Exhibit 10.6

 

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ADVANCE FORMULA AGREEMENT

 

 

 

This Advance Formula Agreement (the "Agreement") is made as of January 29, 2015,
by PERCEPTRON, INC. ("Debtor"), unto COMERICA BANK ("Bank").

 

Debtor executed and delivered unto Bank that certain Master Revolving Note dated
as of January 6, 2012, made in the principal amount of Six Million Dollars
($6,000,000) (as the same may be amended, modified, extended, renewed, restated,
substituted and/or replaced from time to time, and whether in a greater or
lesser amount, the "Note"). Debtor's liabilities, obligations and indebtedness
under or pursuant to the Note are secured pursuant to certain collateral
documents entered into from time to time between Debtor and Bank, including,
without limit, that certain Security Agreement dated October 24, 2002, executed
and delivered by Debtor unto Bank (as the same may be amended, modified,
extended, renewed, restated, substituted and/or replaced from time to time, the
"Security Agreement").

 

1.          FORMULA LOANS. "Formula Loans" shall mean, collectively, loans,
advances and other credit made or extended by Bank to or in favor of Debtor
under or pursuant to and evidenced by the Note, together with any letters of
credit issued by Bank thereunder or in connection therewith, subject to the
terms and conditions of this Agreement, the Note, the Security Agreement and any
other agreement(s) between Debtor and Bank (as the same may be amended,
modified, extended, renewed, restated, substituted and/or replaced from time to
time, the "Loan Documents").

 

2.          ADVANCE FORMULA. For and in consideration of Bank making the Formula
Loans available to Debtor, Debtor warrants and agrees that the aggregate unpaid
principal balance of Debtor's indebtedness to Bank outstanding under the Formula
Loans shall not at any time exceed the Advance Formula. The "Advance Formula"
shall mean the lesser of (i) the face amount of the Note, or (ii) 80% of
Debtor's Eligible Accounts, as hereinafter defined.

 

3.          FORMULA COMPLIANCE. If, at any time, the aggregate unpaid principal
balance of Debtor's indebtedness to Bank outstanding under the Formula Loans
(plus, without duplication, the sum of the aggregate undrawn amounts of any such
letters of credit and the aggregate unreimbursed amount of all draws under such
letters of credit honored by Bank) shall exceed the Advance Formula, Debtor
shall immediately pay Bank sums sufficient to reduce the Formula Loans by the
amount of such excess, without the necessity of notice or demand by Bank. The
foregoing shall not limit, waive or otherwise affect any rights or remedies
available to Bank, whether under this Agreement, the Note, any other Loan
Document(s), at law or otherwise.

 

4.          ELIGIBLE ACCOUNT. "Eligible Account" shall mean an Account (as
hereinafter defined) arising in the ordinary course of Debtor's business which
meets each of the following requirements:

 

(a)it is not due and payable more than ninety (90) days from the date of the
original invoice or other writing evidencing such Account; and it is not owing
more than ninety (90) days after the date of the original invoice or other
writing evidencing such Account;

 

(b)it is not owing by an Account Debtor (as hereinafter defined) who has failed
to pay twenty five percent (25%) or more of the aggregate amount of its Accounts
owing to Debtor within ninety (90) days after the date of the respective
invoices or other writings evidencing such Accounts;

 

(c)it arises from the sale or lease of goods and such goods have been shipped or
delivered to the Account Debtor under such Account for unconditional acceptance
by such Account Debtor; or it arises from services rendered and such services
have been performed by Debtor and unconditionally accepted by the Account
Debtor;

 

(d)it is evidenced by an invoice, dated not later than the date of shipment or
performance, rendered to such Account Debtor or some other evidence of billing
acceptable to Bank;

 

 

 

 

(e)it is not evidenced by any note, trade acceptance, draft or other negotiable
instrument or by any chattel paper, unless such note or other document or
instrument previously has been endorsed and delivered by Debtor to Bank;

 

(f)it is a valid, legally enforceable obligation of the Account Debtor
thereunder, and is not subject to any offset, counterclaim or other defense on
the part of such Account Debtor or to any claim on the part of such Account
Debtor denying liability thereunder in whole or in part;

 

(g)it is subject to a first priority, properly perfected security interest in
favor of Bank, and it is not subject to any sale of accounts, any rights of
offset, assignment, lien or security interest whatsoever other than to Bank;

