UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 4, 2017
PERCEPTRON,
INC.
(Exact name of registrant as specified in its charter)
Michigan |
0-20206 | 38-2381442 | ||
(State or other jurisdiction | (Commission | (IRS Employer | ||
of incorporation) | File Number) | Identification No.) |
47827 Halyard Drive, Plymouth, MI 48170-2461
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (734) 414-6100
Not applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company [ ]
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Item 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
On May 4, 2017, Perceptron, Inc. (the “Company”) and Comerica Bank (“Comerica”) entered into the Ninth Amendment to the Credit Agreement dated as of November 16, 2010 (as amended, the “Credit Agreement”), and related documents, including a Revolving Credit Note and an Advance Formula Agreement. The Ninth Amendment changes the maximum permitted borrowings under the Credit Agreement from $10.0 million to $6.0 million. Additionally the borrowing base was reduced to the lesser of (i) $6.0 million or (ii) the sum of 80% of eligible accounts, plus the lesser of 50% of eligible inventory or $2.5 million. The foregoing description is qualified in its entirety by reference to the Ninth Amendment, Revolving Credit Note and Advance Formula Agreement, copies of which are attached hereto as Exhibits 10.1, 10.2 and 10.3 and incorporated herein by reference.
Item 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On May 8, 2017, Perceptron, Inc. (the “Company”) issued a press release announcing the Company’s financial and operating results for the fiscal 2017 third quarter ended March 31, 2017. Attached hereto and incorporated by reference as Exhibit 99.1 is the press release relating to such announcement. Such information, including Exhibit 99.1 attached hereto under Item 9.01, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits
D. | Exhibits. |
Exhibit No. | Description |
Exhibit 10.1 | Ninth Amendment to Amended and Restated Credit Agreement, dated November 16, 2010, between the Company and Comerica Bank. |
Exhibit 10.2 | Master Revolving Note, dated May 4, 2017, between the Company and Comerica Bank. |
Exhibit 10.3 | Advance Formula Agreement, dated May 4, 2017, between the Company and Comerica Bank. |
Exhibit 99.1 | Press Release dated May 8, 2017 announcing the Company’s financial and operating results for the fiscal 2017 third quarter ended March 31, 2017. |
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 hereunto duly authorized.
PERCEPTRON, INC. | |
Date: May 8, 2017 | /s/ David L. Watza |
By: David L. Watza | |
Its: President, Chief Executive Officer and Chief Financial Officer |
EXHIBIT INDEX
Exhibit Number | Description | |
10.1 |
Ninth Amendment to Amended and Restated Credit Agreement, dated November 16, 2010, between the Company and Comerica Bank. |
|
10.2 |
Master Revolving Note, dated May 4, 2017, between the Company and Comerica Bank. | |
10.3 |
Advance Formula Agreement, dated May 4, 2017, between the Company and Comerica Bank. | |
99.1 | Press Release dated May 8, 2017 announcing the Company’s financial and operating results for the fiscal 2017 third quarter ended March 31, 2017. |
Exhibit 10.1
NINTH AMENDMENT TO CREDIT AGREEMENT AND CONSENT
THIS NINTH AMENDMENT TO CREDIT AGREEMENT AND CONSENT (“Amendment”) is dated as of May 4, 2017, by and between Perceptron, Inc. (“Company”) and Comerica Bank (“Bank”).
RECITALS:
A. Company and Bank entered into an Amended and Restated Credit Agreement dated as of November 16, 2010, as amended (“Agreement”).
B. Company and Bank desire to amend the Agreement as hereinafter set forth.
NOW, THEREFORE, the parties agree as follows:
1. Sections 2.1 and 2.3 of the Agreement are amended to read as follows:
“2.1 Subject to the terms and conditions of this Agreement and the Revolving Credit Note, Bank may, in its sole discretion, make Advances to Company at any time and from time to time not to exceed Six Million Dollars ($6,000,000) in aggregate principal amount at any one time outstanding; provided that the aggregate outstanding amount of Advances plus the Foreign Exchange Reserve shall never exceed the lesser of (a) Six Million Dollars ($6,000,000) or (b) the borrowing formula under the Advance Formula Agreement. All of the Advances under this Section 2 shall be evidenced by the Revolving Credit Note under which Advances, repayments and readvances may be made, subject to the terms and conditions of this Agreement, the Revolving Credit Note and the Advance Formula Agreement.
“2.3 Company may request an Advance under this Section 2 upon the delivery to Bank of a request for advance as provided in the Revolving Credit Note, subject to the following:
(a) the principal amount of such Advance, plus the sum of the amount of all other outstanding Advances under this Section 2 and the Foreign Exchange Reserve shall not exceed Six Million Dollars ($6,000,000); and
(b) a request for an Advance, once delivered to Bank, shall not be revocable by Company.”
2. Section 7.1(b) of the Agreement is amended to read as follows:
“(b) within thirty (30) days after and as of the end of each month, consolidated balance sheets and statements of profit and loss of Company and its consolidated Subsidiaries, together with a report listing investments in Subsidiaries;”
3. The “.” at the end of Section 7.1(g) is deleted and replaced with “; and”, and Section 7.1(h) is added to the Agreement to read as follows:
“(h) within forty five (45) days after and as of the end of each fiscal quarter of Company, a compliance certificate in form and detail satisfactory to Bank, certified by the chief executive or chief financial officer of Company, certifying that, as of the date thereof, to the best of such officer’s knowledge, no Event of Default, or condition or event which, with the giving of notice or the running of time, or both, would constitute an Event of Default, shall have occurred and be continuing or exist, or if any of Event of Default, or condition or event which, with the giving of notice or the running of time, or both, would constitute an Event of Default, shall have occurred and be continuing or exist, specifying, in detail, the nature and period of existence thereof and any action taken or proposed to be taken by Company in respect thereof, and also certifying as to whether Company is in compliance with any financial covenant(s) contained in this Agreement and as more particularly described in said compliance certificate (which compliance certificate shall set forth, in reasonable detail, the calculations and the resultant ratios or financial tests of the Company determined thereunder).”
4. Schedules 6.3, 6.9, 6.10 and 8.13 to the Agreement are deleted and replaced with attached Schedules 6.3, 6.9, 6.10 and 8.13.
5. Exhibit A to the Agreement is deleted and replaced with attached Exhibit A.
6. Company has informed Bank that, on or about January 11, 2017, (a) COORD3 Global, LLC (“COORD3”) was dissolved, (b) all of COORD3’s assets (which, as of the date that COORD3 was dissolved, consisted of equity interests in Coord3 srl and no other assets) were transferred to Company, and (c) Company transferred all of its equity interests in Coord3 srl to Perceptron Europe B.V. pursuant to a Share Premium Contribution Agreement (collectively, the “Dissolution”). Bank consents to the Dissolution.
7. Company hereby represents and warrants that, after giving effect to the amendments and consent contained herein, (a) execution, delivery and performance of this Amendment and any other documents and instruments required under this Amendment or the Agreement are within Company’s corporate powers, have been duly authorized, are not in contravention of law or the terms of Company’s Articles of Incorporation or Bylaws, and do not require the consent or approval of any governmental body, agency, or authority; and this Amendment and any other documents and instruments required under this Amendment or the Agreement, will be valid and binding in accordance with their terms; (b) the continuing representations and warranties of Company set forth in Sections 6.1 through 6.5 and 6.7 through 6.12 of the Agreement are true and correct on and as of the date hereof with the same force and effect as made on and as of the date hereof; (c) the continuing representations and warranties of Company set forth in Section 6.6 of the Agreement are true and correct as of the date hereof with respect to the most recent financial statements furnished to the Bank by Company in accordance with Section 7.1 of the Agreement; and (d) no Event of Default (as defined in the Agreement) or condition or event which, with the giving of notice or the running of time, or both, would constitute an Event of Default under the Agreement, as hereby amended, has occurred and is continuing as of the date hereof.
2 |
8. Except as expressly provided herein, all of the terms and conditions of the Agreement remain unchanged and in full force and effect.
9. This Amendment shall be effective upon (a) execution of this Amendment by Company and the Bank, (b) execution of the Affirmation of Guaranties set forth below, (c) execution and delivery by Company to Bank of a Revolving Credit Note in form satisfactory to Bank, (d) execution and delivery by Company to Bank of an Advance Formula Agreement in form and substance satisfactory to Bank and (e) execution and delivery of the documents on the attached closing agenda.
