exv10w1



 





EXHIBIT
10.1


EMPLOYMENT AND AMENDED AND RESTATED SEVERANCE

AGREEMENT


     THIS EMPLOYMENT AND AMENDED AND RESTATED SEVERANCE AGREEMENT, dated as of January 21, 2008, is
between Perceptron, Inc. (the “Company”) and Alfred A. Pease, who is currently employed by the
Company in the position of President and Chief Executive Officer (the “Executive”) and amends and
restates a certain Severance Agreement dated September 7, 2005 between the Company and the
Executive (the “Severance Agreement”). The parties acknowledge that the Company and the Executive
previously entered into an employment agreement dated February 14, 1996 (the “Prior Agreement”).
The Company and the Executive agree that this Agreement supersedes and renders void the Prior
Agreement and Severance Agreement, except as otherwise provided in this Agreement.


     1. Defined Terms. For purposes of this Agreement, the following terms shall have the
meanings set forth below:



          (a) “Anniversary Date” shall mean January 21, 2009.




          (b) “Annual Base Salary” is defined in Section 4.




          (c) “Auto Benefit” is defined in Section 7(e).




          (d) “Board” or “Board of Directors” shall mean the Board of Directors of the
Company.




          (e) “Cause” shall mean the Executive’s:





          (i) personal dishonesty in connection with the performance of services for the Company,




          (ii) willful misconduct in connection with the performance of services for the Company
which has a demonstrative adverse effect on the Company,




          (iii) conviction for violation of any law involving (A) imprisonment that interferes
with performance of duties or (B) moral turpitude,




          (iv) repeated and intentional failure to perform stated duties, or breach of this
Agreement, the Release Agreement, the Proprietary Information and Inventions Agreement or
the Restrictive Covenants, after written notice is delivered to the Executive identifying
the failure or breach, and such failure or breach is not cured within 10 days following
receipt of such notice,




          (v) breach of a fiduciary duty to the Company, or




          (vi) engaging in activities detrimental to the interests of the Company which have a
demonstrative adverse effect on the Company.



          (f) “Change in Control” shall be deemed to have occurred upon the occurrence of any of
the following events:




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          (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) A sale of all or substantially all of the assets of the Company; or




          (iv) Any person or group of persons (as defined in Section 13(d) of the Securities
Exchange Act of 1934, as amended) (other than any employee benefit plan or employee benefit
trust benefiting the employees of the Company) becoming a beneficial owner, directly or
indirectly, of securities of the Company representing more than 50% of either the then
outstanding Common Stock of the Company, or the combined voting power of the Company’s then
outstanding voting securities.



          (g) “Club Benefit” is defined in Section 7(i).




          (h) “Change in Control Benefits” is defined in Section 9(b).




          (i) “Code” shall mean the Internal Revenue Code of 1986, as amended.




          (j) “Effective Date” shall mean January 21, 2008.




          (k) “Executive Life Insurance Reimbursement” is defined in Section 7(c)(ii).




          (l) “FY 2008 Bonus” is defined in Section 5(a).




          (m) “FY 2008 Plan” is defined in Section 5(a).




          (n) “Health Care Benefit Continuation Period” shall mean until the Executive becomes
eligible for Medicare benefits.




          (o) “Prime Rate” is defined in Section 8(c).




          (p) “Prior Agreement” is defined in the preamble.




          (q) “Proprietary Information and Invention Agreement” shall mean the Proprietary
Information and Invention Agreement dated February 14, 1996 between the parties hereto.




          (r) “Release” is defined in Section 6(b).




          (s) “Release Agreement” shall mean the Release Agreement dated of even date herewith
between the parties hereto and any Release executed pursuant to the terms of this Agreement.




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          (t) “Restrictive Covenants” is defined in Section 13.




          (u) “Second Anniversary Date” shall mean January 21, 2010.




          (v) “Supplemental Compensation” is defined in Section 6(a).




          (w) “Termination of Employment” is defined in Section 8(c).




          (x) “Welfare Benefits” is defined in Section 7(c).




     2. Retirement; Appointment. Effective on the Effective Date:



          (a) The Executive retires from his position as Chairman of the Board, President and Chief
Executive Officer of the Company, but remains as an employee of the Company. At the President’s
request, he will resign from any comparable positions held by him at any direct or indirect
subsidiary of the Company.




          (b) The Executive resigns as a member of the Board of Directors.




          (c) The
Executive is appointed to serve in the position of Executive Advisor
to the CEO, reporting directly
to the President of the Company.




     3. Duties and Responsibilities.



          (a) The Executive shall have such executive level duties and responsibilities as shall be
designated by the President from time to time in writing. All contacts between the Executive and
any current, past or potential customer, supplier, competitor, employee, shareholder, investment or
market analyst, banker or other advisor of the Company relating to the business of the Company
shall include the President of the Company or shall be conducted as directed by the President of
the Company.




          (b) It is anticipated that the Executive will provide part-time services to the Company, which
is expected to involve the Executive providing services for more than 20% of the average amount of
time he worked in each of the last three calendar years or approximately 40-50 days of services per
year (the “Minimum Requirement”). The Company will not have deemed the Executive to have had a
“separation from service” as defined by Code Section 409A unless the Executive works less than the
Minimum Requirement.




          (c) The Executive shall perform his services at the Company’s headquarters in Plymouth,
Michigan, or other locations within 45 miles of the Executive’s current principal residence, as the
President shall designate and provided that the Executive shall be available from time to time for
reasonable business travel as required to perform the duties and responsibilities assigned to him.




          (d) The Executive shall not be precluded from accepting employment, whether as an employee or
independent contractor, from third parties during the term of this Agreement, so long as such
employment does not violate any of the Restrictive Covenants (as defined below) or interfere with
the Executive’s performance of his duties and responsibilities under this Agreement.




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     4. Base Salary. The Executive’s base salary shall be equal to $338,000 per annum
(“Annual Base Salary”), payable through June 30, 2009, in installments consistent with the
Company’s regular payroll practices.