 

(h)it is not owing by an officer, employee, partner, joint venturer, agent,
subsidiary or affiliate of Debtor, or by an Account Debtor that has common
shareholders (unless (i) Debtor and such Account Debtor are each publicly traded
entities, or (ii) such common shareholder shall beneficially own less than five
percent (5%) of the outstanding common stock of Debtor), officers or directors
with Debtor or is otherwise related to Debtor;

 

(i)it is not owing by an Account Debtor which (i) does not maintain its chief
executive office in the United States of America or Canada, or is not organized
under the laws of the United States of America or Canada, or any state or
province thereof, as applicable, or (ii) is the government of any foreign
country or sovereign state, or of any state, province, municipality or other
instrumentality thereof;

 

(j)it is not an Account owing by the United States of America or any state or
political subdivision thereof, or by any department, agency, public body
corporate or other instrumentality of any of the foregoing, unless all necessary
steps are taken to comply with the Federal Assignment of Claims Act of 1940, as
amended, or with any comparable state or local law, if applicable, and all other
necessary steps are taken to perfect Bank's security interest in such Account;

 

(k)it is not owing by an Account Debtor for which (i) the death of the Account
Debtor or any partner of the Account Debtor has occurred, (ii) the dissolution,
liquidation, termination of existence, insolvency or business failure of the
Account Debtor has occurred, (iii) the appointment of a receiver for any part of
the property of the Account Debtor has occurred, (iv) an assignment for the
benefit of creditors, the filing of a petition in bankruptcy, or the
commencement of any proceeding under any bankruptcy or insolvency laws by or
against the Account Debtor has occurred; or (v) Debtor shall have received
notice of the imminent occurrence of any of the foregoing with respect to such
Account Debtor;

 

(l)it is not a contra Account or an Account owing by an Account Debtor with
respect to which Debtor is liable for good sold or leased or for services
rendered by such Account Debtor;

 

(m)it strictly complies with all Debtor's representations and warranties to Bank
set forth in this Agreement, the Security Agreement and any other agreement(s)
between Debtor and Bank;

 

(n)it is not an Account billed in advance, payable on delivery, for consigned
goods, for guaranteed sales, for unbilled sales, for progress billings, payable
at a future date in accordance with its terms, subject to a retainage or
holdback by the Account Debtor or insured by a surety company; and

 

(o)it is not owing by any Account Debtor whose obligations Bank, acting in its
sole discretion, shall have notified Debtor are not deemed to constitute
Eligible Accounts; nor is it an Account that Bank, acting in its sole
discretion, shall have deemed to not constitute an Eligible Account.

 

An Account which is at any time an Eligible Account, but which subsequently
fails to meet any of the foregoing requirements, shall forthwith cease to be an
Eligible Account and shall be immediately deducted from the calculation of
Eligible Accounts.

 

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For purposes of this Agreement, an “Account” shall mean any right of Debtor to
payment for goods sold or leased or for services rendered, but shall not include
interest or service charges; and “Account Debtor” shall mean the person who is
obligated on or under an Account.

 

5.          CERTIFICATES, SCHEDULES AND REPORTS. Debtor will deliver to Bank
from time to time such agings, schedules, certificates and reports as may be
required by the Loan Documents. Debtor will deliver to Bank from time to time
such additional schedules, certificates and reports respecting all or any of the
Collateral (as defined in the Security Agreement), the items or amounts received
by Debtor in full or partial payment of any of the Collateral, and any goods
(the sale or lease of which by Debtor shall have given rise to any of the
Collateral) possession of which has been obtained by Debtor, all and as to such
extent as Bank may request. Any such aging, schedule, certificate or report
shall be executed by a duly authorized officer of Debtor and shall be in such
form and detail as Bank may specify. Any such schedule identifying any Eligible
Account shall be accompanied (if Bank so requests) by a true and correct copy of
the invoice evidencing such Eligible Account and by evidence of shipment or
performance.