10. Company shall reimburse Bank for all costs and expenses, including attorneys’ fees, incurred by Bank in connection with the preparation of this Amendment and the documents, instruments and agreements executed in connection herewith.
11. This Amendment may be executed in counterparts.
[Remainder of Page Intentionally Left Blank]
3 |
IN WITNESS the due execution hereof as of the day and year first above written.
COMERICA BANK | PERCEPTRON, INC. |
By: /s/ Lydia R. Mansoor | By: /s/ David L. Watza | |
Its: Officer | Its: President and Chief Executive Officer |
[Signature Page to Ninth Amendment to Credit Agreement and Consent (13321950)]
AFFIRMATION OF GUARANTIES
The undersigned, Guarantors under certain Guaranties (“Guaranties”) dated October 24, 2002, as amended, and October 30, 2015 made by the undersigned in favor of Comerica Bank (“Bank”) with respect to the liabilities and obligations of Perceptron, Inc. (“Borrower”) to Bank, (i) affirm their obligations to Bank under their Guaranties and acknowledge that the Guaranties remain in full force and effect in accordance with their terms, subject to no setoff, defense or counterclaim and (ii) confirm that this Affirmation is not required by the terms of the Guaranties and need not be obtained in connection with any prior or future waivers or amendments or extensions of additional credit to Borrower.
Dated: May 4, 2017
PERCEPTRON SOFTWARE TECHNOLOGY INC.
By: /s/ David L. Watza
Title: President and Chief Executive Officer
PERCEPTRON GLOBAL, INC.
By: /s/ David L. Watza
Title: President and Chief Executive Officer
[Closing Agenda]
Exhibit 10.2
|
Master Revolving Note Prime Referenced Rate Demand-Optional Advances (Business and Commercial Loans Only) |
AMOUNT
$6,000,000 |
NOTE DATE
May 4, 2017 |
MATURITY DATE
ON DEMAND |
ON DEMAND (or as otherwise provided in this Note), FOR VALUE RECEIVED, the undersigned promise(s) to pay to the order of COMERICA BANK (herein called “Bank”), at any office of the Bank in the State of Michigan, the principal sum of SIX MILLION DOLLARS ($6,000,000), or so much of said sum as has been advanced and is then outstanding under this Note, together with interest thereon as hereinafter set forth.
This Note is a note under which Advances, repayments and re-Advances may be made from time to time, subject to the terms and conditions of this Note.
AT NO TIME SHALL THE BANK BE UNDER ANY OBLIGATION TO MAKE ANY ADVANCES TO THE UNDERSIGNED PURSUANT TO THIS NOTE (NOTWITHSTANDING ANYTHING EXPRESSED OR IMPLIED IN THIS NOTE OR ELSEWHERE TO THE CONTRARY, INCLUDING, WITHOUT LIMITATION, IF BANK SUPPLIES THE UNDERSIGNED WITH A BORROWING FORMULA) AND THE BANK, AT ANY TIME AND FROM TIME TO TIME, WITHOUT NOTICE, AND IN ITS SOLE DISCRETION, MAY REFUSE TO MAKE ADVANCES TO THE UNDERSIGNED WITHOUT INCURRING ANY LIABILITY DUE TO THIS REFUSAL AND WITHOUT AFFECTING THE UNDERSIGNED'S LIABILITY UNDER THIS NOTE FOR ANY AND ALL AMOUNTS ADVANCED.
Subject to the terms and conditions of this Note, each of the Advances made hereunder shall bear interest at the Prime Referenced Rate plus the Applicable Margin.
Unless sooner demanded, accrued and unpaid interest on the unpaid principal balance of each outstanding Advance hereunder shall be payable monthly, in arrears, on the first Business Day of each month from the date made until the same is paid in full (whether in accordance with the terms hereof, by acceleration, or otherwise). Interest accruing hereunder shall be computed on the basis of a year of 360 days, and shall be assessed for the actual number of days elapsed, and in such computation, effect shall be given to any change in the interest rate as a result of any change in the Prime Referenced Rate on the date of each such change.
Upon demand and from and after the occurrence of any Default hereunder, and so long as any such Default remains unremedied or uncured thereafter, the Indebtedness outstanding under this Note shall bear interest at a per annum rate of three percent (3%) above the otherwise applicable interest rate, which interest shall be payable upon demand. In addition to the foregoing, a late payment charge equal to five percent (5%) of each late payment hereunder may be charged on any payment not received by Bank within ten (10) calendar days after the payment due date therefor, but acceptance of payment of any such charge shall not constitute a waiver of any Default hereunder.
In no event shall the interest payable under this Note at any time exceed the maximum rate permitted by law.
THE MAXIMUM INTEREST RATE SHALL NOT EXCEED 25% PER ANNUM OR THE HIGHEST APPLICABLE USURY CEILING, WHICHEVER IS LESS.
The amount and date of each Advance, the applicable interest rate and the amount and date of any repayment shall be noted on Bank's records, which records shall be conclusive evidence thereof, absent manifest error; provided, however, any failure by Bank to make any such notation, or any error in any such notation, shall not relieve the undersigned of its/their obligations to repay Bank all amounts payable by the undersigned to Bank under or pursuant to this Note, when due in accordance with the terms hereof.
The undersigned may request an Advance hereunder either (i) upon the delivery to Bank of a written Request for Advance duly completed and executed by the undersigned (as herein provided) or, (ii) to the extent applicable, pursuant to a request submitted through Bank’s Loan Management System (each a “Request”), in each case, subject to the following: (a) Bank shall not have made demand hereunder and no Default, or any condition or event which, with the giving of notice or the running of time, or both, would constitute a Default, shall have occurred and be continuing or exist under this Note; (b) each such Request shall be delivered to Bank by 11:00 a.m. (Detroit, Michigan time) on the proposed date of the requested Advance; (c) after giving effect to such Advance, the aggregate principal amount of Advances made under this Note (excluding refundings and conversions of outstanding Advances) shall not exceed the Loan Amount; and (d) a Request, once delivered or submitted to Bank, shall not be revocable by the undersigned; provided, however, as aforesaid, Bank shall not be obligated to make any Advance under this Note.
In the event that the undersigned is unable to request Advances hereunder through the Bank’s Loan Management System, Advances hereunder may be requested by delivery or submission to Bank by hand delivery, first class mail, overnight courier, facsimile, email or other means of delivery acceptable to Bank, of a written Request for Advance duly completed and executed by the undersigned. Advances hereunder may be requested in the undersigned’s discretion by telephonic notice to Bank. Any Advance requested by telephonic notice shall be confirmed by the undersigned that same day by submission to Bank of a written Request for Advance, as provided herein. The undersigned acknowledge(s) that if Bank makes an Advance based on a request made by telephone, facsimile, email or other means of delivery (other than by hand delivery, first class mail or overnight courier), it shall be for the undersigned's convenience and all risks involved in the use of any such procedure shall be borne by the undersigned, and the undersigned expressly agree(s) to indemnify and hold Bank harmless therefor. Bank shall have no duty to confirm the authority of anyone requesting an Advance by telephone, facsimile, email or any such other means of delivery. In the event that the undersigned elect(s) to request Advances by telephonic notice, facsimile, email or other means of delivery acceptable to Bank, the undersigned acknowledge(s) and agree(s) that Bank may impose or require such verification, authentication and other procedures as Bank may require from time to time.
In the event that any payment under this Note becomes due and payable on any day which is not a Business Day, the due date thereof shall be extended to the next succeeding Business Day, and, to the extent applicable, interest shall continue to accrue and be payable thereon during such extension at the rate set forth in this Note.
All payments to be made by the undersigned to Bank under or pursuant to this Note shall be in immediately available United States funds, without setoff or counterclaim, and in the event that any payments submitted hereunder are in funds not available until collected, said payments shall continue to bear interest until collected.
The undersigned may prepay all or part of the outstanding balance of any Indebtedness hereunder at any time without premium or penalty. Any prepayment hereunder shall also be accompanied by the payment of all accrued and unpaid interest on the amount so prepaid.