     5. FY 2008 Bonus.


          (a) The Executive shall be entitled to be paid 100% of any bonus that the Executive would have
earned for Fiscal Year 2008 (the “FY 2008 Bonus”) under the Company’s Fiscal Year 2008 Profit
Sharing Plan (“FY 2008 Plan”) had the Executive been employed by the Company at June 30, 2008 as
President and Chief Executive Officer of the Company, using the same methodology as was used to
distribute the bonus pool arising under the Fiscal Year 2006 Profit Sharing Plan to allocate to the
Executive his share of the bonus pool, if any, arising under the FY 2008 Plan. In the event the
Executive’s employment with the Company is terminated prior to the end of Fiscal Year 2008, then
the Executive shall be entitled to a pro-rata percentage of the FY 2008 Bonus based on the number
of weeks during Fiscal Year 2008 that the Executive was employed by the Company.




          (b) The FY 2008 Bonus, if earned in accordance with Section 5(a), shall be payable at the
time set forth in the FY 2008 Plan.




     6. Supplemental
Compensation.


          (a) In addition to the Annual Base Salary, the Company shall pay the Executive an amount equal
to the number of actual days of employment services provided by the Executive to the Company after
the Effective Date but prior to June 30, 2009, (as approved by the President in writing),
multiplied by $3,500 (the “Supplemental Compensation”).




          (b) Except as provided in Section 8(b) of this Agreement, upon the Executive’s execution of a
release (in the form attached hereto as Exhibit A (the “Release”)) at the time of each such
payment, the Supplemental Compensation for services performed in calendar year 2008 is payable in a
lump-sum on the Company’s first normal payroll date in January 2009 and the Supplemental
Compensation for services performed in calendar year 2009 is payable in a lump-sum on the Company’s
first normal payroll date in July 2009. The Company shall execute and deliver to the Executive the
Release upon delivery by the Executive to the Company of a counterpart of the Release executed by
the Executive; provided that any pending legal action by the Company against the Executive at the
time of the execution of the Release may be excluded by the Company from its release.




     7. Benefits.


          (a) The Company will provide the Executive with health benefits (including vision and dental,
if provided by the Company) during the Health Benefit Continuation Period, at the same level and on
comparable terms as provided by the Company to its employees from time to time during the Health
Benefit Continuation Period.




          (b) Health benefits provided during the Health Benefit Continuation Period shall be provided
in such a manner that the benefits (including the associated costs and premiums) are excluded from
the Executive’s income for federal income tax purposes and, if the




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Company reasonably determines that providing continued coverage under one or more of the
health care benefit plans maintained by the Company could cause the benefits to be taxable to the
Executive, the Company shall provide the benefits at the required level through the reimbursement
of the Executive for premiums for the purchase of individual insurance coverage; provided, however,
that the Company shall only be required to reimburse premiums for such coverage to the extent they
do not exceed the greater of (i) two times the annual premium paid by the Company for such coverage
at the Effective Date or (ii) two times the then current amount of the COBRA premium under the
Company’s group health plan for comparable coverage. Any continuation of group health plan
coverage under this paragraph shall run concurrently with the period of required COBRA continuation
coverage under the Code.




          (c) The Company will provide the Executive with the following welfare benefits (“Welfare
Benefits”) until June 30, 2009, at the same level and on comparable terms as provided by the
Company to its employees from time to time during this period (including, in the case, of Group
Long-term Disability, the ability of the Executive to continue to pay his own premiums for such
coverage and be reimbursed for such payments by the Company, if that is the current practice being
used by the Executive):





          (i) Group Life Insurance.




          (ii)
Reimbursement of the Executive for up to an aggregate of $7,000 in premiums
payable by the Executive prior to December 31, 2008 and $2,900
in premiums payable by the Executive between December 31, 2008
and June 30, 2009 on an executive life insurance policy
maintained by the Company (but owned by the Executive and for which the premium is paid by
the Executive) and on other life insurance maintained by the Executive on his life (the
“Executive Life Insurance Reimbursement”).




          (iii) Group Long-term Disability.



          (d) Welfare Benefits (which does not include health benefits) shall be provided only to the
extent permitted under the terms of such plans.




          (e) The Executive’s current auto benefit will continue at Company expense until March 21,
2008, the expiration date of the Executive’s current auto lease. Upon expiration of the current
lease, beginning in April 2008, and thereafter through June 2009, the Company shall pay the
Executive $1,700 per month for all his auto-related expenses (the “Auto Benefit”).




          (f) The Company is not required to continue any health, welfare or auto benefit payments which
duplicate employee benefits and prerequisites received by the Executive from any other source.




          (g) The Company shall reimburse the Executive for all reasonable out-of-pocket expenses
incurred by him in the course of performing his duties under this Agreement which are consistent
with the Company’s policies in effect from time to time with respect to reimbursement of travel,
entertainment and other business-related expenses.





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          (h) Reimbursement for expenses incurred in any calendar year shall not affect the
reimbursement of expenses incurred in subsequent calendar years and shall be paid no later than the
end of the calendar year following the calendar year in which the expenses are incurred.





          (i) The Company shall continue, until June 30, 2009, to reimburse the Executive for monthly
dues at Travis Pointe Country Club, not to exceed $450 per month (“Club Benefit”).




          (j) The Company shall reimburse the Executive for legal fees and disbursements reasonably
incurred in connection with the negotiation, execution, and delivery of this Agreement, up to a
maximum of $10,000, upon presentation to the Company’s Chief Legal Officer of satisfactory evidence
of the incurrence of such fees and disbursements.




          (k) Upon termination of the Executive’s employment with the Company, the Company shall
transfer to the Executive the cell phone and laptop computer (including peripherals as approved by
the President in writing) the Executive was using as of the date preceding this Agreement; provided
that, unless otherwise requested by the Company in writing, Executive shall provide the Company
with a copy of and then delete from such computer all files that are proprietary to the Company.




          (l) The Executive shall not be entitled to any vacation benefits or to be paid for any
vacation benefits upon his termination with the Company, although any vacation taken by him during
the term of this Agreement shall not affect payments of his Annual Base Salary.




     8. Term.


          (a) The Executive’s employment with the Company shall automatically terminate on June 30,
2009, unless:





          (i) Extended by mutual written agreement of the Company (with the approval of the Board
of Directors) and the Executive on such terms as are mutually agreed upon in writing by the
Company and the Executive;




          (ii) Earlier terminated by the Company, upon written notice to the Executive; or




          (iii) Earlier terminated by the Executive, upon written notice to the Company.



