------------ ------------
Diluted EPS $ 1,128 $ 389 8,181 8,240 $ .14 $ .05
============ ============ ============ ============
</TABLE>
Options to purchase 1,244,000 shares of common stock were outstanding in 1999
and were not included in the computation of diluted EPS because the effect would
have been anti-dilutive.
7
<PAGE> 8
7. COMMITMENTS AND CONTINGENCIES
The Company may, from time to time, be subject to legal proceedings and claims.
Litigation involves many uncertainties. Management is currently unaware of any
significant pending litigation affecting the Company, other than the matters
discussed in the Company's 1999 Transition Report on Form 10-K.
8. SEGMENT INFORMATION
The Company has two reportable segments: Automotive and Industrial Businesses.
The Automotive segment designs, manufactures, and markets information-based
process measurement and guidance systems within the automotive industry. The
Industrial Businesses segment employs the same technology, providing products
and services primarily to the forest and wood products industry and, to a lesser
extent, the aerospace and steel industries. The Company evaluates performance
based on operating income. Segment detail is summarized as follows (in
thousands):
<TABLE>
<CAPTION>
FIRST QUARTER AUTOMOTIVE INDUSTRIAL BUSINESSES CONSOLIDATED
- ------------------------ -------------------- ---------------------- ----------------------
<S> <C> <C> <C>
SEPTEMBER 30, 1999
Revenues $ 16,183 $ 2,288 $ 18,471
Operating Income (Loss) 3,517 (1,467) 2,050
Total Assets 60,770 6,828 67,598
SEPTEMBER 30, 1998
Revenues $ 11,583 $ 2,899 $ 14,482
Operating Income 425 54 479
Total Assets 58,572 5,735 64,307
</TABLE>
8
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Overview - The Company reported net income of $1.1 million, or $0.14 per share,
for the first quarter of fiscal 2000, compared to net income of $389,000, or
$0.05 per share, in the quarter ended September 30, 1998. Net sales of $18.5
million for the three months ended September 30, 1999, were up $4.0 million, or
28%, over the prior year's sales of $14.5 million. Automotive sales accounted
for 88% of total sales during the first quarter of fiscal 2000 compared to 80%
in the quarter ended September 30, 1998. Industrial Businesses sales represented
12% of total sales for the quarter ended September 30, 1999, compared to 20% in
the same quarter of 1998. Gross profit for the first quarter of fiscal 2000 was
56.2% compared to 55.5% in the quarter ended September 30, 1998. The improvement
in gross profit reflected favorable fixed overhead absorption from the higher
sales level. Operating expenses were up $768,000 in the first quarter of fiscal
2000 compared to the quarter ended September 30, 1998, primarily as a result of
operating expenses related to the Company's October 1998 Sonic acquisition and
certain incentive related personnel costs that were partially offset by other
reductions in employee related expenses.
Automotive - Sales in the first quarter of fiscal 2000 increased $4.6 million to
$16.2 million compared to $11.6 million in the same period a year ago. P-1000
sales accounted for approximately 48% of net automotive sales in the first
quarter of fiscal 2000 compared to approximately 82% in the same period a year
ago. The percentage sales decrease reflected the higher volume of sales in the
current quarter and the mature nature of the P-1000 product. Overall sales of
the P-1000 product were down approximately 18% from the same period a year ago.
Sales of the Company's new IPNet(TM) product totaled approximately 27% of net
automotive sales in the first quarter of fiscal 2000. RGS and NCA systems sales
accounted for 17% of net sales in the quarter ended September 30, 1999, compared
to 10% one year ago. The variance in RGS and NCA sales was a function of the
timing of orders by the Company's customers. Other product sales and training
and service accounted for the remainder of net sales in both years.
Industrial Businesses - At the present time, the Industrial Businesses segment's
principal market is the Forest Products industry. Sales in the first quarter of
fiscal 2000 were $2.3 million, of which $2.1 million was delivered by the Forest
Products business unit. Sales were down $600,000 from the same period last year
primarily due to the timing of certain orders now scheduled to ship during the
second quarter of fiscal 2000.
Bookings & Backlog - New order bookings for the three months ended September 30,
1999, were $17.0 million compared to $17.9 million in the same period a year
ago. Automotive bookings totaled $14.6 million in the first quarter of fiscal
2000 compared to $15.1 million a year ago. During the quarter ended September
30, 1999, automotive bookings were primarily for the following product lines:
62% P-1000, 17% RGS and NCA and 15% IPNet(TM). Automotive bookings for the
comparable period one year ago were primarily for the following product lines:
79% P-1000 and 8% RGS and NCA. Industrial Businesses bookings were $2.4 million
in the quarter ended September 30, 1999, compared to $2.8 million a year ago, of
which 100% represented Forest Product bookings. Backlog at September 30, 1999,
was $26.4 million compared to $28.0 million at September 30, 1998. The Company
expects to be able to fill substantially all of the orders in backlog by the end
of fiscal 2000. The amount of new order bookings and the level of backlog during
any particular period are not necessarily indicative of the future operating
performance of the Company.
9
<PAGE> 10
Selling, General and Administrative Expenses (SG&A) - SG&A expenses increased
$323,000 from $5.0 million in the quarter ended September 30, 1998, to $5.3
million in the comparable 1999 quarter. The increase was primarily due to
operating expenses related to the Company's October 1998 Sonic acquisition and
certain incentive related personnel costs that were partially offset by other
reductions in employee related expenses.
Engineering, Research and Development Expenses (R&D) - Engineering and R&D
expenses increased from $2.5 million in the quarter ended September 30, 1998, to
$3.0 million in the first quarter of fiscal 2000. The increase in expenses
continued to reflect investments the Company is making in new product
development including increases in labor, contract design services and
engineering supplies as well as expenditures by Sonic. During the quarter ended
September 30, 1999, the Company started to realize returns on its past
investments in new product development principally from sales of the Company's
new IPNet(TM) product. The first phase of the Wet Film Thickness Measurement
System has been installed at an alpha site and is undergoing testing. The
evaluation by the alpha site customer of the Company's revised PaintScan(TM)
product is proceeding. PaintScan(TM) is a paint defect inspection system that
was formerly known as Industrial Dirt Counter. The Company expects to complete
the first installation of its new DriScan product at an alpha site by the end of
December 1999. DriScan detects imperfections on bare metal prior to the paint
process. DriScan was formerly known as the Bare Metal product.
Interest Income (Expense), net - The decrease in interest income (expense), net
reflected the reduction in interest income related to lower cash balances and
higher interest expense from borrowings under the Company's revolving credit
line and the assumption of long-term debt related to the Sonic acquisition.
Outlook - Based on customer shipment schedules, the Company expects reasonably
strong sales in the second quarter of fiscal 2000. The Company expects sales in
the second half of the fiscal year to be seasonally lower than the first half of
the fiscal year. The Company continues to expect its overall operating results
for the balance of fiscal 2000 to compare favorably with the same period one
year ago. The foregoing statement is a "forward looking statement" within the
meaning of the Securities Exchange Act of 1934, as amended. See Item 2
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Safe Harbor Statement" for a discussion of a number of
uncertainties which could cause actual results to differ materially from those
set forth in the forward looking statement.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash and cash equivalents were $5.5 million at September 30, 1999,
compared to $4.2 million at June 30, 1999. The increase of $1.3 million in cash
for the quarter resulted from $3.0 million of cash provided from financing
activities mitigating $1.4 million of cash used in operations; and $300,000 used
for capital spending.
The use of cash for operations reflected increased working capital requirements
of $3.2 million. Receivables, net of foreign translation adjustments, increased
$4.0 million primarily as a result of the high level of sales during the
quarter. Inventory increased $900,000 to support near-term delivery
requirements. Offsetting these increases in working capital was a $1.7 million
increase in current liabilities, which reflected the timing of payments at
quarter end.
Financing activities during the quarter reflected net working capital borrowings
of $3.0 million. The Company believes that available cash on hand and existing
credit facilities will be sufficient to fund its currently anticipated fiscal
2000 cash flow requirements.
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<PAGE> 11
The Company does not believe that inflation has significantly impacted
historical operations and does not expect any significant near-term inflationary
impact.
EURO CONVERSION
A single currency called the "euro" was introduced in Europe on January 1, 1999.
Eleven of the fifteen member countries of the European Union agreed to adopt the
euro as their common legal currency on that date. Fixed conversion rates between
these participating countries' existing currencies (the "legacy currencies") and
the euro were established as of that date. The legacy currencies are scheduled
to remain legal tender as denominations of the euro until at least January 1,
2002 (but not later than July 1, 2002). During this transition period, parties
may settle transactions using either the euro or a participating country's
legacy currency.