If any Change in Law shall (a) subject Bank to any tax, duty or other charge with respect to this Note or any Indebtedness hereunder, or shall change the basis of taxation of payments to Bank of the principal of or interest under this Note or any other amounts due under this Note in respect thereof (except for changes in the rate of tax on the overall net income of Bank imposed by the jurisdiction in which Bank's principal executive office is located); or (b) impose, modify or deem applicable any reserve (including, without limitation, any imposed by the Board of Governors of the Federal Reserve System), special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by Bank, or shall impose on Bank or the foreign exchange and interbank markets any other condition affecting this Note or the Indebtedness hereunder; and the result of any of the foregoing is to increase the cost to Bank of maintaining any part of the Indebtedness hereunder or to reduce the amount of any sum received or receivable by Bank under this Note by an amount deemed by the Bank to be material, then the undersigned shall pay to Bank, within fifteen (15) days of the undersigned’s receipt of written notice from Bank demanding such compensation, such additional amount or amounts as will compensate Bank for such increased cost or reduction. A certificate of Bank, prepared in good faith and in reasonable detail by Bank and submitted by Bank to the undersigned, setting forth the basis for determining such additional amount or amounts necessary to compensate Bank shall be conclusive and binding for all purposes, absent manifest error.
In the event that any Change in Law affects or would affect the amount of capital or liquidity required or expected to be maintained by Bank (or any corporation controlling Bank), and Bank determines that the amount of such capital or liquidity is increased by or based upon the existence of any obligations of Bank hereunder or the maintaining of any Indebtedness hereunder, and such increase has the effect of reducing the rate of return on Bank's (or such controlling corporation's) capital as a consequence of such obligations or the maintaining of such Indebtedness hereunder to a level below that which Bank (or such controlling corporation) could have achieved but for such circumstances (taking into consideration its policies with respect to capital adequacy and liquidity), then the undersigned shall pay to Bank, within fifteen (15) days of the undersigned's receipt of written notice from Bank demanding such compensation, additional amounts as are sufficient to compensate Bank (or such controlling corporation) for any increase in the amount of capital and/or liquidity and reduced rate of return which Bank reasonably determines to be allocable to the existence of any obligations of the Bank hereunder or to maintaining any Indebtedness hereunder. A certificate of Bank as to the amount of such compensation, prepared in good faith and in reasonable detail by the Bank and submitted by Bank to the undersigned, shall be conclusive and binding for all purposes absent manifest error.
2 |
This Note and any other indebtedness and liabilities of any kind of the undersigned (or any of them) to the Bank, and any and all modifications, renewals or extensions of it, whether joint or several, contingent or absolute, now existing or later arising, and however evidenced and whether incurred voluntarily or involuntarily, known or unknown, or originally payable to the Bank or to a third party and subsequently acquired by Bank including, without limitation, any late charges; loan fees or charges; overdraft indebtedness; costs incurred by Bank in establishing, determining, continuing or defending the validity or priority of any security interest, pledge or other lien or in pursuing any of its rights or remedies under any loan document (or otherwise) or in connection with any proceeding involving the Bank as a result of any financial accommodation to the undersigned (or any of them); and reasonable costs and expenses of attorneys and paralegals, whether inside or outside counsel is used, and whether any suit or other action is instituted, and to court costs if suit or action is instituted, and whether any such fees, costs or expenses are incurred at the trial court level or on appeal, in bankruptcy, in administrative proceedings, in probate proceedings or otherwise (collectively “Indebtedness”), are secured by and the Bank is granted a security interest in and lien upon all items deposited in any account of any of the undersigned with the Bank and by all proceeds of these items (cash or otherwise), all account balances of any of the undersigned from time to time with the Bank, by all property of any of the undersigned from time to time in the possession of the Bank and by any other collateral, rights and properties described in each and every deed of trust, mortgage, security agreement, pledge, assignment and other security or collateral agreement which has been, or will at any time(s) later be, executed by any (or all) of the undersigned to or for the benefit of the Bank (collectively “Collateral”). Notwithstanding the above, (i) to the extent that any portion of the Indebtedness is a consumer loan, that portion shall not be secured by any deed of trust or mortgage on or other security interest in any of the undersigned's principal dwelling or in any of the undersigned's real property which is not a purchase money security interest as to that portion, unless expressly provided to the contrary in another place, or (ii) if the undersigned (or any of them) has (have) given or give(s) Bank a deed of trust or mortgage covering California real property, that deed of trust or mortgage shall not secure this Note or any other indebtedness of the undersigned (or any of them), unless expressly provided to the contrary in another place, or (iii) if the undersigned (or any of them) has (have) given or give(s) the Bank a deed of trust or mortgage covering real property which, under Texas law, constitutes the homestead of such person, that deed of trust or mortgage shall not secure this Note or any other indebtedness of the undersigned (or any of them) unless expressly provided to the contrary in another place.
Upon the occurrence of an Event of Default (under and as defined in the Credit Agreement) (each a “Default” hereunder), then Bank may, at its option and without prior notice to the undersigned (or any of them), cease advancing money or extending credit to or for the benefit of the undersigned under this Note or any other agreement between the undersigned and Bank, terminate this Note as to any future liability or obligation of Bank, but without affecting Bank's rights and security interests in any Collateral and the Indebtedness of the undersigned to Bank, declare any or all of the Indebtedness to be immediately due and payable (notwithstanding any provisions contained in the evidence of it to the contrary), sell or liquidate all or any portion of the Collateral, set off against the Indebtedness any amounts owing by the Bank to the undersigned (or any of them), charge interest at the default rate provided in the document evidencing the relevant Indebtedness and exercise any one or more of the rights and remedies granted to the Bank by any agreement with the undersigned (or any of them) or given to it under applicable law. In addition, if this Note is secured by a deed of trust or mortgage covering real property, then the trustor or mortgagor shall not mortgage or pledge the mortgaged premises as security for any other indebtedness or obligations. This Note, together with all other indebtedness secured by said deed of trust or mortgage, shall become due and payable immediately, without notice, at the option of the Bank, (i) if said trustor or mortgagor shall mortgage or pledge the mortgaged premises for any other indebtedness or obligations or shall convey, assign or transfer the mortgaged premises by deed, installment sale contract or other instrument, or (ii) if the title to the mortgaged premises shall become vested in any other person or party in any manner whatsoever, or (iii) if there is any disposition (through one or more transactions) of legal or beneficial title to a controlling interest of said trustor or mortgagor.
The undersigned hereby expressly acknowledge(s) and agree(s) that this Note is a demand note and matures upon issuance, and that the Indebtedness hereunder shall be payable upon demand (unless earlier payment is required in accordance with the terms and conditions of this Note), and that Bank may, at any time in its sole and absolute discretion, without notice and without reason and whether or not any Default shall have occurred and/or exist under this Note, without notice, demand that this Note and the Indebtedness hereunder be immediately paid in full. The Bank may from time to time make demand for partial payments under this Note and these demands shall not preclude the Bank from demanding at any time that this Note be immediately paid in full. Further, the demand nature of this Note shall not be deemed to be modified, limited or otherwise affected by any reference to any Default in this Note, and to the extent that there are any references to any Default(s) hereunder, such references are for the purpose of permitting Bank to accelerate any Indebtedness not on a demand basis and to receive interest at the applicable default rate provided in the document evidencing the relevant Indebtedness.
3 |
The undersigned authorize(s) the Bank to charge any account(s) of the undersigned (or any of them) with the Bank for any and all sums due hereunder when due; provided, however, that such authorization shall not affect any of the undersigned’s obligation to pay to the Bank all amounts when due, whether or not any such account balances that are maintained by the undersigned with the Bank are insufficient to pay to the Bank any amounts when due, and to the extent that such accounts are insufficient to pay to the Bank all such amounts, the undersigned shall remain liable for any deficiencies until paid in full.
If this Note is signed by two or more parties (whether by all as makers or by one or more as an accommodation party or otherwise), the obligations and undertakings under this Note shall be that of all and any two or more jointly and also of each severally. This Note shall bind the undersigned, and the undersigned's respective heirs, personal representatives, successors and assigns.
The undersigned waive(s) presentment, demand, protest, notice of dishonor, notice of demand or intent to demand, notice of acceleration or intent to accelerate, and all other notices, and agree(s) that no extension or indulgence to the undersigned (or any of them) or release, substitution or nonenforcement of any security, or release or substitution of any of the undersigned, any guarantor or any other party, whether with or without notice, shall affect the obligations of any of the undersigned. The undersigned waive(s) all defenses or right to discharge available under Section 3-605 of the Uniform Commercial Code and waive(s) all other suretyship defenses or right to discharge. The undersigned agree(s) that the Bank has the right to sell, assign, or grant participations or any interest in, any or all of the Indebtedness, and that, in connection with this right, but without limiting its ability to make other disclosures to the full extent allowable, the Bank may disclose all documents and information which the Bank now or later has relating to the undersigned or the Indebtedness. The undersigned agree(s) that the Bank may provide information relating to this Note or relating to the undersigned to the Bank's parent, affiliates, subsidiaries and service providers.