          (b) Following
termination of the Executive’s employment with the Company for
any reason, including a Termination of Employment (as defined in 8(c) of this
Agreement), the Executive will continue to receive the following payments/benefits:





          (i) Annual Base Salary through June 30, 2009.




          (ii) Health Benefit as provided in Section 7(a).




          (iii) Executive Life Insurance Reimbursement.





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          (iv) Auto Benefit and Club Benefit through June 30, 2009.




          (v) Reimbursement for expenses incurred prior to the date of termination as provided in
Section 7(g) and subject to the reimbursement timing set forth in Section 7(h).



          (vi) Any amounts due to the Executive under the FY2008 Plan as provided in Section 5.




          (vii) Upon the Executive’s execution of a Release, and subject to the last sentence of
Section 6(b), any Supplemental Compensation arising from actual services provided by the
Executive prior to the termination of his employment, payable within sixty (60) days after
such termination or, if earlier, the due date for such payment as set forth in Section 6(b).



     Provided
that, upon the Executive’s death, the Executive’s estate
will continue to receive only the
payments/benefits set forth in Sections 8(b)(i), (v), (vi) and (vii).



          (c) For purposes of this Agreement, a “Termination of Employment” shall mean a “separation
from service” as defined in Code Section 409A.
Notwithstanding the foregoing, if at the time of Termination of Employment, the Executive
constitutes a “Specified Employee” as defined in Code Section 409A, and the Executive’s aggregate
severance benefit is not exempt from Code Section 409A, commencing at Termination of Employment,
the Executive shall receive the benefits that are exempt from Code Section 409A. However, any
payments that are not exempt from Code Section 409A will be suspended until a period of six months
has lapsed from the Executive’s Termination of Employment or his
death, if earlier. At that time, any suspended payments
shall be aggregated and paid in a lump sum, and the remaining compensation, if any, shall be paid
in accordance with its regular schedule. Any payment, including amounts suspended under Code
Section 409A, made later than 10 days following the Executive’s Termination of Employment (or
applicable due date under this Section 8 or Section 15(a) hereof) for whatever reason, shall
include interest at the Prime Rate plus two percent, which shall begin accruing on the
10th day following the Executive’s Termination of Employment (or applicable due date
under this Section 8 or Section 15(a) hereof). “Prime Rate” shall be determined by reference to
the prime rate established by Comerica Bank (or its successor), in effect from time to time
commencing on the 10th day following the Executive’s Termination of Employment (or
applicable due date under this Agreement).




     9. Change in Control.



          (a) The Executive shall be entitled to the Change in Control Benefits (as defined in Section
9(b) below), in lieu of the compensation and benefits the Executive is entitled to under Sections
4, 5 and 7(c) of this Agreement, if there has been a Change in Control during the period beginning
with the Effective Date and ending on July 21, 2008.




          (b) “Change in Control Benefits” shall mean:






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          (i) A cash benefit equal to $676,000, less all amounts paid to the Executive pursuant
to Section 4 of this Agreement, and the Executive shall not be entitled to any further
payments under Section 4 of this Agreement;




          (ii) $109,200, less all amounts paid to the Executive pursuant to Section 5 of this
Agreement, and the Executive shall not be entitled to any further payments under Section 5
of this Agreement;



          (iii) Subject to Section 7(f), continuation of Company-provided Welfare Benefits until
the Second Anniversary Date;




          (iv) Continued coverage, during the six (6) years following the Effective Date for his
actions or omissions as an officer and, if applicable, director of the Company prior to the
Effective Date under any directors and officers liability insurance policy maintained by the
Company (or, if the Company does not maintain such a policy, by its affiliates) for its
former directors and officers or, at the Company’s election, for the current directors and
officers. If the Company or its affiliates does not otherwise maintain such a policy, then
the Company shall be required to provide the Executive with such a policy, to the extent
available. The policy dollar coverage limits of any such policy shall be not less than the
policy limit under any Company policy in place within the one (1) year prior to the
Effective Date (the “Existing Policy”) or, if less, the policy dollar coverage limit that
can be purchased by the Company for all of its current and former directors and officers at
an annual premium equal to two times the Company’s annual premium for the Existing Policy.



          (c) Subject to Section 15(a) hereof and the Code Section 409A limitations set forth below,
upon the Executive’s execution of a release (in the form attached hereto as Exhibit A) (the
“Release”), the Executive’s cash benefit under Section 9(b)(i) and (ii) shall be paid in a lump sum
cash payment within ten (10) days following a Change in Control that constitutes a “change in
control” as defined under Code Section 409A. If the Change in Control does not satisfy the Code
Section 409A definition, the benefit shall become due upon the Change in Control but shall not
become payable until the first to occur of (i) a Change in Control that constitutes a “change in
control” under Code Section 409A, or (ii) the Executive’s Termination of Employment.
Notwithstanding the foregoing, if the Executive constitutes a “Specified Employee” as defined under
Code Section 409A at the time of the Executive’s Termination of Employment, he shall be entitled to
receive any payments provided for in this Agreement exempt from Code Section 409A. However, any
payments that are not exempt from Code Section 409A shall be suspended until a period of six months
has lapsed from his Termination of Employment or his death, if
earlier, at which time the suspended payments shall be
aggregated and paid in a lump sum, and remaining compensation, if any, shall be paid in accordance
with its regular schedule. Any payment, including amounts suspended under Code Section 409A, made
later than 10 days following the Change in Control (or applicable due date under Section 15(a)
hereof) for whatever reason, shall include interest at the Prime Rate plus two percent, which shall
begin accruing on the 10th day following the Change in Control (or applicable due date under
Section 15(a) hereof).





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     10. Golden Parachute Limit. Payments under this Agreement, if they constitute “golden
parachute” amounts (defined under Section 280G of the Code as compensation that becomes payable or
accelerated due to a Change in Control), when aggregated with any other “golden parachute” amounts
payable under this Agreement or any other plans, agreements or policies of the Company, shall not
exceed the golden parachute cap under Sections 280G and 4999 of the Code.