Conversion to the euro may reduce the amount of the Company's exposure to
changes in foreign exchange rates, due to the netting effect of having assets
and liabilities denominated in a single currency as opposed to the various
legacy currencies. Conversely, because there will be less diversity in the
Company's exposure to foreign currencies, movements in the euro's value in U.S.
dollars could have a more pronounced effect, whether positive or negative, on
the Company.
YEAR 2000 READINESS DISCLOSURE
YEAR 2000 OVERVIEW
An issue affecting the Company is the potential inability of many computer
systems and applications to process information in the Year 2000 and beyond.
This could result in system failures or miscalculations leading to disruptions
in the Company's activities and operations (the "Year 2000" capability issue).
Programs that will operate in the Year 2000 unaffected by the change in year
from 1999 to 2000 are referred to herein as "Year 2000 compliant". The
disclosure below is intended to summarize the Company's actions to minimize the
risk. Certain portions of the discussion set forth below contain "forward
looking statements" within the meaning of the Securities Exchange Act of 1934,
as amended, including, but not limited to, those relating to the compliance of
the Company's products and systems to operate under the Year 2000 issue, future
costs to remediate Year 2000 issues, the timetable in which such remediation is
to occur, the alternatives available to the Company to fully address Year 2000
issues, the Company's requirements and the impact on the Company of an inability
of it or its key suppliers and customers to fully address Year 2000 issues.
Actual results could differ materially from those in the forward looking
statement due to a number of uncertainties set forth below.
YEAR 2000 STATE OF READINESS
The Company has forward-date tested the current version of its principal
products and believes that the current versions, and all versions currently
under warranty, are capable of operating in the Year 2000. The Company's
products operate on computers and operating systems supplied by third party
vendors. The Company's customers have been advised to conduct their own
forward-date tests on such systems and to contact the third party vendors
regarding available upgrades or other remediation efforts.
The Company's principal customers are automotive companies and forest and wood
products processors and system integrators who sell to such customers. Because
of the size and level of Year 2000 compliance activity by these customers, the
Company expects most of these customers will become Year 2000 capable in a
timely fashion. However, the Company is not monitoring their progress in this
regard.
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<PAGE> 12
If any of the Company's customers are unable to become Year 2000 capable in a
timely fashion, it is possible they could suspend product purchases from the
Company until their systems have addressed the Year 2000 issue.
The Company has contacted its principal vendors and suppliers (all of which are
referred to as "Third Party Suppliers") to determine if they are Year 2000
capable. The Company also intends to order extra material from critical Third
Party Suppliers of its product components and parts during the fourth calendar
quarter of 1999 to provide buffer stock in the event supply is disrupted. The
failure of one or more critical Third Party Suppliers (including utility and
similar providers) to be Year 2000 capable such that its supply of needed
products or services is interrupted could result in the Company not being able
to produce one or more of its systems for a period of time, which in turn could
result in lost sales and profits.
The Company has established a project team to identify internal systems which
are not Year 2000 capable and complete the work required to mitigate the Year
2000 issue. The Company's principal information technology ("IT") systems are
located at its headquarters in Plymouth, Michigan. These systems consist of a
financial system, which the Company has forward-date tested and believes is Year
2000 capable, and an operations system provided by a third party vendor. Another
third party vendor was engaged to make the operating system Year 2000 compliant.
The work has been completed and the system tested off-site and found to be
compliant. The changes were implemented and tested live at the Company's
headquarters early in the fourth calendar quarter of 1999 and is believed to be
Year 2000 capable. The Company also has a number of engineering systems, used
primarily for testing, developed by the Company's internal staff. The Company
forward-date tested these systems during the first calendar quarter of 1999 and
believes it has completed the remediation and testing necessary to make them
Year 2000 compliant. The Company's subsidiaries believe that they have completed
the modifications and testing necessary to make their IT systems, which are
generally small networks of personal computers, Year 2000 compliant.
The Company maintains networks of personal computers. Using internal personnel,
the Company has assessed its personal computer networks for Year 2000
compliance. Modifications necessary to effect individual personal computer Year
2000 compliance have been completed and modifications required to achieve Year
2000 compliance to certain components of the network are expected to be
completed during the fourth calendar quarter of 1999. The Company's personal
computer systems generally operate using "shrink-wrapped" software (such as
Microsoft Windows 95, Microsoft Word and Excel). To the extent any of the
programs used by the personal computer systems are not Year 2000 compliant, the
Company believes that Year 2000 capable upgrades are or will be readily
available for purchase.
A failure of one or more of the Company's internal systems to become Year 2000
compliant, particularly the Company's principal internal information technology
systems, could require the Company to manually process information or could
prevent or limit access to mission critical information.
The Company's non-IT systems consist principally of security, climate control,
telephone and data communication systems. The Company has contacted the vendors
that support these systems at the Company's headquarters, each of which believes
its system to be Year 2000 compliant. The Company will be testing these systems
during the fourth calendar quarter of 1999.
YEAR 2000 COSTS
Most of the costs incurred by the Company to date on Year 2000 compliance issues
have been internal staff costs and costs relating to normal product upgrades,
which the Company has not separately tracked.
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<PAGE> 13
As a result, the Company is not able to reasonably estimate the amount of such
expenditures. The Company presently estimates that its future costs relating to
Year 2000 compliance issues, including replacement systems, will be less than
$100,000. The Company would have incurred many of the costs for these efforts in
any event because of the normal process of product and equipment upgrades. These
cost estimates are subject to a number of uncertainties, which could result in
actual costs exceeding the estimated amounts described below. Costs related to
the Year 2000 issue are funded through operating cash flow. The Year 2000 costs
have not caused the Company to defer any other significant information
technology programs.
YEAR 2000 RISKS AND CONTINGENCY PLANS
The Company's Year 2000 project team has evaluated business disruption
scenarios, principally related to the Company's internal systems for processing
information and the purchase of goods and services to maintain timely
production. The team has developed and implemented the plans disclosed
previously under "Year 2000 State of Readiness". Estimates of time, costs and
risks associated with the Year 2000 issue are based on currently available
information. Developments that could affect estimates include, but are not
limited to, the availability and cost of trained personnel; the ability to
locate and correct all relevant computer code and systems; cooperation and
remediation success of the Company's suppliers and customers (and their
suppliers and customers); the ability to correctly anticipate risks and
implement suitable contingency plans in the event of system failures at the
Company or its suppliers or customers (and their suppliers and customers);
unanticipated difficulties with the assessment or remediation process resulting
in the need to replace more systems or hire more personnel or third party firms
to assist in the process than expected and the Company being required to assist
any of its Third Party Suppliers to become Year 2000 compliant.
Some commentators have stated that a significant amount of litigation will arise
out of Year 2000 compliance issues. In addition, it is possible that there will
be undetected errors or defects associated with Year 2000 date functions in the
Company's current products or internal systems or those of its Third Party
Suppliers (and their suppliers and customers). Because of the unprecedented
nature of litigation in this area, it is uncertain how the Company may be
affected by it. In the event of such litigation or the occurrence of production
disruptions related to Third Party Suppliers, internal issues or customers, it
is possible the Company's revenues, net income or financial condition could be
materially adversely affected.
MARKET RISK INFORMATION
Perceptron's primary market risk is related to foreign exchange rates. This risk
is derived from sales by its international operations, which are primarily
located in Germany and The Netherlands and for which products are produced in
the U.S. The Company is also subject to interest rate risk in connection with
its borrowings. At September 30, 1999, the Company did not have any market risk
instruments for trading purposes.
FOREIGN CURRENCY RISK
The Company has limited foreign currency exchange risk in its international
operations due to the percentage of contracts entered into in U.S. dollars and
the short time period between sales commitment and delivery for contracts in the
non-U.S. currencies. The Company's percentage of sales commitments in U.S.
dollars at September 30, 1999, was 84%. For sales commitments entered into in
the non-U.S. currencies, the currency rate risk exposure is predominantly less
than one year with the majority in the
13
<PAGE> 14
120 to 150 day range. See also "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Euro Conversion".
The Company may use, from time to time, a limited hedging program to minimize
the impact of foreign currency fluctuations. As the Company exports products, it
may enter into limited hedging transactions relating to the accounts receivable
arising as a result of such shipment. These transactions involve the use of
forward contracts. At September 30, 1999, the Company had no forward contracts
outstanding.
INTEREST RATE RISK
The Company is subject to interest rate risk in connection with borrowings under
its variable rate revolving line of credit and from fixed rate debt assumed in
conjunction with the purchase of ultrasound intellectual property in October
1998. However, this risk is limited due to the limited level of debt the Company
has outstanding. The Company's exposure to interest rate risk arises primarily
from changes in the prime rate and changes in Eurodollar rates in the London
interbank market. See Note 3 of "Notes to Consolidated Statements" for a
description of the Company's outstanding debt.