The undersigned agree(s) to pay or reimburse to Bank, or any other holder or owner of this Note, on demand, any and all costs and expenses of Bank (including, without limit, court costs, legal expenses and reasonable attorneys’ fees, whether inside or outside counsel is used, whether or not suit is instituted, and, if suit is instituted, whether at the trial court level, appellate level, in a bankruptcy, probate or administrative proceeding or otherwise) incurred in connection with the preparation, execution, delivery, amendment, administration, and performance of this Note and the related documents, or incurred in collecting or attempting to collect this Note or the Indebtedness, or incurred in any other matter or proceeding relating to this Note or the Indebtedness.
The undersigned acknowledge(s) and agree(s) that there are no contrary agreements, oral or written, establishing a term of this Note and agree(s) that the terms and conditions of this Note may not be amended, waived or modified except in a writing signed by an officer of the Bank expressly stating that the writing constitutes an amendment, waiver or modification of the terms of this Note. As used in this Note, the word “undersigned” means, individually and collectively, each maker, accommodation party, endorser and other party signing this Note in a similar capacity. If any provision of this Note is unenforceable in whole or part for any reason, the remaining provisions shall continue to be effective. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF MICHIGAN, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.
For the purposes of this Note, the following terms have the following meanings:
“Advance” means a borrowing requested by the undersigned and made by Bank under this Note.
“Applicable Margin” means zero percent (0%) per annum.
“Business Day” means any day, other than a Saturday, Sunday or any other day designated as a holiday under Federal or applicable State statute or regulation, on which Bank is open for all or substantially all of its domestic and international business (including dealings in foreign exchange) in Detroit, Michigan, and, in respect of notices and determinations relating to the Daily Adjusting LIBOR Rate, also a day on which dealings in dollar deposits are also carried on in the London interbank market and on which banks are open for business in London, England.
4 |
“Change in Law” means the occurrence, after the date hereof, of any of the following: (i) the adoption or introduction of, or any change in any applicable law, treaty, rule or regulation (whether domestic or foreign) now or hereafter in effect and whether or not applicable to Bank on such date, or (ii) any change in interpretation, administration or implementation thereof of any such law, treaty, rule or regulation by any Governmental Authority, or (iii) the issuance, making or implementation by any Governmental Authority of any interpretation, administration, request, regulation, guideline, or directive (whether or not having the force of law), including, without limitation, any risk-based capital guidelines or any interpretation, administration, request, regulation, guideline, or directive relating to liquidity. For purposes of this definition, (x) a change in law, treaty, rule, regulation, interpretation, administration or implementation shall include, without limitation, any change made or which becomes effective on the basis of a law, treaty, rule, regulation, interpretation administration or implementation then in force, the effective date of which change is delayed by the terms of such law, treaty, rule, regulation, interpretation, administration or implementation, and (y) the Dodd-Frank Wall Street Reform and Consumer Protection Act (Pub. L. 111-203, H.R. 4173) and all requests, rules, regulations, guidelines, interpretations or directives promulgated thereunder or issued in connection therewith shall be deemed to be a “Change in Law”, regardless of the date enacted, adopted, issued or promulgated, whether before or after the date hereof, and (z) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States regulatory authorities, in each case pursuant to Basel III, shall each be deemed to be a “Change in Law”, regardless of the date enacted, adopted, issued or implemented.
“Credit Agreement” shall mean the Amended and Restated Credit Agreement dated November 16, 2010 between undersigned and Bank, as amended, modified, revised or restated from time to time.
“Daily Adjusting LIBOR Rate” means, for any day, a per annum interest rate which is equal to the quotient of the following:
(a) | for any day, the per annum rate of interest determined on the basis of the rate for deposits in United States Dollars for a period equal to one (1) month appearing on Page BBAM of the Bloomberg Financial Markets Information Service at or about 11:00 a.m. (London, England time) (or as soon thereafter as practical) on such day, or if such day is not a Business Day, on the immediately preceding Business Day. In the event that such rate does not appear on Page BBAM of the Bloomberg Financial Markets Information Service (or otherwise on such Service) on any day, the “Daily Adjusting LIBOR Rate” for such day shall be determined by reference to such other publicly available service for displaying eurodollar rates as may be reasonably selected by Bank, or, in the absence of such other service, the “Daily Adjusting LIBOR Rate” for such day shall, instead, be determined based upon the average of the rates at which Bank is offered dollar deposits at or about 11:00 a.m. (Detroit, Michigan time) (or as soon thereafter as practical), on such day, or if such day is not a Business Day, on the immediately preceding Business Day, in the interbank eurodollar market in an amount comparable to the principal amount of the Indebtedness outstanding hereunder and for a period equal to one (1) month; |
divided by
(b) | 1.00 minus the maximum rate (expressed as a decimal) on such day at which Bank is required to maintain reserves on “Euro-currency Liabilities” as defined in and pursuant to Regulation D of the Board of Governors of the Federal Reserve System or, if such regulation or definition is modified, and as long as Bank is required to maintain reserves against a category of liabilities which includes eurodollar deposits or includes a category of assets which includes eurodollar loans, the rate at which such reserves are required to be maintained on such category; |
provided , however , and notwithstanding anything to the contrary set forth in this Note, if at any time the Daily Adjusting LIBOR Rate determined as provided above would be less than zero percent (0%), then the Daily Adjusting LIBOR Rate shall be deemed to be zero percent (0%) per annum for all purposes of this Note. Each calculation by Bank of the Daily Adjusting LIBOR Rate shall be conclusive and binding for all purposes, absent manifest error.
“Governmental Authority” means the government of the United States of America or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including, without limitation, any supranational bodies such as the European Union or the European Central Bank).
“Loan Amount” means the face amount of this Note as set forth at the top of Page 1 hereof.
“Prime Rate” means the per annum interest rate established by Bank as its prime rate for its borrowers, as such rate may vary from time to time, which rate is not necessarily the lowest rate on loans made by Bank at any such time.
“Prime Referenced Rate” means, for any day, a per annum interest rate which is equal to the Prime Rate in effect on such day, but in no event and at no time shall the Prime Referenced Rate be less than the sum of the Daily Adjusting LIBOR Rate for such day plus two and one-half percent (2.50%) per annum. If, at any time, Bank determines that it is unable to determine or ascertain the Daily Adjusting LIBOR Rate for any day, the Prime Referenced Rate for each such day shall be the Prime Rate in effect at such time, but not less than two and one-half percent (2.50%) per annum.
5 |
“Request for Advance” means a Request for Advance issued by the undersigned under this Note in the form annexed to this Note as Exhibit “A”.
No delay or failure of Bank in exercising any right, power or privilege hereunder shall affect such right, power or privilege, nor shall any single or partial exercise thereof preclude any further exercise thereof, or the exercise of any other power, right or privilege. The rights of Bank under this Note are cumulative and not exclusive of any right or remedies which Bank would otherwise have, whether by other instruments or by law.
THE UNDERSIGNED AND BANK, BY ACCEPTANCE OF THIS NOTE, ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED UNDER CERTAIN CIRCUMSTANCES. TO THE EXTENT PERMITTED BY LAW, EACH PARTY, AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT, WAIVES ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS NOTE OR THE INDEBTEDNESS.
[Remainder of page intentionally left blank]
6 |
This Note amends, restates, supersedes and replaces that certain Master Revolving Note (Demand) dated as of October 30, 2015, made in the principal amount of Ten Million Dollars ($10,000,000) by the undersigned payable to the Bank, as amended (the “Prior Note”); provided , however , (i) the execution and delivery by the undersigned of this Note shall not, in any manner or circumstance, be deemed to be a payment of, a novation of or to have terminated, extinguished or discharged any of the undersigned’s indebtedness evidenced by the Prior Note, all of which indebtedness shall continue under and shall hereinafter be evidenced and governed by this Note, and (ii) all Collateral and guaranties securing or supporting the Prior Note shall continue to secure and support this Note.