     11. No Mitigation or Duty to Seek Reemployment. The Executive shall be under no duty
or obligation to seek or accept other employment during the term of this Agreement, or after the
Agreement terminates or after his employment with the Company
terminates, and shall not be required to mitigate the amount of any payments provided for by this Agreement by
seeking employment or otherwise. Payments and provisions of benefits under this Agreement shall
not be reduced or suspended if the Executive accepts other employment, except that Company is not
required to continue any health, welfare or auto benefit payments which duplicate employee benefits
and perquisites received in such other employment.



     12. Stock Options. The Executive’s rights with respect to any options to purchase
Company stock shall be governed by the terms of the agreements pursuant to which such options were
issued; provided that any stock options held by the Executive that are not exercisable shall become
immediately exercisable upon the termination of the Executive’s employment with the Company, other
than a termination of his employment by the Company for Cause. Upon a termination by the Company
of the Executive’s employment for Cause, any stock options held by the Executive that are not
exercisable shall not become exercisable and shall automatically expire.



     13. Non-Competition and Restrictive Covenant. If, during the term that the Executive
is receiving benefits under this Agreement (including the Release),
the Executive violates the terms of this Agreement
 or
Section 8 of the Prior Agreement, which Section 8 shall survive the execution and termination of
this Agreement, or any other non-competition agreement with the
Company (including the Proprietary Information and Inventions
Agreement) (the “Restrictive
Covenants”), the Company’s obligations to the Executive under this Agreement shall automatically
terminate. For purposes of Section 8 of the Prior Agreement, “Payment Completion Period” shall
mean the period ending June 30, 2009, unless the Executive receives Change in Control Benefits
under Section 9, in which case, it shall be the Second Anniversary Date.



     14. Tax Withholding. The Company may withhold from any cash amounts payable to the
Executive under this Agreement to satisfy all applicable Federal, State, local or other income
(including excise) and employment withholding taxes. In the event the Company fails to withhold
such sums for any reason, or withholding is required for any non-cash payments to the Executive,
the Company may require the Executive to promptly remit to the Company sufficient cash to satisfy
all applicable income and employment withholding taxes.



     15. Binding Effect.



          (a) This Agreement shall be binding upon the successors and assigns of the Company. The
Company shall take whatever actions are necessary to ensure that any successor to its operations
(whether by purchase, merger, consolidation, sale of substantially all assets or




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otherwise) assumes
the obligations under this Agreement and shall cause such successor to evidence the assumption of
such obligations in an agreement satisfactory to the Executive. Notwithstanding any other
provisions in this Agreement, if the Company fails to obtain an agreement evidencing the assumption
of the Company’s obligations by any such successor, the Executive shall be entitled to immediate
payment of the compensation provided under this Agreement. For purposes of implementing the
foregoing, the date on which any succession becomes effective shall be deemed to constitute the
date of the Executive’s termination of employment. Notwithstanding the foregoing, if the succession
does not constitute a “Change of Control” as defined under Code Section 409A, the accelerated
compensation payments under this Section 15 shall be suspended until the earlier of a “Change of
Control” as defined under Code Section 409A, or the Executive incurs an actual separation from
service, or, if later, at the end of any additional suspensions as may be required under this Agreement if the Executive is
a “Specified Employee” at the time of separation from service, at which time any suspended
payments, with interest at the Prime Rate plus two percent, accruing from 10 days following the
succession date, shall be paid in accordance with the terms of this Agreement.




          (b) This Agreement shall be binding upon the Executive and shall inure to the benefit of and
be enforceable by the Executive’s legal representatives and heirs. However, the rights of the
Executive under this Agreement shall not be assigned, transferred, pledged, hypothecated or
otherwise encumbered, except by operation of law.




     16. Amendment of Agreement. This Agreement may not be modified or amended except by
instrument in writing signed by the parties hereto. The parties agree that this Agreement may be
amended to comply with applicable law, including, but not limited to, Code Section 409A.



     17. Validity. The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this Agreement, which
shall continue in full force and effect.



     18. Limitation on Rights.



          (a) This Agreement shall not be deemed to create a contract of employment between the Company
and the Executive and shall create no right in the Executive to continue in the Company’s
employment for any specific period of time, or to create any other rights in the Executive or
obligations on the part of the Company, except as set forth herein. This Agreement shall not
restrict the right of the Company to terminate the Executive, or restrict the right of the
Executive to terminate employment.




          (b) The rights of the Executive under this Agreement shall be solely those of an unsecured
general creditor of the Company.




     19. Claims Procedure.



          (a) The administrator for purposes of this Agreement shall be the Company (“Administrator”),
whose address is 47827 Halyard Drive, Plymouth, Michigan 48170, and whose telephone number is (734)
414-6100. The “Named Fiduciary” as defined in Section 402(a)(2) of ERISA, also shall be the
Company. The Company shall have the right to designate




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one or more Company employees as the
Administrator and the Named Fiduciary at any time, and to change the address and telephone number
of the same. The Company shall give the Executive written notice of any change in the
Administrator and Named Fiduciary, or in the address or telephone number of the same.




          (b) The Administrator shall make all determinations as to the right of any person to receive
benefits under the Agreement. Any denial by the Administrator of a claim for benefits by the
Executive (“the claimant”) shall be stated in writing by the Administrator and delivered or mailed
to the claimant within 10 days after receipt of the claim, unless special circumstances require an
extension of time for processing the claim. If such an extension is required, written notice of
the extension shall be furnished to the claimant prior to the
termination of the initial 10-day period. In no event shall such extension exceed a period of
10 days from the end of the initial period. Any notice of denial shall set forth the specific
reasons for the denial, specific reference to pertinent provisions of this Agreement upon which the
denial is based, a description of any additional material or information necessary for the claimant
to perfect the claim, with an explanation of why such material or information is necessary, and any
explanation of claim review procedures, written to the best of the Administrator’s ability in a
manner that may be understood without legal or actuarial counsel.




