-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BeoJkpoi+KHo1e4JaPjC9KI/igF8LgPyqZ6IkVZQM8Fzq0NeYLjycoaAxaFCXGKi uX0TLTNVCn54FPMnyD6bJw== 0000950124-99-006000.txt : 19991117 0000950124-99-006000.hdr.sgml : 19991117 ACCESSION NUMBER: 0000950124-99-006000 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991115 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PERCEPTRON INC/MI CENTRAL INDEX KEY: 0000887226 STANDARD INDUSTRIAL CLASSIFICATION: OPTICAL INSTRUMENTS & LENSES [3827] IRS NUMBER: 382381442 STATE OF INCORPORATION: MI FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-20206 FILM NUMBER: 99751314 BUSINESS ADDRESS: STREET 1: PERCEPTRON INC STREET 2: 47827 HALYARD DR CITY: PLYMOUTH STATE: MI ZIP: 48170-2461 BUSINESS PHONE: 3134144816 MAIL ADDRESS: STREET 1: PERCEPTRON INC STREET 2: 47827 HALYARD DRIVE CITY: PLYMOUTH STATE: MI ZIP: 48170-2461 10-Q 1 FORM 10-Q 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 2 PERCEPTRON, INC. AND SUBSIDIARIES INDEX TO FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1999
PAGE NUMBER ------ 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
2 3 PERCEPTRON, INC AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, JUNE 30, (In Thousands) 1999 1999 ------------------ ------------------- (Unaudited) 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 ================= ==================
The notes to the consolidated financial statements are an integral part of these statements. 3 4 PERCEPTRON, INC AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
THREE MONTHS ENDED SEPTEMBER 30, (In Thousands, Except Per Share Amounts) 1999 1998 -------------------- -------------------- 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
The notes to the consolidated financial statements are an integral part of these statements. 4 5 PERCEPTRON, INC AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED)
THREE MONTHS ENDED SEPTEMBER 30, (In Thousands) 1999 1998 -------------------- ------------------ 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) =================== =================
The notes to the consolidated financial statements are an integral part of these statements. 5 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):
SEPTEMBER 30, JUNE 30, 1999 1999 ---------------- ---------------- Component Parts $ 7,697 $ 6,553 Work In Process 1,890 1,683 Finished Goods 3,696 4,087 --------------- --------------- Total $ 13,283 $ 12,323 =============== ===============
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. 6 7 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):
THREE MONTHS ENDED SEPTEMBER 30, 1999 1998 --------------- ---------------- Net Income $ 1,128 $ 389 Other Comprehensive Income: Foreign currency translation adjustments 454 1,002 --------------- ---------------- Total Comprehensive Income $ 1,582 $ 1,391 =============== ================
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):
WEIGHTED AVG. EARNINGS NET INCOME COMMON SHARES PER SHARE THREE MONTHS ENDED SEPT. 30, 1999 1998 1999 1998 1999 1998 ------------ ------------ ------------ ------------ ------------ ------------ 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 ============ ============ ============ ============
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 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):
FIRST QUARTER AUTOMOTIVE INDUSTRIAL BUSINESSES CONSOLIDATED - ------------------------ -------------------- ---------------------- ---------------------- 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
8 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 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. 10 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. 11 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. 12 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 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 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 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) 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)
16 17 Exhibit Index -------------
Exhibit No. Description - ----------- ----------- 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
EX-10.30 2 FORM OF INCENTIVE STOCK OPTION AGREEMENT 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. 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 EX-10.31 3 FORM OF NON-QUALIFIED STOCK OPTION AGMT. GLOBAL 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. 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 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 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 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 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 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 EX-27 4 FINANCIAL DATA SCHEDULE
5 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. 3-MOS JUN-30-2000 JUL-01-1999 SEP-30-1999 5,534,000 0 30,432,000 (321,000) 13,283,000 51,906,000 17,551,000 (6,686,000) 67,598,000 10,612,000 7,340,000 0 0 82,000 49,564,000 67,598,000 18,471,000 18,471,000 8,089,000 8,089,000 8,332,000 0 82,000 1,887,000 759,000 1,128,000 0 0 0 1,128,000 .14 .14
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