This Note is dated and shall be effective as of the date set forth above.
PERCEPTRON, INC.
By: /s/ David L. Watza
SIGNATURE OF
Its: President and Chief Executive Office
TITLE
47827 Halyard Drive | Plymouth | Michigan | 48170 | |||
STREET ADDRESS | CITY | STATE | ZIP CODE |
For Bank Use Only | |||||
OFFICER INITIALS
|
LOAN GROUP NAME
|
OBLIGOR NAME
Perceptron, Inc. |
|||
OFFICER ID. NO.
|
LOAN GROUP NO.
|
OBLIGOR NO.
|
NOTE NO.
|
AMOUNT
$6,000,000 |
|
Exhibit 10.3
|
ADVANCE FORMULA AGREEMENT
|
This Advance Formula Agreement (the "Agreement") is made as of May 4, 2017, by PERCEPTRON, INC. ("Debtor"), unto COMERICA BANK ("Bank").
This Agreement amends, restates, and supersedes in its entirety, without novation, that certain Advance Formula Agreement dated as of October 30, 2015 by and between Debtor and Bank, as the same may have been amended from time to time.
Debtor executed and delivered unto Bank that certain Master Revolving Note dated as of May 4, 2017, made in the principal amount of Six Million Dollars ($6,000,000) (as the same may be amended, modified, extended, renewed, restated, substituted and/or replaced from time to time, and whether in a greater or lesser amount, the "Note"). Debtor's liabilities, obligations and indebtedness under or pursuant to the Note are secured pursuant to certain collateral documents entered into from time to time between Debtor and Bank, including, without limit, that certain Security Agreement dated October 24, 2002, executed and delivered by Debtor unto Bank (as the same may be amended, modified, extended, renewed, restated, substituted and/or replaced from time to time, the "Security Agreement").
1. FORMULA LOANS . "Formula Loans" shall mean, collectively, loans, advances and other credit made or extended by Bank to or in favor of Debtor under or pursuant to and evidenced by the Note, together with any letters of credit issued by Bank thereunder or in connection therewith, subject to the terms and conditions of this Agreement, the Note, the Security Agreement and any other agreement(s) between Debtor and Bank (as the same may be amended, modified, extended, renewed, restated, substituted and/or replaced from time to time, the "Loan Documents").
2. ADVANCE FORMULA . For and in consideration of Bank making the Formula Loans available to Debtor, Debtor warrants and agrees that the aggregate unpaid principal balance of Debtor's indebtedness to Bank outstanding under the Formula Loans shall not at any time exceed the Advance Formula. The "Advance Formula" shall mean the lesser of (i) the face amount of the Note, or (ii) the sum of the following:
(a) | 80% of Debtor's Eligible Accounts, as hereinafter defined; plus |
(b) | the lesser of (i) 50% of Debtor's Eligible Inventory, as hereinafter defined, or (ii) Two Million Five Hundred Thousand Dollars ($2,500,000). |
3. FORMULA COMPLIANCE . If, at any time, the aggregate unpaid principal balance of Debtor's indebtedness to Bank outstanding under the Formula Loans (plus, without duplication, the sum of the aggregate undrawn amounts of any such letters of credit and the aggregate unreimbursed amount of all draws under such letters of credit honored by Bank) shall exceed the Advance Formula, Debtor shall immediately pay Bank sums sufficient to reduce the Formula Loans by the amount of such excess, without the necessity of notice or demand by Bank. The foregoing shall not limit, waive or otherwise affect any rights or remedies available to Bank, whether under this Agreement, the Note, any other Loan Document(s), at law or otherwise.
4. ELIGIBLE ACCOUNT . "Eligible Account" shall mean an Account (as hereinafter defined) arising in the ordinary course of Debtor's business which meets each of the following requirements:
(a) | it is not due and payable more than ninety (90) days from the date of the original invoice or other writing evidencing such Account; and it is not owing more than ninety (90) days after the date of the original invoice or other writing evidencing such Account; |
(b) | it is not owing by an Account Debtor (as hereinafter defined) who has failed to pay twenty five percent (25%) or more of the aggregate amount of its Accounts owing to Debtor within ninety (90) days after the date of the respective invoices or other writings evidencing such Accounts; |
(c) | it arises from the sale or lease of goods and such goods have been shipped or delivered to the Account Debtor under such Account for unconditional acceptance by such Account Debtor; or it arises from services rendered and such services have been performed by Debtor and unconditionally accepted by the Account Debtor; |
(d) | it is evidenced by an invoice, dated not later than the date of shipment or performance, rendered to such Account Debtor or some other evidence of billing acceptable to Bank; |
(e) | it is not evidenced by any note, trade acceptance, draft or other negotiable instrument or by any chattel paper, unless such note or other document or instrument previously has been endorsed and delivered by Debtor to Bank; |
(f) | it is a valid, legally enforceable obligation of the Account Debtor thereunder, and is not subject to any offset, counterclaim or other defense on the part of such Account Debtor or to any claim on the part of such Account Debtor denying liability thereunder in whole or in part; |
(g) | it is subject to a first priority, properly perfected security interest in favor of Bank, and it is not subject to any sale of accounts, any rights of offset, assignment, lien or security interest whatsoever other than to Bank; |
(h) | it is not owing by an officer, employee, partner, joint venturer, agent, subsidiary or affiliate of Debtor, or by an Account Debtor that has common shareholders (unless (i) Debtor and such Account Debtor are each publicly traded entities, or (ii) such common shareholder shall beneficially own less than five percent (5%) of the outstanding common stock of Debtor), officers or directors with Debtor or is otherwise related to Debtor; |
(i) | it is not owing by an Account Debtor which (i) does not maintain its chief executive office in the United States of America or Canada, or is not organized under the laws of the United States of America or Canada, or any state or province thereof, as applicable, or (ii) is the government of any foreign country or sovereign state, or of any state, province, municipality or other instrumentality thereof; |
(j) | it is not an Account owing by the United States of America or any state or political subdivision thereof, or by any department, agency, public body corporate or other instrumentality of any of the foregoing, unless all necessary steps are taken to comply with the Federal Assignment of Claims Act of 1940, as amended, or with any comparable state or local law, if applicable, and all other necessary steps are taken to perfect Bank's security interest in such Account; |
(k) | it is not owing by an Account Debtor for which (i) the death of the Account Debtor or any partner of the Account Debtor has occurred, (ii) the dissolution, liquidation, termination of existence, insolvency or business failure of the Account Debtor has occurred, (iii) the appointment of a receiver for any part of the property of the Account Debtor has occurred, (iv) an assignment for the benefit of creditors, the filing of a petition in bankruptcy, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against the Account Debtor has occurred; or (v) Debtor shall have received notice of the imminent occurrence of any of the foregoing with respect to such Account Debtor; |
(l) | it is not a contra Account or an Account owing by an Account Debtor with respect to which Debtor is liable for good sold or leased or for services rendered by such Account Debtor; |
(m) | it strictly complies with all Debtor's representations and warranties to Bank set forth in this Agreement, the Security Agreement and any other agreement(s) between Debtor and Bank; |
(n) | it is not an Account billed in advance, payable on delivery, for consigned goods, for guaranteed sales, for unbilled sales, for progress billings, payable at a future date in accordance with its terms, subject to a retainage or holdback by the Account Debtor or insured by a surety company; and |
2 |
(o) | it is not owing by any Account Debtor whose obligations Bank, acting in its sole discretion, shall have notified Debtor are not deemed to constitute Eligible Accounts; nor is it an Account that Bank, acting in its sole discretion, shall have deemed to not constitute an Eligible Account. |
An Account which is at any time an Eligible Account, but which subsequently fails to meet any of the foregoing requirements, shall forthwith cease to be an Eligible Account and shall be immediately deducted from the calculation of Eligible Accounts.
For purposes of this Agreement, an “Account” shall mean any right of Debtor to payment for goods sold or leased or for services rendered, but shall not include interest or service charges; and “Account Debtor” shall mean the person who is obligated on or under an Account.