          (c) A claimant whose claim for benefits has been wholly or partially denied by the
Administrator may request, within 60 days following the date of such denial, in a writing addressed
to the Administrator, a review of such denial. The claimant shall be entitled to submit such
issues or comments in writing or otherwise, as the claimant shall consider relevant to a
determination of the claim, and the claimant may include a request for a hearing in person before
the Administrator. Prior to submitting the request, the claimant shall be entitled to review such
documents as are pertinent to the claim. The claimant may, at all stages of review, be represented
by counsel, legal or otherwise, of the claimant’s choice. All requests for review shall be
promptly resolved. The Administrator’s decision with respect to any such review shall be set forth
in writing and shall be mailed to the claimant not later than 10 days following receipt by the
Administrator of the claimant’s request unless special circumstances, such as the need to hold a
hearing, require an extension of time for processing, in which case the Administrator’s decision
shall be so mailed not later than 20 days after receipt of such request.




          (d) A claimant who has followed the procedure in paragraphs (b) and (c) of this Section, but
who has not obtained full relief on the claim for benefits, may, within 60 days following the
claimant’s receipt of the Administrator’s written decision on review, apply in writing to the
Administrator for binding arbitration of the claim before an arbitrator mutually acceptable to both
parties, the arbitration to be held in Plymouth, Michigan, in accordance with the arbitration rules
of the American Arbitration Association, Commercial Disputes Resolution Procedures, as then in
effect. If the parties are unable to mutually agree upon an arbitrator, then the arbitration
proceedings shall be held before three arbitrators, one of which shall be designated by the
Company, one of which shall be designated by the claimant and the third of which shall be
designated mutually by the first two arbitrators in accordance with the arbitration rules
referenced above. The arbitrator(s) sole authority shall be to interpret and apply the provisions
of this Agreement; the arbitrator(s) shall not change, add to, or subtract from, any of the
Agreement’s provisions. The arbitrator(s) shall have the power to compel attendance of witnesses
at the hearing. Any court having jurisdiction may enter a judgment based upon such




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arbitration.
All decisions of the arbitrator(s) shall be final and binding on the claimant and the Company
without appeal to any court. The Executive and the Company hereby acknowledge that as arbitration
is the exclusive remedy with respect to any grievance hereunder, neither party has the right to
resort to any federal, state or local court or administrative agency concerning breaches of this
Agreement, and the decision of the arbitrator shall be a complete defense to any suit, action or
proceeding instituted in any federal, state or local court or before any administrative agency with
respect to any dispute which is arbitrable as herein set forth.



     20. Legal Fees and Expenses.



          (a) Except as otherwise provided in Section 20(b), in the event any arbitration or litigation
is brought to enforce any provision of this Agreement and the Executive prevails, then the
Executive shall be entitled to recover from the Company the Executive’s reasonable costs and
reasonable expenses of such arbitration or litigation, including reasonable fees and disbursements
of counsel (both at trial and in appellate proceedings), (“Expenses). Except as otherwise provided
in Section 20(b), if the Company prevails, then each party shall be responsible for its/his
respective costs, expenses and attorneys fees, and the costs of the arbitrator shall be equally
divided.




          (b) Except to the extent prohibited by applicable law, in the event any arbitration or
litigation is brought to enforce any provision of Section 9 of this Agreement, the Company shall
advance to the Executive one half of the amount of the Executive’s Expenses and shall pay the costs
of the arbitrator. The Executive shall be obligated to repay such advances to the Company only if
the Company prevails in the arbitration or litigation.




          (c) In the event that it is determined that the Executive is entitled to compensation, legal
fees and expenses hereunder, the Executive also shall be entitled to interest thereon, from the
date payment thereof was due, payable to the Executive at the Prime Rate of interest plus two
percent.




          (d) For purposes of this Section 20, “prevails” means that the Executive receives an award of
benefits in such arbitration or litigation in excess of the amount offered to be paid by the
Company to the Executive prior to the initiation of the arbitration or litigation. For purposes of
determining the date when legal fees and expenses are payable, such amounts are not due until 30
days after notification to the Company of such amounts.




          (e) Notwithstanding the foregoing, to the extent that the payment by the Company of the
Executive’s Expenses more than two calendar years following the calendar year of the Executive’s
Termination of Employment (the “Outside Date”) would cause the payments under this Agreement to not
be exempt from Code Section 409A, no such payments after the Outside Date shall be payable
hereunder.




     21. Nonalienation of Benefits. Except in so far as this provision may be contrary to
applicable law, no sale, transfer, alienation, assignment, pledge, collateralization or attachment
of any benefits under this Agreement shall be valid or recognized by the Company.



     22. ERISA. This Agreement is an unfunded compensation arrangement for a member of a
select group of the Company’s management or highly compensated employees and



12









 





any exemptions under
ERISA, as applicable to such an arrangement, shall be applicable to this Agreement.



     23. Reporting and Disclosure. The Company, from time to time, shall provide
government agencies with such reports concerning this Agreement as may be required by law, and the
Company shall provide the Executive with such disclosure concerning this Agreement as may be
required by law or as the Company may deem appropriate.



     24. Notices. Any notice required or permitted by this Agreement shall be in writing,
sent by registered or certified mail, return receipt requested, addressed to the Board and the
Company at the Company’s then principal office, or to the Executive at the Executive’s last address
on file with the Company, as the case may be, or to such other address or addresses as any party
hereto may from time to time specify in writing for the purpose of this Agreement in a notice given
to the other parties in compliance with this section. Notices shall be deemed given when received.



     25. Miscellaneous/Severability. A waiver of the breach of any term or condition of
this Agreement shall not be deemed to constitute a waiver of any subsequent breach of the same or
any other term or condition. This Agreement is intended to be performed in accordance with, and
only to the extent permitted by, all applicable laws, ordinances, rules and regulations. To the
extent that any provision or benefit under this Agreement is not deemed to be in accordance with
any applicable law, ordinance, rule or regulation, the noncomplying provision shall be construed,
or benefit limited, to the extent necessary to comply with all applicable laws, ordinances and
regulations and any such provision or benefit shall not affect the validity of any other provision
or benefit provided by this Agreement. The headings in this Agreement are inserted for convenience
of reference only and shall not be a part of or control or affect the meaning of any provision
hereof.



     26. Governing Law. To the extent not preempted by Federal law, this Agreement shall
be governed and construed in accordance with the laws of the State of Michigan, without regard to
its conflicts of law rules.