SAFE HARBOR STATEMENT
Certain statements in this Management's Discussion and Analysis of Financial
Condition and Results of Operation may be "forward looking statements" within
the meaning of the Securities Exchange Act of 1934, including the Company's
expectation as to fiscal 2000 and future revenue and earnings levels, the timing
of new product releases and the expansion of the Company into new markets.
Actual results could differ materially from those in the forward looking
statements due to a number of uncertainties, including, but not limited to, the
dependence of the Company's revenue on a number of sizable orders from a small
number of customers, the timing of orders and shipments which can cause the
Company to experience significant fluctuations in its quarterly and annual
revenue and operating results, timely receipt of required supplies and
components which could result in delays in anticipated shipments, general
product demand and market acceptance risks, the ability of the Company to
successfully compete with alternative and similar technologies, the timing and
continuation of the automotive industry's retooling programs, the ability of the
Company to resolve technical issues inherent in the development of new products
and technologies, the ability of the Company to identify and satisfy market
needs, general product development and commercialization difficulties, the
quality and cost of competitive products already in existence or developed in
the future, the level of interest existing and potential new customers may have
in new products and technologies generally, rapid or unexpected technological
changes, the impact of undetected errors or defects associated with the Year
2000 date functions on the Company and its suppliers, and the effect of economic
conditions, particularly economic conditions in the domestic and worldwide
Automotive and Forest Products industries, both of which have from time to time
been subject to cyclical downturns due to the level of demand for, or supply of,
the products produced by companies in these industries.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Information required pursuant to this item is incorporated by reference herein
from Item 2 "Management's Discussion and Analysis of Financial Condition and
Results of Operations - Market Risk Information".
14
<PAGE> 15
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
Kenneth R. Dabrowski was appointed to the Board of Directors effective November
1, 1999. Mr. Dabrowski recently retired as the Vice President for Quality and
Process Leadership for Ford Automotive Operations, where he had global
responsibility for Corporate and Supplier Quality and Customer Satisfaction.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) Exhibits
10.30 Forms of Incentive Stock Option Agreements (Officers)
and Non-Qualified Stock Option Agreements (Officers)
under 1992 Stock Option Plan after September 1, 1999.
10.31 Form of Non-Qualified Stock Option Agreements under
1998 Global Team Member Stock Option Plan after
September 1, 1999.
27. Financial Data Schedule
(B) Reports on Form 8-K
None
15
<PAGE> 16
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PERCEPTRON, INC.
(Registrant)
<TABLE>
<S> <C>
Date: November 11, 1999 By: /S/ Alfred A. Pease
--------------------------------------
Alfred A. Pease
President and Chief Executive Officer
Date: November 11, 1999 By: /S/ John J. Garber
--------------------------------------
John J. Garber
Vice President and Chief Financial Officer
(Principal Financial Officer)
Date: November 11, 1999 By: /S/ Sylvia M. Smith
--------------------------------------
Sylvia M. Smith
Controller and Chief Accounting Officer
(Principal Accounting Officer)
</TABLE>
16
<PAGE> 17
Exhibit Index
-------------
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
10.30 Forms of Incentive Stock Option Agreements (Officers) and Non-
Qualified Stock Option Agreement (Officers) under 1992 Stock Option
Plan after September 1, 1999.
10.31 Form of Non-Qualified Stock Option Agreements under 1998 Global
Team Member Stock Option Plan after September 1, 1999.
27. Financial Data Schedule
</TABLE>
<PAGE> 1
EXHIBIT 10.30
INCENTIVE STOCK OPTION AGREEMENT TERMS - OFFICER
UNDER THE PERCEPTRON, INC. 1992 STOCK OPTION PLAN
THESE STOCK OPTION AGREEMENT TERMS pertain to stock options granted
effective November 1, 1999 under the 1992 Stock Option Plan (the "Plan") as
detailed in the accompanying Notice of Grant of Stock Options and Option
Agreement (the "Notice) between Perceptron, Inc., a Michigan corporation ("the
Company"), and the employee named in the Notice who is currently employed by the
Company or one of its subsidiaries (the "Optionee"). A copy of the 1992 Stock
Option Plan is not attached hereto but is available upon written request made to
the Chief Financial Officer of the Company.
1. GRANT OF OPTION. Subject to the terms and conditions hereof, the
Company hereby grants to the Optionee an option to purchase from the Company up
to, but not exceeding in the aggregate, the number of shares of the Company's
Common Stock detailed in the Notice at the price per share designated in the
Notice. This option is intended to constitute an "incentive stock option" within
the meaning of Section 422 of the Internal Revenue Code ("Code").
2. RIGHT TO EXERCISE OPTION. Unless otherwise indicated in the Notice,
the Optionee may purchase from the Company on and after the first anniversary of
the date of grant, 25% of the shares covered by this option, and on each
succeeding one year anniversary thereof may exercise an additional 25% of the
shares covered by the option, so that on the fourth anniversary of the date of
grant this option shall be fully exercisable. To the extent not exercised,
installments shall accumulate and the Optionee may exercise them in whole or in
part in any subsequent period. Unless a shorter period is specified in the
Notice under the "Expiration" column, and notwithstanding any provision of this
Agreement, no portion of this option shall be exercisable on or after the tenth
anniversary of the date of grant.
3. TERMINATION OF EMPLOYMENT. If, prior to the date that this option
shall first become exercisable, the Optionee's employment with the Company or
any of its subsidiaries shall be terminated for any reason, the Optionee's right
to exercise this option shall terminate and all rights hereunder shall cease. As
used in this Agreement, the term "subsidiary" of the Company means any
"subsidiary corporation" as defined in Section 424(f) of the Code, the term
"employment" means employment with the Company or any subsidiary of the Company,
and the term "disability" means "total and permanent disability," as defined in
Section 22(e) of the Code.
If, on or after the date that this option shall first become
exercisable, the Optionee's employment shall be terminated for any reason other
than death or disability, the Optionee shall have the right, within three months
after such termination of employment, to exercise this option to the extent that
it shall have been exercisable and unexercised on the date of such termination
of services, subject to any other limitation on the exercise of such option in
effect at the date of exercise.
<PAGE> 2
If on or after the date that this option shall first become exercisable
the Optionee's employment shall be terminated due to death or disability, the
Optionee or the executor or administrator of the estate of the Optionee (as the
case may be) or the person or persons to whom the option shall have been
transferred by will or by the laws of descent and distribution, shall have the
right, within one year from the date of the Optionee's death or disability, to
exercise this option to the extent that it was exercisable and unexercised on
the date of the Optionee's death or disability, subject to any other limitation
on exercise in effect at the date of exercise.
The transfer of the Optionee from one corporation to another among the
Company and any of its subsidiaries, or a leave of absence with the written
consent of the Company, shall not be a termination of services for purposes of
this option.