5. ELIGIBLE INVENTORY . "Eligible Inventory" (a) shall be valued at the lesser of cost or present market value of Debtor’s Inventory (as defined in the Michigan Uniform Commercial Code, as amended and in effect from time to time), as determined in accordance with generally accepted accounting principles, consistently applied (“GAAP”), and as may be adjusted by Bank, in Bank's discretion, for age and seasonality or other factors affecting the value of such Inventory; and (b) shall mean all of Debtor's Inventory which is in good and merchantable condition, free from all material defects, which is not obsolete or discontinued, which would be properly classified as “raw materials” or as “finished goods inventory” under and in accordance with GAAP, and which is subject to a first priority, properly perfected security interest in favor of Bank, and which strictly complies with all Debtor's representations and warranties to Bank set forth in this Agreement, the Security Agreement and any other agreement(s) between Debtor and Bank, but excluding (i) Debtor’s "work-in-process" inventory, supplies and packaging, consigned goods, Inventory located outside the United States of America or Canada, (ii) Inventory covered by or subject to a seller's right to repurchase, or any consensual or nonconsensual lien or security interest (including, without limitation, purchase money security interests) other than in favor of Bank, whether senior or junior to Bank's security interest, (iii) Inventory consisting of raw materials or purchased parts not in saleable form or condition, (iv) defective Inventory or Inventory under repair, (v) Inventory not insured and/or without a lender's loss payable provision in favor of Bank, (vi) Inventory located or stored at leased premises or with a bailee, warehouseman or other third party without Bank's prior written consent and unless a lessor's agreement, collateral access agreement, bailment agreement or other similar agreement in form and substance acceptable to Bank is in place, pursuant to which such lessor, bailee, warehouseman or other third party acknowledges Bank's security interest in such Inventory and permits Bank access to and possession of such Inventory, and (vii) Inventory that Bank, acting in its sole discretion, after having notified Debtor, excludes. Inventory which is at any time Eligible Inventory, but which subsequently fails to meet any of the foregoing requirements, shall forthwith cease to be Eligible Inventory and shall be immediately deducted from the calculation of Eligible Inventory.
6. CERTIFICATES, SCHEDULES AND REPORTS . Debtor will deliver to Bank from time to time such agings, schedules, certificates and reports as may be required by the Loan Documents. Debtor will deliver to Bank from time to time such additional schedules, certificates and reports respecting all or any of the Collateral (as defined in the Security Agreement), the items or amounts received by Debtor in full or partial payment of any of the Collateral, and any goods (the sale or lease of which by Debtor shall have given rise to any of the Collateral) possession of which has been obtained by Debtor, all and as to such extent as Bank may request. Any such aging, schedule, certificate or report shall be executed by a duly authorized officer of Debtor and shall be in such form and detail as Bank may specify. Any such schedule identifying any Eligible Account shall be accompanied (if Bank so requests) by a true and correct copy of the invoice evidencing such Eligible Account and by evidence of shipment or performance.
7. INSPECTIONS; COMPLIANCE . Debtor shall permit Bank and its designees from time to time to make such inspections and audits, and to obtain such confirmations or other information, with respect to any of the Collateral or any Account Debtor as Bank is entitled to make or obtain under the Security Agreement or other Loan Document(s), and shall reimburse Bank on demand for all costs and expenses incurred by Bank in connection with such inspections and audits. Debtor shall further comply with all of the other terms and conditions of the Security Agreement and each of the other Loan Documents. Notwithstanding any of the provisions contained this Agreement or otherwise, Debtor hereby acknowledges and agrees that upon completion of any such inspection or audit Bank shall have the right to modify the percentage of Eligible Accounts and/or the percentage of Eligible Inventory included within the Advance Formula under Section 2 above or the definition of Eligible Accounts and/or Eligible Inventory, in its sole and reasonable discretion, based on its review of the results of such inspection or audit.
3 |
8. DEFAULT . Any failure by Debtor to comply with this Agreement shall constitute a default under the Formula Loans and under the Note, the Security Agreement and the Indebtedness, as defined therein, and each of the other Loan Documents, and Bank shall be entitled to exercise any and all rights and remedies available to it as a result of such default, whether under this Agreement, the Note, any other Loan Document(s), at law or otherwise.
9. AMENDMENTS; WAIVERS; OTHER DOCUMENTS . This Agreement may be amended, modified or terminated only in writing duly executed by Debtor and Bank. No delay by Bank in requiring Debtor's compliance herewith shall constitute a waiver of such right. The rights granted to Bank hereunder are cumulative, and in addition to any other rights Bank may have by agreement or under applicable law. This Agreement shall supersede and replace in their entirety any prior advance formula agreements in effect between Bank and Debtor. Debtor acknowledges and agrees that the Formula Loans are further subject to the terms and conditions of all other instruments, documents and agreements evidencing, governing, securing or otherwise relating to the Formula Loans.
10. GOVERNING LAW . This Agreement shall be governed by and construed in accordance with the internal laws of the State of Michigan, without regard to conflict of laws principles.
11. DISCRETIONARY/DEMAND BASIS FORMULA LOANS . Notwithstanding anything to the contrary set forth in this Agreement, in the event that the Formula Loans are at any time on a demand basis or advances are subject to the Bank's discretion, Debtor hereby acknowledges and agrees that the Advance Formula set forth in Section 2 hereof is merely for advisory and guidance purposes and Bank shall not be obligated to make any loans or advances under the Formula Loans, and, notwithstanding the terms of Section 3 above, Bank may at any time, at its option, demand payment of any or all of the Formula Loans, whereupon the same shall become due and payable.
12. DILUTION OF ACCOUNTS . In the event that Bank, at any time in its sole discretion, determines that the dollar amount of Eligible Accounts collectable by Debtor is reduced or diluted as a result of discounts or rebates granted by Debtor to the respective Account Debtor(s), returned or rejected Inventory or services, or such other reasons or factors as Bank deems applicable, Bank may, in its sole discretion, upon five (5) business days’ prior written notice to Debtor, reduce or otherwise modify the percentage of Eligible Accounts included within the Advance Formula under Section 2(a) above and/or reduce the dollar amount of Debtor’s Eligible Accounts by an amount determined by Bank in its sole discretion.
13. JURY WAIVER . DEBTOR AND BANK ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED UNDER CERTAIN CIRCUMSTANCES. TO THE EXTENT PERMITTED BY LAW, EACH PARTY, AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT WAIVES ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS AGREEMENT OR THE INDEBTEDNESS.
14. SPECIAL PROVISIONS : None.
[the rest of this page intentionally left blank]
4 |
IN WITNESS WHEREOF, this Agreement has been duly executed as of the day and year first above written.
Debtor's Chief Executive Office Address:
Perceptron, Inc. 47827 Halyard Dr. Plymouth, MI 48170
|
DEBTOR:
PERCEPTRON, INC.
By: /s/ David L. Watza SIGNATURE OF
Its: President and Chief Executive Officer TITLE
|
Accepted and Approved:
COMERICA BANK
By: /s/ Lydia R. Mansoor SIGNATURE OF
Its: Officer
|
[Signature Page to Advance Formula Agreement (13340417)]
EXHIBIT 99.1
Perceptron Announces Third Quarter Fiscal 2017 Results
Bookings Over $20 Million for Fourth Consecutive Quarter; Backlog Over $40 Million for Third Consecutive Quarter
PLYMOUTH, Mich., May 08, 2017 (GLOBE NEWSWIRE) -- Perceptron, Inc. (NASDAQ:PRCP) today announced results for the third quarter of its 2017 fiscal year (quarterly period ended March 31, 2017). The Company announced revenue of $16.3 million, record third quarter bookings of $23.2 million, backlog of $48.6 million, net loss of $0.6 million and net loss per diluted share of $0.06 for the third quarter of fiscal 2017. For the first nine months of fiscal 2017, the Company announced revenue of $55.6 million and bookings of $65.9 million, which represent increases of 10.3% and 37.0% over the same period in fiscal 2016. The Company also reported a net loss of $0.4 million and net loss per diluted share of $0.05 for the first nine months of fiscal 2017.