     27. Entire Agreement. This document represents the entire agreement and understanding
of the parties with respect to the subject matter of the Agreement (other than Section 8 of the
Prior Agreement, as amended, and the Company’s Proprietary Information and Inventions Agreement,
which shall remain in full force and effect after the execution of this Agreement) and it may not
be altered or amended except by an agreement in writing that is executed by both parties to this
Agreement. Specifically, this Agreement supersedes any compensation or severance pay provisions in
the Severance Agreement, the Prior Agreement or the Company’s documented severance policy, if any.



13









 





     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year
first written above.



	 	 	 	 	 	 	 
	 	 	PERCEPTRON, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Harry T. Rittenour 	 	 
	 

	 	 	 	 

Harry T. Rittenour,
President and Chief Executive Officer
 
	 	 
	 
	 	/s/ A. A. Pease 	 	 
	 	 	 	 	 
	 	 	ALFRED A. PEASE	 	 







14









 










EXHIBIT A




RELEASE AGREEMENT




     THIS AGREEMENT (“Agreement”) is made by and between Alfred A. Pease (“Employee”) and
Perceptron, Inc. (the “Company”) (each a “Party” and, collectively, the “Parties”).



RECITALS




     A. [Employee has terminated employment with the Company, effective                     , ___.]



     B. Employee has been given the opportunity to review this Agreement, to consult with legal
counsel, and to ascertain his rights and remedies.



     C. Employee and Company, without any admission of liability, desire to settle with finality,
compromise, dispose of, and release any and all claims and demands asserted or which could be
asserted arising out of Employee’s employment at and separation from Company.



     In consideration of the foregoing and of the promises and mutual covenants contained herein
and of the good and valuable consideration set forth in that certain Employment and Amended and
Restated Severance Agreement, made as of January ___, 2008, between the Company and Employee (the
“Employment Agreement”), including the payment of the Supplemental Compensation (as defined in the
Employment Agreement), it is hereby agreed between Employee and Company as follows:



AGREEMENT




     1. Employee hereby releases, waives and discharges any and all manner of action, causes of
action, claims, rights, charges, suits, damages, debts, demands, obligations, attorneys fees, and
any and all other liabilities or claims of whatsoever nature, whether in law or in equity, known or
unknown, including, but not limited to, age discrimination under the Age Discrimination in
Employment Act of 1967 (as amended), employment discrimination prohibited by other federal, state
or local laws, and any other claims, which Employee has claimed or may claim or could claim in any
local, state or federal or other forum, against Company, its directors, officers, employees,
agents, attorneys, successors and assigns as a result of or relating to Employee’s employment at
and separation from Company and as an officer of Company as a result of any acts or omissions by
Company or any of its directors, officers, employees, agents, attorneys, successors or assigns
(“Covered Acts or Omissions”) which occurred prior to the date of this Agreement; excluding only
those for indemnification under the Company’s articles of incorporation, bylaws or applicable law
by reason of his service as an officer or director of the Company (“Company Indemnification
Obligations”), those arising under the Employment Agreement and those arising under Stock Option
Agreements between the Company and the Employee.



A-1









 





     2. The Company, for itself and for its directors, officers, employees, agents, attorneys,
successors and assigns, hereby releases, waives and discharges any and all manner of action, causes
of action, claims, rights, charges, suits, damages, debts, demands, obligations, attorneys fees,
and any and all other liabilities or claims of whatsoever nature, whether in law or in equity,
known or unknown, which the Company has claimed or may claim or could claim in any local, state or
federal or other forum, against Employee, as a result of or relating to Employee’s employment at
and separation from Company and as an officer of Company as a result of any acts or omissions by
the Executive which occurred prior to the date of this Agreement; excluding only those arising
under the Employment Agreement, Section 8 of the employment agreement dated February 14, 1996
between the Parties, the Proprietary Information and Invention Agreement dated February 14, 1996
between the Parties and Stock Option Agreements between the Parties, those arising in connection
with Company Indemnification Obligations or those arising from the Employee’s fraud, malfeasance,
willful misconduct or gross negligence. Notwithstanding the foregoing, nothing in this Agreement
shall be deemed a waiver of any rights or claims that the Company may have under any insurance
policy or against any third party, other than the Employee.



     3. Employee agrees to immediately return to Company all property, assets, manuals, materials,
information, notes, reports, agreements, memoranda, customer lists, formulae, data, know-how,
inventions, trade secrets, processes, techniques, and all other assets, materials and information
of any kind or nature, belonging or pertaining to Company (“Company Information and Property”),
including, but not limited to, computer programs and diskettes or other media for electronic
storage of information containing Company Information and Property, in Employee’s possession, and
Employee shall not retain copies of any such Company Information and Property; and provided that
Employee may retain his Company provided cell phone and laptop computer and peripherals as provided
in Section 7(k) of the Employment Agreement. Employee further agrees that from and after the date
hereof he will not remove from Company’s offices any Company Information and Property, nor retain
possession or copies of any Company Information and Property.



     4. Employee agrees that he shall never make any statement that negatively affects the goodwill
or good reputation of the Company, or any officer or director of Company, except as required by
law, and except that such statements may be made to members of the Board of Directors of the
Company.



     5. The Company, for itself and for members of its Board of Directors and officers, agrees that
it shall never make any statement that negatively affects the good reputation of Employee, except
as may be required by law, and except that such statements may be made to members of the Board of
Directors or officers of the Company.



     6. Employee covenants and agrees that he shall never commence or prosecute, or knowingly
encourage, promote, assist or participate in any way, except as required by law, in the
commencement or prosecution, of any claim, demand, action, cause of action or suit of any nature
whatsoever against Company or any officer, director, employee or agent of Company (“Covered
Litigation”) that is based upon any claim, demand, action, cause of action or suit released
pursuant to this Agreement or involving or based upon the Covered Acts and Omissions.



A-2









 





     7. The Company, for itself and for members of its Board of Directors and officers, covenants
and agrees that it shall never commence or prosecute, or knowingly encourage, promote, assist or
participate in any way, except as required by law, in the commencement or prosecution, of any
claim, demand, action, cause of action or suit of any nature whatsoever against Employee (“Covered
Litigation”) that is based upon any claim, demand, action, cause of action or suit released
pursuant to this Agreement.



     8. The Parties acknowledge that they have read this Agreement carefully and understand all of
its terms.



     9. The Parties acknowledge that they were advised to consult with an attorney and did so prior
to executing this Agreement.