 

6.          INSPECTIONS; COMPLIANCE. Debtor shall permit Bank and its designees
from time to time to make such inspections and audits, and to obtain such
confirmations or other information, with respect to any of the Collateral or any
Account Debtor as Bank is entitled to make or obtain under the Security
Agreement or other Loan Document(s), and shall reimburse Bank on demand for all
costs and expenses incurred by Bank in connection with such inspections and
audits. Debtor shall further comply with all of the other terms and conditions
of the Security Agreement and each of the other Loan Documents. Notwithstanding
any of the provisions contained this Agreement or otherwise, Debtor hereby
acknowledges and agrees that upon completion of any such inspection or audit
Bank shall have the right to modify the percentage of Eligible Accounts included
within the Advance Formula under Section 2 above or the definition of Eligible
Accounts, in its sole and reasonable discretion, based on its review of the
results of such inspection or audit.

 

7.          DEFAULT. Any failure by Debtor to comply with this Agreement shall
constitute a default under the Formula Loans and under the Note, the Security
Agreement and the Indebtedness, as defined therein, and each of the other Loan
Documents, and Bank shall be entitled to exercise any and all rights and
remedies available to it as a result of such default, whether under this
Agreement, the Note, any other Loan Document(s), at law or otherwise.

 

8.          AMENDMENTS; WAIVERS; OTHER DOCUMENTS. This Agreement may be amended,
modified or terminated only in writing duly executed by Debtor and Bank. No
delay by Bank in requiring Debtor's compliance herewith shall constitute a
waiver of such right. The rights granted to Bank hereunder are cumulative, and
in addition to any other rights Bank may have by agreement or under applicable
law. This Agreement shall supersede and replace in their entirety any prior
advance formula agreements in effect between Bank and Debtor. Debtor
acknowledges and agrees that the Formula Loans are further subject to the terms
and conditions of all other instruments, documents and agreements evidencing,
governing, securing or otherwise relating to the Formula Loans.

 

9.          GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Michigan, without regard to
conflict of laws principles.

 

10.         DISCRETIONARY/DEMAND BASIS FORMULA LOANS. Notwithstanding anything
to the contrary set forth in this Agreement, in the event that the Formula Loans
are at any time on a demand basis or advances are subject to the Bank's
discretion, Debtor hereby acknowledges and agrees that the Advance Formula set
forth in Section 2 hereof is merely for advisory and guidance purposes and Bank
shall not be obligated to make any loans or advances under the Formula Loans,
and, notwithstanding the terms of Section 3 above, Bank may at any time, at its
option, demand payment of any or all of the Formula Loans, whereupon the same
shall become due and payable.

 

11.         DILUTION OF ACCOUNTS. In the event that Bank, at any time in its
sole discretion, determines that the dollar amount of Eligible Accounts
collectable by Debtor is reduced or diluted as a result of discounts or rebates
granted by Debtor to the respective Account Debtor(s), returned or rejected
Inventory or services, or such other reasons or factors as Bank deems
applicable, Bank may, in its sole discretion, upon five (5) business days’ prior
written notice to Debtor, reduce or otherwise modify the percentage of Eligible
Accounts included within the Advance Formula under Section 2(a) above and/or
reduce the dollar amount of Debtor’s Eligible Accounts by an amount determined
by Bank in its sole discretion.

 

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12.         JURY WAIVER. DEBTOR AND BANK ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY
JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED UNDER CERTAIN
CIRCUMSTANCES. TO THE EXTENT PERMITTED BY LAW, EACH PARTY, AFTER CONSULTING (OR
HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR CHOICE, KNOWINGLY
AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT WAIVES ANY RIGHT TO TRIAL BY JURY
IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR ENFORCEMENT OF, OR IN
ANY WAY RELATED TO, THIS AGREEMENT OR THE INDEBTEDNESS.

 

13.         SPECIAL PROVISIONS: None.

 

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IN WITNESS WHEREOF, this Agreement has been duly executed as of the day and year
first above written.

 

Debtor's Chief Executive Office Address: DEBTOR:     Perceptron, Inc.
PERCEPTRON, INC. 47827 Halyard Dr.   Plymouth, MI 48170  

 

  By: /s/ Keith R. Marchiando     SIGNATURE OF

 

  Its: Chief Financial Officer     TITLE

 

Accepted and Approved:

 

COMERICA BANK

 

By: /s/ Robert A. Rosati     SIGNATURE OF ROBERT A. ROSATI  

 

Its: Vice President

 

[Signature Page to Advance Formula Agreement]