Notwithstanding the provisions of Section 2 "Right to Exercise Option"
and Section 3 "Termination of Employment" of this Agreement, (i) in the event of
a termination by the Company of the Optionee's employment Without Cause (as
defined below) or Diminishment of the Optionee's Responsibilities Without Cause
(as defined below), following a Change in Control of the Company, or (ii), in
the event of a Change in Control, if one of the corporations surviving the
Change in Control or the person purchasing the Company's assets in the Change in
Control does not assume this option, any portion of this option that is then not
exercisable shall become immediately exercisable; provided, however, that the
foregoing provision shall apply, in case of incentive stock options ("ISOs"),
and in the case of options held by a person subject to Section 16(b) of the
Securities Exchange Act of 1934 ("Section 16(b) Grants"), only if the
termination or diminishment referred to in (i) above and the Change in Control
referred to in (ii) above occurs after the first anniversary of the date of
grant of this option, in the case of ISOs, or the date six months after the date
of grant of this option, in the case of Section 16(b) Grants; and, provided
further, however, that the Committee shall have the right, at any time prior to
the occurrence of the termination or diminishment referred to in (i) above or
the Change in Control referred to in (ii) above, to modify the provisions of
this paragraph, including the termination of all of the Optionee's rights set
forth in this paragraph, to the extent required under applicable accounting and
Securities and Exchange Commission rules, regulations, policies, guidelines or
other similar requirements to permit the Company to account for a then
contemplated business combination under pooling-of-interests accounting. For
purposes hereof, "Without Cause" shall mean the Optionee's employment is
terminated by the Company, or there is a Diminishment of the Optionee's
Responsibilities, for any reason except (i) personal dishonesty; (ii) willful
misconduct; (iii) breach of fiduciary duty to the Company; (iv) conviction for
violation of any law (other than traffic violations or similar offenses); or (v)
repeated or intentional failure to perform duties, after written notice is
delivered identifying the failure, and it is not cured within ten (10) days
following receipt of such notice. For purposes hereof, "Diminishment of the
Optionee's Responsibilities" shall mean the Company, or any successor thereto,
(i) reassigning the Optionee substantial duties which are materially
inconsistent with the Optionee's position, duties and responsibilities with the
Company immediately prior to the Change in Control, except for reassignments of
duties which constitute a bona fide promotion of the Optionee, or (ii) reducing
the Optionee's compensation such that (a) the Optionee's annual base salary is
less than eighty (80%) percent of the Optionee's annual base salary prior to the
Change in Control; and (b) the Optionee's annual base salary and the annual cash
bonus which the Optionee is eligible to earn (including any performance based
bonus), combined, is not at least equal to the
2
<PAGE> 3
combination of the Optionee's annual base salary prior to the Change in Control
and the average of the annual cash bonuses which the Optionee was eligible to
earn (including any performance based bonus, but excluding any bonus payable to
the Optionee for completing the Change in Control), whether or not actually
earned, for the year in which the Change in Control occurred and for the year
prior thereto. For purposes hereof, a "Change in Control" shall be deemed to
have occurred in the event of (i) a merger involving the Company in which the
Company is not the surviving corporation (other than a merger with a
wholly-owned subsidiary of the Company formed for the purpose of changing the
Company's corporate domicile); (ii) a share exchange in which the shareholders
of the Company exchange their stock in the Company for stock of another
corporation (other than a share exchange in which all or substantially all of
the holders of the voting stock of the Company, immediately prior to the
transaction, exchange, on a pro rata basis, their voting stock of the Company
for more than 50% of the voting stock of such other corporation); (iii) the sale
of all or substantially all of the assets of the Company; or (iv) any person or
group of persons (as defined by Section 13(d) of the Securities Exchange Act of
1934, as amended) (other than any employee benefit plan or employee benefit
trust benefitting the employees of the Company) becoming a beneficial owner,
directly or indirectly, of securities of the Company representing more than
fifty (50%) percent of either the then outstanding Common Stock of the Company,
or the combined voting power of the Company's then outstanding voting
securities.
Notwithstanding the provisions of Section 2 "Right to Exercise Option"
and Section 3 "Termination of Employment" of this Agreement, (provided, however,
if this option is an incentive stock option, only if the merger, consolidation
or sale or transfer referred to below occurs after the first anniversary of the
date of grant of this option, and, if this option is held by a person subject to
Section 16(b) of the Securities Exchange Act of 1934, only if such merger,
consolidation or sale or transfer occurs after the date six months after the
date of grant of this option), if, in connection with any merger, consolidation,
or sale or transfer by the Company of substantially all of its assets, this
option is not assumed or continued by the surviving corporation or the
purchaser, the date of termination of this option and the date on or after which
this option, or any portion thereof not then exercisable, may be exercised,
shall be advanced to a date to be fixed by the Committee, which date shall not
be more than 15 days prior to such merger, consolidation, or sale or transfer;
provided however, that the Committee shall have the right, at any time prior to
the occurrence of such merger, consolidation or sale or transfer, to modify the
provisions of this paragraph, including the termination of all of the Optionee's
rights set forth in this paragraph, to the extent required under applicable
accounting and Securities and Exchange Commission rules, regulations, policies,
guidelines or other similar requirements to permit the Company to account for a
then contemplated business combination under pooling-of-interests accounting.
4. EXERCISE OF OPTION.
(a) At any time that this option may be exercised as provided in
this Agreement, the Optionee may exercise any portion of this option which is
then exercisable, in whole or in part, by delivery to the Company of a written
notice, in the form attached hereto, signed by the Optionee.
3
<PAGE> 4
(b) In addition, the Optionee shall deliver, on the date of
exercise:
(i) cash equal to the purchase price of the shares being
purchased,
(ii) such documents as are or may be required under
the terms of Section 5.3 of the Plan to effect a cashless exercise, or
(iii) Permitted Shares with a value (determined as of the
date of exercise of the option) equal to the purchase price of the shares being
purchased (the "Delivered Shares Method").
(c) "Permitted Shares" are shares of Company Common Stock to be
delivered to pay the exercise price of the option (the "Delivered Shares"):
(i) which have been owned by the Optionee for at least
six months prior to the date of delivery, or
(ii) if they have not been owned by the Optionee for at
least six months prior to the date of delivery, the Optionee then owns, and has
owned for at least six months prior thereto, a number of shares of Company
Common Stock at least equal in number to the Delivered Shares.
(d) Shares which have been counted during the prior six months as
owned by the Optionee for purposes of determining whether the Optionee may
exercise options to purchase Common Stock pursuant to the Delivered Shares
Method:
(i) may not be used as Delivered Shares, and
(ii) may not be counted as owned by the Optionee for
purposes of making calculations under the Delivered Shares Method.
5. COMPLIANCE WITH SECURITIES LAWS. Anything to the contrary
herein notwithstanding, the Company's obligation to sell and deliver stock under
this option is subject to such compliance with federal and state laws, rules and
regulations applying to the authorization, issuance or sale of securities, and
applicable stock exchange requirements, as the Company deems necessary or
advisable.
6. NON-ASSIGNABILITY. The option hereby granted shall not be
transferable by the Optionee other than by will or the laws of descent and
distribution, and the option may be exercised during the Optionee's lifetime
only by the Optionee. Any transferee of the option shall take the same subject
to the terms and conditions of this Agreement. No such transfer of the option
shall be effective to bind the Company unless the Company shall have been
furnished with written notice thereof and a copy of the will and/or such other
evidence as the Company may deem necessary to establish the validity of the
transfer and the acceptance by the transferee or transferees of the terms and
conditions of this Agreement. No assignment or transfer of this option, or of
the rights represented thereby, whether voluntary or involuntary, by operation
of law or otherwise, except a transfer by the Optionee by will or by the laws of
descent and distribution, shall vest in the purported
4
<PAGE> 5
assignee or transferee any interest or right herein whatsoever.
7. DISPUTES. As a condition of the granting of the option granted
hereby, the Optionee and the Optionee's successors and assigns agree that any
dispute or disagreement which shall arise under or as a result of this Agreement
shall be determined by the Committee in its sole discretion and judgment and
that any such determination and any interpretation by the Committee of the terms
of this Agreement shall be final and shall be binding and conclusive for all
purposes.
8. ADJUSTMENTS. In the event of any stock dividend, stock split,
reclassification, merger, consolidation, or similar transaction affecting the
shares covered by this option, the rights of the Optionee shall be as provided
in Section 8 of the Plan and any adjustment therein provided shall be made in
accordance with Section 8 of the Plan.
9. RIGHTS AS SHAREHOLDER. The Optionee shall have no rights as a
shareholder of the Company with respect to any of the shares covered by this
option until the issuance of a stock certificate or certificates upon the
exercise of the option in full or in part, and then only with respect to the
shares represented by such certificate or certificates.
10. NOTICES. Every notice relating to this Agreement shall be in
writing and if given by mail shall be given by registered or certified mail with
return receipt requested. All notices to the Company shall be delivered to the
Secretary of the Company at the Company's headquarters or addressed to the
Secretary of the Company at the Company's headquarters. All notices by the
Company to the Optionee shall be delivered to the Optionee personally or
addressed to the Optionee at the Optionee's last residence address as then
contained in the records of the Company or such other address as the Optionee
may designate. Either party by notice to the other may designate a different
address to which notices shall addressed. Any notice given by the Company to the
Optionee at the Optionee's last designated address shall be effective to bind
any other person who shall acquire rights hereunder.
11. "OPTIONEE" TO INCLUDE CERTAIN TRANSFEREES. Whenever the word
"Optionee" is used in any provision of this Agreement under circumstances where
the provision should logically apply to any other person or persons to whom the
option, in accordance with the provisions of Section 6 hereof, may be
transferred, the word "Optionee" shall be deemed to include such person or
persons.
12. GOVERNING LAW. This Agreement has been made in and shall be
construed in accordance with the laws of the State of Michigan.
13. PROVISIONS OF PLAN CONTROLLING. The provisions hereof are
subject to the terms and provisions of the Plan copies of which are available
for review upon request. In the event of any conflict between the provisions of
this option and the provisions of the Plan, the provisions of the Plan shall
control, except to the extent that the provisions of this option limit or
restrict the rights of the Optionee to a greater extent than set forth in the
Plan.
5
<PAGE> 6
NOTICE OF EXERCISE OF INCENTIVE STOCK OPTION
UNDER THE PERCEPTRON, INC. 1992 STOCK OPTION PLAN
Perceptron, Inc.