     10. Employee understands and agrees that he has been given twenty-one (21) days within which
to consider this Agreement.



     11. Employee understands and agrees that he may revoke this Agreement for a period of seven
(7) calendar days following the execution of this Agreement (the “Revocation Period”) and any
payments or agreements conditioned upon his signing this Agreement shall not be paid until the
Revocation Period expires and such payments shall not be required to be paid and such agreements
shall be deemed revoked if this Agreement is revoked. This Agreement is not effective until this
revocation period has expired. Employee understands that any revocation, to be effective, must be
in writing and either (a) postmarked within seven (7) days of execution of this Agreement and
addressed to David Geiss, Vice President and General Counsel, Perceptron, Inc., 47827 Halyard
Drive, Plymouth, Michigan 48170 or (b) hand delivered within seven (7) days of execution of this
Agreement to David Geiss, Vice President and General Counsel, Perceptron, Inc., 47827 Halyard
Drive, Plymouth, Michigan 48170. Employee understands that if revocation is made by mail, mailing
by certified mail, return receipt requested, is recommended to show proof of mailing.



     12. In agreeing to sign this Agreement and separate from Company, Employee is doing so
completely voluntarily and of his own free-will and without any encouragement or pressure from
Company and agrees that in doing so he has not relied on any oral statements or explanations made
by Company or its representatives.



     13. Both Parties agree not to disclose the terms of this Agreement to any third party, except
as is required by law, or as is necessary for purposes of securing counsel from either parties’
attorneys or accountants.



     14. This Agreement shall not be construed as an admission of wrongdoing by either Party.



     15. This Agreement contains the entire agreement between Employee and Company regarding the
matters set forth herein. Any modification of this Agreement must be made in writing and signed by
Employee and each of the entities constituting the Company.



     16. This Agreement shall be governed by and construed in accordance with the domestic laws of
the State of Michigan, without giving effect to any choice of law or conflict of



A-3









 







law provision or rule (whether of the State of Michigan or any other jurisdiction) that would
cause the application of the laws of any jurisdiction other than the State of Michigan.



     17. In the event any provision of this Agreement or portion thereof is found to be wholly or
partially invalid, illegal or unenforceable in any judicial proceeding, then such provision shall
be deemed to be modified or restricted to the extent and in the manner necessary to render the same
valid and enforceable, or shall be deemed excised from this Agreement, as the case may require, and
this Agreement shall be construed and enforced to the maximum extent permitted by law, as if such
provision had been originally incorporated herein as so modified or restricted, or as if such
provision had not been originally incorporated herein, as the case may be.



     18. If there is a breach or threatened breach of the provisions of this Agreement, either
Party may, in addition to other available rights and remedies, apply to any court of competent
jurisdiction for specific performance and/or injunctive relief in order to enforce, or prevent any
violation of, any of the provisions of this Agreement.



     The Parties have entered into
this Agreement as of this               
       day of          
           ,        
            .



	 	 	 	 	 	 	 
	 	 	PERCEPTRON, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 	 	ALFRED A. PEASE	 	 







A-4












 





EXECUTION COPY




RELEASE AGREEMENT




     THIS AGREEMENT (“Agreement”) is made by and between Alfred A. Pease (“Employee”) and
Perceptron, Inc. (the “Company”, which shall include the Company’s direct and indirect subsidiaries
for purposes of this Agreement”) (each a “Party” and, collectively, the “Parties).



RECITALS




     A. Employee has retired from his employment with the Company as Chairman of the Board,
President and Chief Executive Officer, effective January 21, 2008 (the “Effective Date”), although
he will continue as a part-time employee of the Company for periods thereafter.



     B. Employee has been given the opportunity to review this Agreement, to consult with legal
counsel, and to ascertain his rights and remedies.



     C. Employee and Company, without any admission of liability, desire to settle with finality,
compromise, dispose of, and release any and all claims and demands asserted or which could be
asserted arising out of Employee’s employment at the Company and retirement as Chairman of the
Board, President and Chief Executive Officer of the Company.



     In consideration of the foregoing and of the promises and mutual covenants contained herein
and of the good and valuable consideration set forth in that certain Employment and Amended and
Restated Severance Agreement, made as of January 21, 2008, between the Company and Employee (the
“Employment Agreement”), it is hereby agreed between Employee and Company as follows:



AGREEMENT




     1. Employee hereby releases, waives and discharges any and all manner of action, causes of
action, claims, rights, charges, suits, damages, debts, demands, obligations, attorneys fees, and
any and all other liabilities or claims of whatsoever nature, whether in law or in equity, known or
unknown, including, but not limited to, age discrimination under the Age Discrimination in
Employment Act of 1967 (as amended), employment discrimination prohibited by other federal, state
or local laws, and any other claims, which Employee has claimed or may claim or could claim in any
local, state or federal or other forum, against Company, its directors, officers, employees,
agents, attorneys, successors and assigns as a result of or relating to Employee’s employment at
the Company and as an officer of Company and his retirement as Chairman of the Board, President and
Chief Executive Officer, or any comparable position with any direct or indirect subsidiary of the
Company, as a result of any acts or omissions by Company or any of its directors, officers,
employees, agents, attorneys, successors or assigns (“Covered Acts or Omissions”) which occurred
prior to the date of this Agreement; excluding only those for indemnification under the Company’s
articles of incorporation, bylaws or applicable law by reason of his service as an officer or
director of the Company, or any comparable position with any direct or indirect subsidiary of the
Company, (“Company













 







Indemnification Obligations”), those arising under the Employment Agreement and those arising
under Stock Option Agreements between the Company and the Employee.



     2. The Company, for itself and for its directors, officers, employees, agents, attorneys,
successors and assigns, hereby releases, waives and discharges any and all manner of action, causes
of action, claims, rights, charges, suits, damages, debts, demands, obligations, attorneys fees,
and any and all other liabilities or claims of whatsoever nature, whether in law or in equity,
known or unknown, which the Company has claimed or may claim or could claim in any local, state or
federal or other forum, against Employee, as a result of or relating to Employee’s employment at
and separation from Company and as an officer of Company, or any comparable position with any
direct or indirect subsidiary of the Company, as a result of any acts or omissions by the Executive
which occurred prior to the date of this Agreement; excluding only those arising under the
Employment Agreement, Section 8 of the employment agreement dated February 14, 1996 between the
Parties, the Proprietary Information and Invention Agreement dated February 14, 1996 between the
Parties and Stock Option Agreements between the Parties, those arising in connection with Company
Indemnification Obligations or those arising from the Employee’s fraud, malfeasance, willful
misconduct or gross negligence. Notwithstanding the foregoing, nothing in this Agreement shall be
deemed a waiver of any rights or claims that the Company may have under any insurance policy or
against any third party, other than the Employee.