FINANCIAL HIGHLIGHTS (in millions, except per share data) | |||||||||||||||||||
Three Months Ended March 31,
|
Nine Months Ended March 31,
|
||||||||||||||||||
2017 | 2016 | Change | 2017 | 2016 | Change | ||||||||||||||
Revenue | $ | 16.3 | $ | 18.1 | $ | (1.8) | $ | 55.6 | $ | 50.4 | $ | 5.2 | |||||||
Net Income (Loss) | (0.6) | (2.9) | 2.3 | (0.4) | (6.5) | 6.1 | |||||||||||||
Diluted Earnings (Loss) per Share | ($0.06) | ($0.31) | $ | 0.25 | ($0.05) | ($0.70) | $ | 0.65 | |||||||||||
David Watza, President and CEO, commented, “We are pleased to announce the results for the third quarter of our 2017 fiscal year, which reflect our continued performance improvement, sustained strength in our end markets and persistent cost savings efforts. With bookings of $23.2 million, we have surpassed the $20 million bookings threshold for the fourth consecutive quarter, which is the longest sustained such period in company history. We recognized revenue of $16.3 million in the third quarter of fiscal 2017, which was consistent with the guidance we provided three months ago. Year to date, we reported a recurring operating profit of $1.5 million, which is an $8.1 million turnaround from last year’s nine-month figure, and clearly illustrates the progress we have made as a team. Furthermore, we ended the quarter with a robust backlog of $48.6 million. As we continue to see increasing strength in these customer demand metrics, we remain confident in the future prospects of our Company.”
“We are making substantial progress in the transformation of our Company through the growth of our top line, as reflected in our year-to-date bookings and revenue in comparison to last year,” continued Watza. “Our financial results continue to benefit from cost savings initiatives, starting with our March 2016 Financial Improvement Plan and reflecting additional ongoing activities. As a team, we have been able to further reduce fixed costs, which has significantly lowered our break-even point.”
“We remain confident in our current guidance of high single-digit to low double-digit revenue growth for fiscal 2017, as our bookings have been strong for multiple quarters,” stated Watza. “We believe that our third quarter results show strong customer activity and demand for Perceptron’s products and services. As a result, we expect our fourth quarter fiscal 2017 revenue will be in the range of $18.5 million to $21.5 million.”
“We have an extremely talented and committed work force that is engaged in providing superior value to our customers. In my first five months as CEO, I’ve spent time with various countries, functions and disciplines within our Company. As a team, we have identified a number of our organizational strengths and weaknesses, and an equivalent number of opportunities. With the best efforts of our people, continuous improvement in our company is an achievable goal. The strength of our team taken together with our recent financial results, validates we are making progress on our turnaround as we execute our strategic plan. I remain very excited about our future,” Watza concluded.
Highlights of Operations | |||||||||||||||||||
INCOME STATEMENT KEY METRICS (in millions, except per share data) | |||||||||||||||||||
Three Months Ended March 31,
|
Nine Months Ended March 31,
|
||||||||||||||||||
2017 |
2016 |
Change | 2017 | 2016 |
Change |
||||||||||||||
Americas Sales | $ | 6.0 | $ | 6.7 | $ | (0.7) | $ | 20.3 | $ | 16.2 | $ | 4.1 | |||||||
Europe Sales | 6.5 | 7.9 | (1.4) | 24.2 | 23.0 | 1.2 | |||||||||||||
Asia Sales | 3.8 | 3.5 | 0.3 | 11.1 | 11.2 | (0.1) | |||||||||||||
Total Sales | $ | 16.3 | $ | 18.1 | $ | (1.8) | $ | 55.6 | $ | 50.4 | $ | 5.2 | |||||||
Gross Profit | $ | 5.2 | $ | 5.2 | $ | - | $ | 19.2 | $ | 14.7 | $ | 4.5 | |||||||
Gross Profit as a percent of sales | 31.9% | 28.8% | 34.5% | 29.2% | |||||||||||||||
Operating Income (Loss) | $ | (0.5) | $ | (3.8) | $ | 3.3 | $ | 0.8 | $ | (9.1) | $ | 9.9 | |||||||
Operating Income (Loss) as a percent of sales | (3.0%) | (21.1%) | 1.4% | (18.0%) | |||||||||||||||
Net Income (Loss) | $ | (0.6) | $ | (2.9) | $ | 2.3 | $ | (0.4) | $ | (6.5) | $ | 6.1 | |||||||
Diluted Income (Loss) per Share | $ | (0.06) | $ | (0.31) | $ | 0.25 | $ | (0.05) | $ | (0.70) | $ | 0.65 | |||||||
Recurring Operating Income (Loss) | $ | (0.5) | $ | (1.2) | $ | 0.7 | $ | 1.5 | $ | (6.6) | $ | 8.1 | |||||||
Recurring Operating Income (Loss) as a percent of sales | (3.0%) | (6.9%) | 2.7% | (13.1%) | |||||||||||||||
Total sales for the third quarter of fiscal 2017 were down $1.8 million, or 9.9%, versus the same quarter in the prior year, reflecting decreases in our Europe and Americas regions, partially offset by an increase in our Asia region. The improvement in our Asia region was primarily due to increases in our Off-Line Measurement Solutions, as well as our 3D Scanning Solutions, partially offset by a decrease in our In-Line and Near-Line Measurement Solutions. The Europe region was down primarily due to decreased sales in our In-Line and Near-Line Measurement Solutions, and the Americas region was down primarily due to decreased sales in our Off-Line Measurement Solutions.
Total sales for the first nine months of fiscal 2017 were up $5.2 million or 10.3%, reflecting increases in our Americas and Europe regions, partially offset by a slight decrease in our Asia region.
In the third quarter of fiscal 2017, our gross profit was positively impacted compared to the prior year by the mix of our revenue and the timing of certain expenses in our cost of goods sold. Gross profit was also improved as a result of lower employee-related costs due to our Financial Improvement Plan, which commenced in the third quarter of fiscal 2016.
In the third quarter of fiscal 2017, total operating expenses were down $0.7 million, primarily as a result of savings realized in the Financial Improvement Plan as well as a reduction of bad debt expense and lower advertising and marketing costs.
Three Months Ended March 31,
|
Nine Months Ended March 31,
|
|||||||||||||||||
BOOKINGS (in millions) |
2017 |
2016 | Change | 2017 | 2016 | Change | ||||||||||||
Geographic Region | ||||||||||||||||||
Americas | $ | 11.3 | $ | 5.1 | $ | 6.2 | $ | 30.6 | $ | 17.3 | $ | 13.3 | ||||||
Europe | 7.0 | 8.0 | (1.0) | 21.8 | 22.9 | (1.1) | ||||||||||||
Asia | 4.9 | 1.7 | 3.2 | 13.5 | 7.9 | 5.6 | ||||||||||||
Total Bookings | $ | 23.2 | $ | 14.8 | $ | 8.4 | $ | 65.9 | $ | 48.1 | $ | 17.8 | ||||||
Prior Reported Bookings | $ | 15.8 | $ | 49.6 | ||||||||||||||
Note: Prior Reported Booking amounts have been updated to reflect corrections to prior calculations.
BACKLOG (in millions) | 3/31/2017 | 12/31/2016 | 9/30/2016 | 6/30/2016 | 3/31/2016 | ||||||||||
Geographic Region | |||||||||||||||
Americas | $ | 20.9 | $ | 15.6 | $ | 16.2 | $ | 10.6 | $ | 11.4 | |||||
Europe | 16.7 | 16.2 | 15.3 | 19.1 | 15.5 | ||||||||||
Asia | 11.0 | 9.9 | 11.1 | 8.6 | 9.8 | ||||||||||
Total Backlog | $ | 48.6 | $ | 41.7 | $ | 42.6 | $ | 38.3 | $ | 36.7 | |||||
Prior Reported Backlog | $ | 40.6 | $ | 38.2 | |||||||||||
Note: Reported Backlog amounts prior to September 30, 2016 have been updated to reflect corrections to prior calculations.
Third quarter bookings were $23.2 million, marking the first time in Perceptron’s history that quarterly bookings were at or above $20 million for four consecutive quarters. For the first nine months of fiscal 2017, bookings totaled $65.9 million, an increase of $17.8 million compared to the first nine months of fiscal 2016.
Bookings in the third quarter of fiscal 2017 exceeded revenue by $6.9 million, which resulted in an increase in the backlog to $48.6 million at quarter-end. As the level of bookings and backlog typically fluctuates from quarter-to-quarter, management does not necessarily consider these metrics to be indicative of the future operating performance of the Company.
FINANCIAL POSITION
Our cash and short-term investment balance was $5.1 million at March 31, 2017, down from $6.3 million at December 31, 2016, and down from $8.3 million at June 30, 2016. At March 31, 2017, we had $0.8 million in bank debt outstanding.