47827 Halyard Drive
Plymouth, MI 48170
Dear Sir:
An incentive stock option was granted to me on ________, 19__ to purchase
shares of Perceptron, Inc. Common Stock at a price of $________ per share.
I hereby elect to exercise my incentive stock option with respect to_______
shares for an aggregate purchase price of $_________. I hereby elect to pay for
such shares as follows:
Personal Check $_______
Cash $_______
Bank Draft $_______
Money Order $_______
Cashless Exercise $_______
Perceptron Common Stock $_______
Total $_______
A personal check or cash, bank draft or money order for the purchase price is
enclosed herewith.
Documents as are required to effect a cashless exercise are enclosed.
I hereby elect to exercise my stock option with respect to________ shares
through a combination of cash payments and shares of Perceptron, Inc. Common
Stock, as described on the attached Exhibit A. A personal check for the purchase
price to be paid in cash is enclosed herewith. Certificates for ______ shares of
Perceptron, Inc. Common Stock are enclosed herewith, along with a duly executed
stock power in proper form for transfer, with all signatures properly guaranteed
by a national bank or member firm of the NYSE or AMEX. I represent that the
shares of Perceptron, Inc. Common Stock enclosed herewith have been owned by me
for more than six months or I currently own more than ________ shares of
Perceptron, Inc. Common Stock which have been owned by me for more than six
months. Such shares have not been counted during the prior six months as owned
by me for purposes of determining whether I may exercise options to purchase
Common Stock pursuant to the Delivered Shares Method.
I agree to notify the Company if prior to two years from the date of grant and
one year from the exercise date, I dispose of any shares acquired pursuant to my
exercise of this incentive stock option.
6
<PAGE> 7
I represent that the shares of stock that I am purchasing upon this exercise of
my option are being purchased for investment purposes and not with a view to
resale. This representation shall not be binding upon me if the shares of Common
Stock that I am purchasing are subject to an effective Registration Statement
under the Securities Act of 1933.
Optionee:
________________________
Dated:
___________________________
7
<PAGE> 8
PERCEPTRON, INC.
NOTICE OF GRANT OF STOCK OPTIONS ID: 38-2381442
AND OPTION AGREEMENT 47827 Halyard Drive
Plymouth, MI 48170
- --------------------------------------------------------------------------------
OPTION NUMBER:
PLAN: 92
ID:
- --------------------------------------------------------------------------------
Effective , you have been granted a(n) Incentive Stock Option to buy
shares of Perceptron, Inc. (the Company) stock at $ per share.
The total option price of the shares granted is $ .
Shares in each period will become fully vested on the date shown.
Shares Vest Type Full Vest Expiration
- --------------------------------------------------------------------------------
By your signature and the Company's signature below, you and the Company agree
that these options are granted under and governed by the terms and conditions of
the Company's Stock Option Plan as amended and the Option Agreement, all of
which are attached and made a part of this document.
- --------------------------------------------------------------------------------
- ----------------------------------- --------------------------------
Perceptron, Inc. Date
- ----------------------------------- --------------------------------
(Employee) Date
<PAGE> 9
EXHIBIT 10.30
NON-QUALIFIED STOCK OPTION AGREEMENT TERMS - OFFICER
UNDER THE PERCEPTRON, INC. 1992 STOCK OPTION PLAN
THESE STOCK OPTION AGREEMENT TERMS pertain to stock options granted
effective September 3, 1999 under the 1992 Stock Option Plan (the "Plan") as
detailed in the accompanying Notice of Grant of Stock Options and Option
Agreement (the "Notice") between Perceptron, Inc., a Michigan corporation ("the
Company"), and the employee named in the Notice who is currently employed by the
Company or one of its subsidiaries (the "Optionee"). A copy of the 1992 Stock
Option Plan is not attached hereto but is available upon written request made to
the Chief Financial Officer of the Company.
1. GRANT OF OPTION. Subject to the terms and conditions hereof, the
Company hereby grants to the Optionee an option to purchase from the Company up
to, but not exceeding in the aggregate, the number of shares of the Company's
Common Stock detailed in the accompanying Notice at the price per share
designated in the Notice. This option is not intended to constitute an
"incentive stock option" within the meaning of Section 422 of the Internal
Revenue Code ("Code").
2. RIGHT TO EXERCISE OPTION. Unless otherwise indicated in the Notice,
the Optionee may purchase from the Company on and after the first anniversary of
the date of grant, 25% of the shares covered by this option, and on each
succeeding one year anniversary thereof may exercise an additional 25% of the
shares covered by the option, so that on the fourth anniversary of the date of
grant this option shall be fully exercisable. To the extent not exercised,
installments shall accumulate and the Optionee may exercise them in whole or in
part in any subsequent period. Unless a shorter period is specified in the
Notice under the "Expiration" column, and notwithstanding any provision of this
Agreement, no portion of this option shall be exercisable on or after the tenth
anniversary of the date of grant.
3. TERMINATION OF EMPLOYMENT. If, prior to the date that this option
shall first become exercisable, the Optionee's employment with the Company or
any of its subsidiaries shall be terminated for any reason, the Optionee's right
to exercise this option shall terminate and all rights hereunder shall cease. As
used in this Agreement, the term "subsidiary" of the Company means any
"subsidiary corporation" as defined in Section 424(f) of the Code, the term
"employment" means employment with the Company or any subsidiary of the Company,
and the term "disability" means "total and permanent disability," as defined in
Section 22(e) of the Code.
If, on or after the date that this option shall first become
exercisable, the Optionee's employment shall be terminated for any reason other
than death or disability, the Optionee shall have the right, within three months
after such termination of employment, to exercise this option to the extent that
it shall have been exercisable and unexercised on the date of such termination
of services, subject to any other limitation on the exercise of such option in
effect at the date of exercise.
If on or after the date that this option shall first become exercisable
the Optionee's
<PAGE> 10
employment shall be terminated due to death or disability, the Optionee or the
executor or administrator of the estate of the Optionee (as the case may be) or
the person or persons to whom the option shall have been transferred by will or
by the laws of descent and distribution, shall have the right, within one year
from the date of the Optionee's death or disability, to exercise this option to
the extent that it was exercisable and unexercised on the date of the Optionee's
death or disability, subject to any other limitation on exercise in effect at
the date of exercise.
The transfer of the Optionee from one corporation to another among the
Company and any of its subsidiaries, or a leave of absence with the written
consent of the Company, shall not be a termination of services for purposes of
this option.
Notwithstanding the provisions of Section 2 "Right to Exercise Option"
and Section 3 "Termination of Employment" of this Agreement, (i) in the event of
a termination by the Company of the Optionee's employment Without Cause (as
defined below) or Diminishment of the Optionee's Responsibilities Without Cause
(as defined below), following a Change in Control of the Company, or (ii), in
the event of a Change in Control, if one of the corporations surviving the
Change in Control or the person purchasing the Company's assets in the Change in
Control does not assume this option, any portion of this option that is then not
exercisable shall become immediately exercisable; provided, however, that the
foregoing provision shall apply, in case of incentive stock options ("ISOs"),
and in the case of options held by a person subject to Section 16(b) of the
Securities Exchange Act of 1934 ("Section 16(b) Grants"), only if the
termination or diminishment referred to in (i) above and the Change in Control
referred to in (ii) above occurs after the first anniversary of the date of
grant of this option, in the case of ISOs, or the date six months after the date
of grant of this option, in the case of Section 16(b) Grants; and, provided
further, however, that the Committee shall have the right, at any time prior to
the occurrence of the termination or diminishment referred to in (i) above or
the Change in Control referred to in (ii) above, to modify the provisions of
this paragraph, including the termination of all of the Optionee's rights set
forth in this paragraph, to the extent required under applicable accounting and
Securities and Exchange Commission rules, regulations, policies, guidelines or
other similar requirements to permit the Company to account for a then
contemplated business combination under pooling-of-interests accounting. For
purposes hereof, "Without Cause" shall mean the Optionee's employment is
terminated by the Company, or there is a Diminishment of the Optionee's
Responsibilities, for any reason except (i) personal dishonesty; (ii) willful
misconduct; (iii) breach of fiduciary duty to the Company; (iv) conviction for
violation of any law (other than traffic violations or similar offenses); or (v)
repeated or intentional failure to perform duties, after written notice is
delivered identifying the failure, and it is not cured within ten (10) days
following receipt of such notice. For purposes hereof, "Diminishment of the
Optionee's Responsibilities" shall mean the Company, or any successor thereto,
(i) reassigning the Optionee substantial duties which are materially
inconsistent with the Optionee's position, duties and responsibilities with the
Company immediately prior to the Change in Control, except for reassignments of
duties which constitute a bona fide promotion of the Optionee, or (ii) reducing
the Optionee's compensation such that (a) the Optionee's annual base salary is
less than eighty (80%) percent of the Optionee's annual base salary prior to the
Change in Control; and (b) the Optionee's annual base salary and the annual cash
bonus which the Optionee is eligible to earn (including any performance based
bonus), combined, is not at least equal to the combination of the Optionee's
annual base salary prior to the Change in Control and the average of
2
<PAGE> 11
the annual cash bonuses which the Optionee was eligible to earn (including any
performance based bonus, but excluding any bonus payable to the Optionee for
completing the Change in Control), whether or not actually earned, for the year
in which the Change in Control occurred and for the year prior thereto. For
purposes hereof, a "Change in Control" shall be deemed to have occurred in the
event of (i) a merger involving the Company in which the Company is not the
surviving corporation (other than a merger with a wholly-owned subsidiary of the
Company formed for the purpose of changing the Company's corporate domicile);
(ii) a share exchange in which the shareholders of the Company exchange their
stock in the Company for stock of another corporation (other than a share
exchange in which all or substantially all of the holders of the voting stock of
the Company, immediately prior to the transaction, exchange, on a pro rata
basis, their voting stock of the Company for more than 50% of the voting stock
of such other corporation); (iii) the sale of all or substantially all of the
assets of the Company; or (iv) any person or group of persons (as defined by
Section 13(d) of the Securities Exchange Act of 1934, as amended) (other than
any employee benefit plan or employee benefit trust benefitting the employees of
the Company) becoming a beneficial owner, directly or indirectly, of securities
of the Company representing more than fifty (50%) percent of either the then
outstanding Common Stock of the Company, or the combined voting power of the
Company's then outstanding voting securities.