     3. Employee agrees to immediately return to Company all property, assets, manuals, materials,
information, notes, reports, agreements, memoranda, customer lists, formulae, data, know-how,
inventions, trade secrets, processes, techniques, and all other assets, materials and information
of any kind or nature, belonging or pertaining to Company (“Company Information and Property”),
including, but not limited to, computer programs and diskettes or other media for electronic
storage of information containing Company Information and Property, in Employee’s possession, and
Employee shall not retain copies of any such Company Information and Property, except as otherwise
agreed by the President of the Company in writing; and provided that Employee may retain his
Company provided cell phone and laptop computer and peripherals as provided in Section 7(k) of the
Employment Agreement. Employee further agrees that from and after the date hereof he will not
remove from Company’s offices any Company Information and Property, nor retain possession or copies
of any Company Information and Property, except as otherwise agreed by the President of the Company
in writing.



     4. Employee agrees that he shall never make any statement that negatively affects the goodwill
or good reputation of the Company, or any officer or director of Company, except as required by
law, and except that such statements may be made to members of the Board of Directors of the
Company.



     5. The Company, for itself and for members of its Board of Directors and officers, agrees that
it shall never make any statement that negatively affects the good reputation of Employee, except
as may be required by law, and except that such statements may be made to members of the Board of
Directors or officers of the Company.



     6. Employee covenants and agrees that he shall never commence or prosecute, or knowingly
encourage, promote, assist or participate in any way, except as required by law, in the



2









 







commencement or prosecution, of any claim, demand, action, cause of action or suit of any
nature whatsoever against Company or any officer, director, employee or agent of Company (“Covered
Litigation”) that is based upon any claim, demand, action, cause of action or suit released
pursuant to this Agreement or involving or based upon the Covered Acts and Omissions.



     7. The Company, for itself and for members of its Board of Directors and officers, covenants
and agrees that it shall never commence or prosecute, or knowingly encourage, promote, assist or
participate in any way, except as required by law, in the commencement or prosecution, of any
claim, demand, action, cause of action or suit of any nature whatsoever against Employee (“Covered
Litigation”) that is based upon any claim, demand, action, cause of action or suit released
pursuant to this Agreement.



     8. The Parties further acknowledge that they have read this Agreement carefully and understand
all of its terms.



     9. The Parties acknowledge that they were advised to consult with an attorney and did so prior
to executing this Agreement.



     10. Employee understands and agrees that he has been given twenty-one (21) days within which
to consider this Agreement.



     11. Employee understands and agrees that he may revoke this Agreement for a period of seven
(7) calendar days following the execution of this Agreement (the “Revocation Period”) and any
payments or agreements conditioned upon his signing this Agreement, including the Employment
Agreement, shall not be paid until the Revocation Period expires and such payments shall not be
required to be paid and such agreements shall be deemed revoked if this Agreement is revoked. This
Agreement is not effective until this revocation period has expired. Employee understands that any
revocation, to be effective, must be in writing and either (a) postmarked within seven (7) days of
execution of this Agreement and addressed to David Geiss, Vice President and General Counsel,
Perceptron, Inc., 47827 Halyard Drive, Plymouth, Michigan 48170 or (b) hand delivered within seven
(7) days of execution of this Agreement to David Geiss, Vice President and General Counsel,
Perceptron, Inc., 47827 Halyard Drive, Plymouth, Michigan 48170. Employee understands that if
revocation is made by mail, mailing by certified mail, return receipt requested, is recommended to
show proof of mailing.



     12. In agreeing to sign this Agreement and separate from Company, Employee is doing so
completely voluntarily and of his own free-will and without any encouragement or pressure from
Company and agrees that in doing so he has not relied on any oral statements or explanations made
by Company or its representatives.



     13. Both Parties agree not to disclose the terms of this Agreement to any third party, except
as is required by law, or as is necessary for purposes of securing counsel from either Parties’
attorneys or accountants.



     14. This Agreement shall not be construed as an admission of wrongdoing by either Party.



3









 





     15. This Agreement contains the entire agreement between Employee and Company regarding the
matters set forth herein. Any modification of this Agreement must be made in writing and signed by
Employee and each of the entities constituting the Company.



     16. This Agreement shall be governed by and construed in accordance with the domestic laws of
the State of Michigan, without giving effect to any choice of law or conflict of law provision or
rule (whether of the State of Michigan or any other jurisdiction) that would cause the application
of the laws of any jurisdiction other than the State of Michigan.



     17. In the event any provision of this Agreement or portion thereof is found to be wholly or
partially invalid, illegal or unenforceable in any judicial proceeding, then such provision shall
be deemed to be modified or restricted to the extent and in the manner necessary to render the same
valid and enforceable, or shall be deemed excised from this Agreement, as the case may require, and
this Agreement shall be construed and enforced to the maximum extent permitted by law, as if such
provision had been originally incorporated herein as so modified or restricted, or as if such
provision had not been originally incorporated herein, as the case may be.



     18. If there is a breach or threatened breach of the provisions of this Agreement, either
Party may, in addition to other available rights and remedies, apply to any court of competent
jurisdiction for specific performance and/or injunctive relief in order to enforce, or prevent any
violation of, any of the provisions of this Agreement.



     The Parties have entered into this Agreement as of this 21st day of January, 2008.



	 	 	 	 	 
	 	PERCEPTRON, INC.

 	 
	 	By:  	/s/ Harry T. Rittenour
 	 
	 	 	Name:  	Harry T. Rittenour 	 
	 	 	Title:  	President and Chief Executive Officer 	 
	 



	 	 	 	 	 
	 	 	 
	 	
/s/ A. A. Pease
 	 
	 	ALFRED A. PEASE 	 
	 	 	 
	 




4