Quarterly Investor Call and Webcast
Perceptron, Inc., will hold its third quarter investor conference call/webcast, chaired by David L. Watza, President and CEO, on Tuesday, May 9, 2017, at 10:00 AM (EDT). Investors can access the call at:
Webcast | investors.perceptron.com on the Event page | |
Conference Call | 877-317-6789 (domestic callers) or | |
412-317-6789 (international callers) | ||
Conference ID | 10104482 |
A replay will be posted to the Company's website after the conference call concludes.
About Perceptron
®
Perceptron (NASDAQ:PRCP) develops, produces and sells a comprehensive range of automated industrial metrology products and solutions to manufacturing organizations for dimensional gauging, dimensional inspection and 3D scanning. Products include 3D machine vision solutions, robot guidance, coordinate measuring machines, laser scanning and advanced analysis software. Global automotive, aerospace and other manufacturing companies rely on Perceptron's metrology solutions to assist in managing their complex manufacturing processes to improve quality, shorten product launch times and reduce costs. Headquartered in Plymouth, Michigan, USA, Perceptron has subsidiary operations in Brazil, China, Czech Republic, France, Germany, India, Italy, Japan, Singapore, Slovakia, Spain and the United Kingdom. For more information, please visit www.perceptron.com.
Safe Harbor Statement
Certain statements in this press release may be “forward-looking statements” within the meaning of the Securities Exchange Act of 1934, including our expectation as to our fiscal year 2017 and future results, cost savings from our financial improvement plan, operating data, new order bookings, revenue, expenses, net income and backlog levels, trends affecting our future revenue levels, the rate of new orders, the timing of revenue and net income increases from new products which we have recently released or have not yet released, the timing of the introduction of new products, and our ability to fund our fiscal year 2017 and future cash flow requirements. Whenever possible, we have identified these forward-looking statements by words such as “target,” “will,” “should,” “could,” “believes,” “expects,” “anticipates,” “estimates,” “prospects,” “outlook,” “guidance” or similar expressions. We claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 for all of our forward-looking statements. While we believe that our forward-looking statements are reasonable, you should not place undue reliance on any such forward-looking statements, which speak only as of the date made. Because these forward-looking statements are based on estimates and assumptions that are subject to significant business, economic and competitive uncertainties, many of which are beyond our control or are subject to change, actual results could be materially different. Factors that might cause such a difference include, without limitation, disruptions to our operations due to the financial improvement plan and related headcount reductions and position eliminations, risks associated with changes in our sales strategy and structure, including the impact of such changes on booking and revenue levels and customer purchase decisions, the risk that actual charges from the financial improvement plan differ from the assumptions used in estimating the charges and the risks and uncertainties discussed from time to time in our periodic reports filed with the Securities and Exchange Commission, including those listed in “Item 1A – Risk Factors” of our Annual Report on Form 10-K for fiscal 2016. Except as required by applicable law, we do not undertake, and expressly disclaim, any obligation to publicly update or alter our statements whether as a result of new information, events or circumstances occurring after the date of this report or otherwise.
--- Financial Tables Follow ---
PERCEPTRON, INC. | ||||||||||||||||
SELECTED FINANCIAL DATA | ||||||||||||||||
(Unaudited, In Thousands Except Per Share Amounts) | ||||||||||||||||
Condensed Income Statements | Three Months Ended | Nine Months Ended | ||||||||||||||
March 31, | March 31, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Net Sales | $ | 16,325 | $ | 18,082 | $ | 55,596 | $ | 50,361 | ||||||||
Cost of Sales | 11,135 | 12,880 | 36,388 | 35,638 | ||||||||||||
Gross Profit
|
5,190 | 5,202 | 19,208 | 14,723 | ||||||||||||
Operating Expenses | ||||||||||||||||
Selling, General and Administrative Expense | 4,039 | 4,702 | 12,795 | 15,358 | ||||||||||||
Engineering, Research and Development Expense | 1,650 | 1,740 | 4,917 | 5,938 | ||||||||||||
Severance, Impairment and Other Charges | 3 | 2,567 | 720 | 2,567 | ||||||||||||
Operating Income (Loss) | (502) | (3,807) | 776 | (9,140) | ||||||||||||
Other Income and (Expenses), net | ||||||||||||||||
Interest Income (Expense), net | (94) | (46) | (212) | (92) | ||||||||||||
Foreign Currency and Other, net | 122 | 170 | (198) | 374 | ||||||||||||
Income (Loss) Before Income Taxes | (474) | (3,683) | 366 | (8,858) | ||||||||||||
Income Tax (Expense) Benefit | (124) | 818 | (795) | 2,339 | ||||||||||||
Net Income (Loss) | $ | (598) | $ | (2,865) | $ | (429) | $ | (6,519) | ||||||||
Loss Per Common Share | ||||||||||||||||
Basic | ($0.06) | ($0.31) | ($0.05) | ($0.70) | ||||||||||||
Diluted | ($0.06) | ($0.31) | ($0.05) | ($0.70) | ||||||||||||
Weighted Average Common Shares Outstanding
|
||||||||||||||||
Basic | 9,400 | 9,351 | 9,384 | 9,351 | ||||||||||||
Diluted | 9,400 | 9,351 | 9,384 | 9,351 | ||||||||||||
PERCEPTRON, INC. | ||||||||
SELECTED FINANCIAL DATA | ||||||||
(In Thousands) | ||||||||
Condensed Balance Sheets | March 31, | June 30, | ||||||
2017 | 2016 | |||||||
(Unaudited) | ||||||||
Cash and Cash Equivalents | $ | 4,894 | $ | 6,787 | ||||
Short-Term Investments | 241 | 1,474 | ||||||
Receivables, net | 26,130 | 24,075 | ||||||
Inventories, net | 12,107 | 12,172 | ||||||
Other Current Assets | 1,548 | 2,201 | ||||||
Total Current Assets | 44,920 | 46,709 | ||||||
Property and Equipment, net | 7,266 | 7,926 | ||||||
Goodwill and Other Intangible Assets, net | 11,376 | 12,517 | ||||||
Long-Term Investments | 725 | 770 | ||||||
Total Non-Current Assets | 19,367 | 21,213 | ||||||
Total Assets | $ | 64,287 | $ | 67,922 | ||||
Accounts Payable | $ | 7,655 | $ | 8,801 | ||||
Short-Term Notes Payable | 1,007 | 200 | ||||||
Deferred Revenue | 7,286 | 7,711 | ||||||
Restructuring Reserve | 214 | 814 | ||||||
Other Current Liabilities | 7,416 | 7,857 | ||||||
Total Current Liabilities | 23,578 | 25,383 | ||||||
Long-Term Taxes Payable | 1,062 | 1,714 | ||||||
Deferred Income Taxes | 886 | 1,131 | ||||||
Other Long-Term Liabilities | 782 | 1,140 | ||||||
Total Long-Term Liabilities | 2,730 | 3,985 | ||||||
Total Liabilities | 26,308 | 29,368 | ||||||
Shareholders' Equity | 37,979 | 38,554 | ||||||
Total Liabilities and Shareholders' Equity
|
$ | 64,287 | $ | 67,922 | ||||
Non-GAAP Financial Measures
While Perceptron’s results under Generally Accepted Accounting Principles in the United States of America (“U.S. GAAP”) provide significant insight into our operations and financial position, Perceptron’s management supplements its analysis of the business using “Recurring Operating Income (Loss).” This is a non-GAAP financial measure. Management believes that this non-GAAP financial measure, when taken together with the corresponding GAAP measure, provides incremental insight into the underlying factors and trends affecting our performance. However, it should be viewed as supplemental data, rather than as a substitute or an alternative to the comparable GAAP measure. The table below presents reconciliations of the non-GAAP measure to Operating Income (Loss).
PERCEPTRON, INC. | ||||||||||||
Additional Information Regarding Special Items Impacting | ||||||||||||
Reported GAAP Financial Measures | ||||||||||||
(Unaudited, In Thousands) | ||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||
March 31, | March 31, | |||||||||||
2017 |
2016 |
2017 |
2016 |
|||||||||
Operating Income (Loss), as reported | $ | (502) | $ | (3,807) | $ | 776 | $ | (9,140) | ||||
Severance, Impairment and Other Charges | 3 | 2,567 | 720 | 2,567 | ||||||||
Excluding special items, Operating | ||||||||||||
Income (Loss) would have been | $ | (499) | $ | (1,240) | $ | 1,496 | $ | (6,573) | ||||
Contact:
Investor Relations
investors@perceptron.com