Notwithstanding the provisions of Section 2 "Right to Exercise Option"
and Section 3 "Termination of Employment" of this Agreement, (provided, however,
if this option is an incentive stock option, only if the merger, consolidation
or sale or transfer referred to below occurs after the first anniversary of the
date of grant of this option, and, if this option is held by a person subject to
Section 16(b) of the Securities Exchange Act of 1934, only if such merger,
consolidation or sale or transfer occurs after the date six months after the
date of grant of this option), if, in connection with any merger, consolidation,
or sale or transfer by the Company of substantially all of its assets, this
option is not assumed or continued by the surviving corporation or the
purchaser, the date of termination of this option and the date on or after which
this option, or any portion thereof not then exercisable, may be exercised,
shall be advanced to a date to be fixed by the Committee, which date shall not
be more than 15 days prior to such merger, consolidation, or sale or transfer;
provided however, that the Committee shall have the right, at any time prior to
the occurrence of such merger, consolidation or sale or transfer, to modify the
provisions of this paragraph, including the termination of all of the Optionee's
rights set forth in this paragraph, to the extent required under applicable
accounting and Securities and Exchange Commission rules, regulations, policies,
guidelines or other similar requirements to permit the Company to account for a
then contemplated business combination under pooling-of-interests accounting.
4. EXERCISE OF OPTION.
(a) At any time that this option may be exercised as provided in
this Agreement, the Optionee may exercise any portion of this
option which is then exercisable, in whole or in part, by
delivery to the Company of a written notice, in the form
attached hereto, signed by the Optionee.
(b) In addition, the Optionee shall deliver, on the date of
exercise:
3
<PAGE> 12
(i) cash equal to the purchase price of the shares being
purchased,
(ii) such documents as are or may be required under the
terms of Section 5.3 of the Plan to effect a cashless exercise, or
(iii) Permitted Shares with a value (determined as of the
date of exercise of the option) equal to the purchase price of the shares being
purchased (the "Delivered Shares Method").
(c) "Permitted Shares" are shares of Company Common Stock to be
delivered to pay the exercise price of the option (the "Delivered Shares"):
(i) which have been owned by the Optionee for at least six
months prior to the date of delivery, or
(ii) if they have not been owned by the Optionee for at
least six months prior to the date of delivery, the Optionee then owns, and has
owned for at least six months prior thereto, a number of shares of Company
Common Stock at least equal in number to the Delivered Shares.
(d) Shares which have been counted during the prior six months as
owned by the Optionee for purposes of determining whether the Optionee may
exercise options to purchase Common Stock pursuant to the Delivered Shares
Method:
(i) may not be used as Delivered Shares, and
(ii) may not be counted as owned by the Optionee for
purposes of making calculations under the Delivered Shares Method.
5. COMPLIANCE WITH SECURITIES LAWS. Anything to the contrary herein
notwithstanding, the Company's obligation to sell and deliver stock under this
option is subject to such compliance with federal and state laws, rules and
regulations applying to the authorization, issuance or sale of securities, and
applicable stock exchange requirements, as the Company deems necessary or
advisable.
6. NON-ASSIGNABILITY. The option hereby granted shall not be
transferable by the Optionee other than by will or the laws of descent and
distribution, and the option may be exercised during the Optionee's lifetime
only by the Optionee. Any transferee of the option shall take the same subject
to the terms and conditions of this Agreement. No such transfer of the option
shall be effective to bind the Company unless the Company shall have been
furnished with written notice thereof and a copy of the will and/or such other
evidence as the Company may deem necessary to establish the validity of the
transfer and the acceptance by the transferee or transferees of the terms and
conditions of this Agreement. No assignment or transfer of this option, or of
the rights represented thereby, whether voluntary or involuntary, by operation
of law or otherwise, except a transfer by the Optionee by will or by the laws of
descent and distribution, shall vest in the purported
4
<PAGE> 13
assignee or transferee any interest or right herein whatsoever.
7. DISPUTES. As a condition of the granting of the option granted
hereby, the Optionee and the Optionee's successors and assigns agree that any
dispute or disagreement which shall arise under or as a result of this Agreement
shall be determined by the Committee in its sole discretion and judgment and
that any such determination and any interpretation by the Committee of the terms
of this Agreement shall be final and shall be binding and conclusive for all
purposes.
8. ADJUSTMENTS. In the event of any stock dividend, stock split,
reclassification, merger, consolidation, or similar transaction affecting the
shares covered by this option, the rights of the Optionee shall be as provided
in Section 8 of the Plan and any adjustment therein provided shall be made in
accordance with Section 8 of the Plan.
9. RIGHTS AS SHAREHOLDER. The Optionee shall have no rights as a
shareholder of the Company with respect to any of the shares covered by this
option until the issuance of a stock certificate or certificates upon the
exercise of the option in full or in part, and then only with respect to the
shares represented by such certificate or certificates.
10. NOTICES. Every notice relating to this Agreement shall be in
writing and if given by mail shall be given by registered or certified mail with
return receipt requested. All notices to the Company shall be delivered to the
Secretary of the Company at the Company's headquarters or addressed to the
Secretary of the Company at the Company's headquarters. All notices by the
Company to the Optionee shall be delivered to the Optionee personally or
addressed to the Optionee at the Optionee's last residence address as then
contained in the records of the Company or such other address as the Optionee
may designate. Either party by notice to the other may designate a different
address to which notices shall addressed. Any notice given by the Company to the
Optionee at the Optionee's last designated address shall be effective to bind
any other person who shall acquire rights hereunder.
11. "OPTIONEE" TO INCLUDE CERTAIN TRANSFEREES. Whenever the word
"Optionee" is used in any provision of this Agreement under circumstances where
the provision should logically apply to any other person or persons to whom the
option, in accordance with the provisions of Section 6 hereof, may be
transferred, the word "Optionee" shall be deemed to include such person or
persons.
12. GOVERNING LAW. This Agreement has been made in and shall be
construed in accordance with the laws of the State of Michigan.
13. PROVISIONS OF PLAN CONTROLLING. The provisions hereof are
subject to the terms and provisions of the Plan copies of which are available
for review upon request. In the event of any conflict between the provisions of
this option and the provisions of the Plan, the provisions of the Plan shall
control, except to the extent that the provisions of this option limit or
restrict the rights of the Optionee to a greater extent than set forth in the
Plan.
14. WITHHOLDING. The Optionee hereby authorizes the Company to
withhold from his
5
<PAGE> 14
compensation or agrees to tender the applicable amount to the Company to satisfy
any requirements for withholding of income and employment taxes in connection
with the exercise of the option granted hereby.
6
<PAGE> 15
NOTICE OF EXERCISE OF NON-QUALIFIED STOCK OPTION
UNDER THE PERCEPTRON, INC.
1992 STOCK OPTION PLAN
Perceptron, Inc.
47827 Halyard Drive
Plymouth, MI 48170
Dear Sir:
A non-qualified stock option was granted to me on _____________, 19__ to
purchase _____shares of Perceptron, Inc. Common Stock at a price of $______ per
share.
I hereby elect to exercise my non-qualified stock option with respect to _____
shares for an aggregate purchase price of $______. I hereby elect to pay for
such shares as follows:
Personal Check $_______
Cash $_______
Bank Draft $_______
Money Order $_______
Cashless Exercise $_______
Perceptron Common Stock $_______
Total $_______
A personal check [or cash, bank draft or money order] for the purchase price is
enclosed herewith.
Documents as are required to effect a cashless exercise are enclosed.
I hereby elect to exercise my stock option with respect to ________ shares
through a combination of cash payments and shares of Perceptron, Inc. Common
Stock, as described on the attached Exhibit A. A personal check for the purchase
price to be paid in cash is enclosed herewith. Certificates for ____shares of
Perceptron, Inc. Common Stock are enclosed herewith, along with a duly executed
stock power in proper form for transfer, with all signatures properly guaranteed
by a national bank or member firm of the NYSE or AMEX. I represent that the
shares of Perceptron, Inc. Common Stock enclosed herewith have been owned by me
for more than six months or I currently own more than shares of
Perceptron, Inc. Common Stock which have been owned by me for more than
six months. Such shares have not been counted during the prior six months as
owned by me for purposes of determining whether I may exercise options to
purchase Common Stock pursuant to the Delivered Shares Method.
7
<PAGE> 16
I represent that the shares of stock that I am purchasing upon this exercise of
my option are being purchased for investment purposes and not with a view to
resale. This representation shall not be binding upon me if the shares of Common
Stock that I am purchasing are subject to an effective Registration Statement
under the Securities Act of 1933.
Optionee:
___________________________________
Dated:
______________________________________
8
<PAGE> 17
PERCEPTRON, INC.
NOTICE OF GRANT OF STOCK OPTIONS ID: 38-2381442
AND OPTION AGREEMENT 47827 Halyard Drive
Plymouth, MI 48170
- --------------------------------------------------------------------------------
OPTION NUMBER:
PLAN: 92
ID:
- --------------------------------------------------------------------------------
Effective , you have been granted a(n) Non-Qualified Stock Option to
buy shares of Perceptron, Inc. (the Company) stock at $ per share.
The total option price of the shares granted is $ .
Shares in each period will become fully vested on the date shown.
Shares Vest Type Full Vest Expiration
- --------------------------------------------------------------------------------
By your signature and the Company's signature below, you and the Company agree
that these options are granted under and governed by the terms and conditions of
the Company's Stock Option Plan as amended and the Option Agreement, all of
which are attached and made a part of this document.
- --------------------------------------------------------------------------------
- ----------------------------------- --------------------------------
Perceptron, Inc. Date
- ----------------------------------- --------------------------------
(Employee) Date
<PAGE> 1
EXHIBIT 10.31
STOCK OPTION AGREEMENT TERMS
UNDER THE PERCEPTRON, INC.
1998 GLOBAL TEAM MEMBER STOCK OPTION PLAN
THESE STOCK OPTION AGREEMENT TERMS pertain to stock options granted
effective September 3, 1999 under the 1998 Global Team Member Stock Option Plan
(the "Plan") as detailed in the accompanying Notice of Grant of Stock Options
and Option Agreement (the "Notice") between Perceptron, Inc., a Michigan
corporation (the "Company"), and the employee named in the Notice who is
currently employed by the Company or one of its subsidiaries (the "Optionee"). A
copy of the 1998 Global Employee Stock Option Plan is not attached hereto but is
available upon written request made to the Chief Financial Officer of the
Company.
1. GRANT OF OPTION. Subject to the terms and conditions hereof, the
Company hereby grants to the Optionee an option to purchase from the Company up
to, but not exceeding in the aggregate, the number of shares of the Company's
Common Stock detailed in the accompanying Notice at the price per share
designated in the Notice.
2. RIGHT TO EXERCISE OPTION. Unless otherwise indicated in the Notice,
the Optionee may purchase from the Company on and after the first (1st)
anniversary of the date of grant, 25% of the shares covered by this option, and
on each succeeding one year anniversary thereof, may exercise an additional 25%
of the shares covered by the option, so that on the fourth (4th) anniversary of
the date of grant this option shall be fully exercisable. Unless a shorter
period is specified in the Notice under the "Expiration" column, and
notwithstanding any provision of this Agreement, no portion of this option shall
be exercisable on or after the tenth (10th) anniversary of the date of grant.
3. TERMINATION OF EMPLOYMENT. If, prior to the date on which this
option first shall become exercisable, the Optionee's employment with the
Company or any of its subsidiaries is terminated for any reason, the Optionee's
right to exercise this option shall terminate and all rights hereunder shall
cease. As used in this Agreement, the term "subsidiary" of the Company means any
"subsidiary corporation" as defined in Section 424(f) of the Code, the term
"employment" means employment with the Company or any subsidiary of the Company,
and the term "disability" means "total and permanent disability," as defined in
Section 22(e) of the Code.
If, on or after the date on which this option first shall become
exercisable, the Optionee's employment is terminated for any reason other than
death or disability, the Optionee shall have the right to exercise this option,
to the extent that it was exercisable and unexercised on the date of the
Optionee's termination of employment, at any time on or before the earlier of:
(i) the expiration date of the option, or (ii) three (3) months after the date
of such termination of employment, subject to any other limitation on the
exercise of such option in effect on the date of exercise.
<PAGE> 2
If, on or after the date on which this option first shall become
exercisable, the Optionee's employment is terminated due to the Optionee's death
or disability, the Optionee, the executor or the administrator of the estate of
the Optionee, or the person(s) to whom the option has been transferred by will
or by the laws of descent and distribution, shall have the right to exercise
this option at any time on or before the earlier of: (i) the expiration date of
the option, or (ii) one (1) year from the date of the Optionee's death or
disability, to the extent that the option was exercisable and unexercised on the
date of the Optionee's death or disability, subject to any other limitation on
the exercise of such option in effect on the date of exercise.
For purposes of this Agreement, the transfer of an Optionee to/from the
Company to/from any of its subsidiaries, shall not constitute a termination of
employment. In addition, a leave of absence by an Optionee shall not constitute
a termination of employment, provided the Optionee obtains the prior written
consent of the Company for such leave of absence.
Notwithstanding the provisions contained in Section 2 "Right to
Exercise Option" and Section 3 "Termination of Employment" of this Agreement,
if, in connection with any merger, consolidation, or sale or transfer by the
Company of substantially all of its assets, this option is not assumed or
continued by the surviving corporation or the purchaser, the date of termination
of this option and the date on or after which this option, or any portion
thereof not then exercisable, may be exercised, shall be advanced to a date to
be fixed by the Company's Management Development, Compensation and Stock Option
Committee, or such other committee as determined by the Board of Directors (the
"Committee"), which date shall not be more than 15 days prior to such merger,
consolidation, or sale or transfer; provided however, that the Committee shall
have the right, at any time prior to the occurrence of such merger,
consolidation or sale or transfer, to modify the provisions of this paragraph,
including the termination of all of the Optionee's rights set forth in this
paragraph, to the extent required under applicable accounting and Securities and
Exchange Commission rules, regulations, policies, guidelines or other similar
requirements, to permit the Company to account for a then contemplated business
combination under pooling-of-interests accounting.
4. EXERCISE OF OPTION.
(a) At any time during which this option may be exercised as
provided in this Agreement, the Optionee may exercise any portion of this option
which is then exercisable, in whole or in part, by delivering a written notice
to the Company, in the form attached hereto, signed by the Optionee.
(b) In addition, the Optionee shall deliver, on the date of
exercise:
(i) cash, personal check, bank draft or money order equal
to the purchase price of the shares being purchased,
(ii) such documents as are or may be required to effect a
cashless exercise pursuant to Section 5.3 of the 1998 Global Team Member Stock
Option Plan (the "Plan"), or
2
<PAGE> 3
(iii) Permitted Shares with a fair market value (determined
as of the date of exercise of the option and as defined in the Plan) equal to
the purchase price of the shares being purchased (the "Delivered Shares Method")
pursuant to Section 5.3 of the Plan.
(c) "Permitted Shares" are shares of Company Common Stock to be
delivered to pay the exercise price of the option (the "Delivered Shares"):
(i) which have been owned by the Optionee for at least
six (6) months prior to the date of delivery, or
(ii) if they have not been owned by the Optionee for at
least six (6) months prior to the date of delivery, the Optionee then owns, and
has owned for at least six (6) months prior thereto, a number of shares of
Company Common Stock at least equal in number to the Delivered Shares.
(d) Shares which have been counted during the prior six (6) months
as owned by the Optionee, for purposes of determining whether the Optionee may
exercise options to purchase Common Stock pursuant to the Delivered Shares
Method, may not be used as Delivered Shares and may not be counted as owned by
the Optionee for purposes of making calculations under the Delivered Shares
Method.
5. COMPLIANCE WITH SECURITIES LAWS. Notwithstanding any provision
in this Agreement to the contrary, the Company's obligation to sell and deliver
stock under this option is subject to such compliance with federal, state and
foreign laws, rules and regulations applying the authorization, issuance or sale
of securities, and applicable stock exchange requirements, as the Company deems
necessary or advisable.
6. NON-ASSIGNABILITY. The option hereby granted shall not be
transferable by the Optionee other than by will or by the laws of descent and
distribution, and the option may be exercised only during the Optionee's
lifetime by the Optionee. Any person to whom this option is transferred shall
take such option subject to the terms and conditions of this Agreement. No such
transfer of an option shall be effective to bind the Company unless the Company
is furnished with written notice of the transfer, and a copy of the will and/or
such other evidence as the Company may deem necessary to establish the validity
of the transfer and the acceptance by the transferee(s) of the terms and
conditions of this Agreement. No assignment or transfer of this option, or of
the rights represented thereby, whether voluntary or involuntary, by operation
of law or otherwise, shall vest in the purported assignee or transferee any
interest or right herein whatsoever, except to the extent an Optionee makes a
transfer by will or by the laws of descent and distribution.
7. DISPUTES. The granting of this option under this Agreement is
conditioned upon the agreement by the Optionee, and the Optionee's successors
and assigns, that any dispute or disagreement which may arise under or as a
result of this Agreement shall be resolved by the Committee in its sole
discretion and judgment, and that any such determination or interpretation by
the Committee of the terms of this Agreement shall be final, binding and
conclusive for all purposes.
3
<PAGE> 4
8. ADJUSTMENTS. In the event of any stock dividend on the Common
Stock, subdivision or combination of shares of the Common Stock, or
reclassification of the Common Stock, and in the event of a merger,
consolidation, share exchange, reorganization, recapitalization or other change
in the capitalization of the Company directly affecting the outstanding Common
Stock, the rights of the Optionee shall be determined pursuant to Section 8 of
the Plan and any adjustment to this option shall be made in accordance with
Section 8 of the Plan.
9. RIGHTS AS SHAREHOLDER. The Optionee shall have no rights as a
shareholder of the Company with respect to any of the shares covered by this
option until the certificate(s) are issued upon the exercise of the option, in
full or in part, and then only with respect to the shares represented by such
certificate(s).
10. NOTICES. Any notice which relates to this Agreement shall be
made in writing and if such notice is mailed, it shall be mailed by either
registered or certified mail, with return receipt requested. Any notice to the
Company either shall be delivered or addressed to the Secretary of the Company
at the Company's headquarters. Any notice by the Company to the Optionee shall
be delivered to the Optionee personally or addressed to the Optionee at the
Optionee's last known address, as then contained in the records of the Company,
or such other address as the Optionee may designate. Either party may designate
a different address to which notices shall be addressed, provided the other
party has received sufficient notification of such designation. Any notice given
by the Company to an Optionee at the Optionee's last designated address shall be
effective to bind any other person who shall acquire any rights hereunder.
11. "OPTIONEE" TO INCLUDE CERTAIN TRANSFEREES. Whenever the word
"Optionee" is used in any provision of this Agreement under circumstances in
which the provision logically should apply to any other person(s) to whom the
option, in accordance with the provisions of Section 6 hereof, may be
transferred, the word "Optionee" shall be deemed to include such other
person(s).
12. GOVERNING LAW. This Agreement is made under and shall be
construed in accordance with the laws of the State of Michigan.
13. PROVISIONS OF PLAN CONTROLLING. The provisions of this
Agreement are subject to the terms and provisions of the Plan. Copies of the
Plan are available for review upon request. In the event a conflict arises
between the provisions of this option and the provisions of the Plan, the
provisions of the Plan shall control, except to the extent that the provisions
of this option limit or restrict the rights of an Optionee to a greater extent
than that which is set forth in the Plan.
14. WITHHOLDING. The Optionee hereby authorizes the Company to
withhold from his compensation or agrees to tender the applicable amount to the
Company to satisfy any requirements for withholding of income and employment
taxes in connection with the exercise of the option granted hereby.
4
<PAGE> 5
NOTICE OF EXERCISE OF NON-QUALIFIED STOCK OPTION
UNDER THE PERCEPTRON, INC.
1998 GLOBAL TEAM MEMBER STOCK OPTION PLAN
Perceptron, Inc.
47827 Halyard Drive
Plymouth, MI 48170
Dear Sir:
A non-qualified stock option was granted to me on ______________, 19__ to
purchase _______shares of Perceptron, Inc. Common Stock at a price of $_______
per share.
I hereby elect to exercise my non-qualified stock option with respect to shares
for an aggregate purchase price of $___________. I hereby elect to pay for such
shares as follows:
Personal Check $_______
Cash $_______
Bank Draft $_______
Money Order $_______
Cashless Exercise $_______
Perceptron Common Stock $_______
Total $_______
A personal check [or cash, bank draft or money order] for the purchase price is
enclosed herewith.
Documents as are required to effect a cashless exercise are enclosed.
I hereby elect to exercise my stock option with respect to ________shares
through a combination of cash payments and shares of Perceptron, Inc. Common
Stock, as described on the attached Exhibit A. A personal check for the purchase
price to be paid in cash is enclosed herewith. Certificates for _________shares
of Perceptron, Inc. Common Stock are enclosed herewith, along with a duly
executed stock power in proper form for transfer, with all signatures properly
guaranteed by a national bank or member firm of the NYSE or AMEX. I represent
that the shares of Perceptron, Inc. Common Stock enclosed herewith have been
owned by me for more than six months or I currently own more than ________shares
of Perceptron, Inc. Common Stock which have been owned by me for more than six
months. Such shares have not been counted during the prior six months as owned
by me for purposes of determining whether I may exercise options to purchase
Common Stock pursuant to the Delivered Shares Method.
I represent that the shares of stock that I am purchasing upon this exercise of
my option are being
5
<PAGE> 6
purchased for investment purposes and not with a view to resale. This
representation shall not be binding upon me if the shares of Common Stock that I
am purchasing are subject to an effective Registration Statement under the
Securities Act of 1933.
Optionee:___________________________
Dated:___________________
6
<PAGE> 7
PERCEPTRON, INC.
NOTICE OF GRANT OF STOCK OPTIONS ID: 38-2381442
AND OPTION AGREEMENT 47827 Halyard Drive
Plymouth, MI 48170
- --------------------------------------------------------------------------------
OPTION NUMBER:
PLAN: 98
ID:
- --------------------------------------------------------------------------------
Effective , you have been granted a(n) Non-Qualified Stock Option to
buy shares of Perceptron, Inc. (the Company) stock at $ per share.
The total option price of the shares granted is $ .
Shares in each period will become fully vested on the date shown.
Shares Vest Type Full Vest Expiration
- --------------------------------------------------------------------------------
By your signature and the Company's signature below, you and the Company agree
that these options are granted under and governed by the terms and conditions of
the Company's Stock Option Plan as amended and the Option Agreement, all of
which are attached and made a part of this document.
- --------------------------------------------------------------------------------
- ----------------------------------- ------------------------------------
Perceptron, Inc. Date
- ----------------------------------- ------------------------------------
(Employee) Date
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AND STATEMENT OF INCOME AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> JUL-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 5,534,000
<SECURITIES> 0
<RECEIVABLES> 30,432,000
<ALLOWANCES> (321,000)
<INVENTORY> 13,283,000
<CURRENT-ASSETS> 51,906,000
<PP&E> 17,551,000
<DEPRECIATION> (6,686,000)
<TOTAL-ASSETS> 67,598,000
<CURRENT-LIABILITIES> 10,612,000
<BONDS> 7,340,000
0
0
<COMMON> 82,000
<OTHER-SE> 49,564,000
<TOTAL-LIABILITY-AND-EQUITY> 67,598,000
<SALES> 18,471,000
<TOTAL-REVENUES> 18,471,000
<CGS> 8,089,000
<TOTAL-COSTS> 8,089,000
<OTHER-EXPENSES> 8,332,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 82,000
<INCOME-PRETAX> 1,887,000
<INCOME-TAX> 759,000
<INCOME-CONTINUING> 1,128,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,128,000
<EPS-BASIC> .14
<EPS-DILUTED> .14
</TABLE>
