PERCEPTRON,
INC.

    SEVERANCE
AGREEMENT - EXECUTIVE

     

    THIS SEVERANCE AGREEMENT,
dated as of December 18, 2008 (the “Agreement”), is between Perceptron, Inc.
(the “Company”) and Mark S. Hoefing, who is currently employed by the Company in
the position of Senior Vice President – Industrial Business Unit (the
“Executive”).  The parties acknowledge that the Company and the
Executive previously entered into a severance agreement dated September 26, 2005
(the “Prior Agreement”), and the Company and the Executive agree that this
Agreement supersedes and renders void the Prior Agreement in all
respects.

     

    1.           Operation
of Agreement.  This Agreement
sets forth the severance compensation that the Company shall pay the Executive
if the Executive’s employment with the Company terminates under one of the
applicable provisions set forth herein.  As used in this Agreement,
employment with the Company shall be deemed to include employment with a
subsidiary of the Company.  The severance provided under this
Agreement is intended either to be exempt from or comply with the provisions of
Section 409A of the Internal Revenue Code of 1986, as amended (the
“Code”).

     

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

     

    (a)           “Administrator” is
defined in Section 15(a).

     

    (b)           “Agreement” is defined
in the preamble.

     

    (c)           “Benefit Continuation
Period” is defined in Section 3(b)(iii).

     

    (d)           “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,

     

    (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, after written notice is
delivered identifying the failure, and it is not cured within 10 days following
receipt of such notice,

     

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

     

    (vi)           breach
of the Proprietary Information and Invention Agreement or the Perceptron
Executive Agreement Not to Compete, or


    
      
         


      

      
        
        

        
          

        

      

      
         


      

    

     

    (vii)           prior
to a Change in Control, engaging in activities detrimental to the interests of
the Company that have a demonstrable adverse effect on the Company.

     

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

     

    (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.

     

    (f)           “Change in Control Benefit
Continuation Period” is defined in Section 4(c)(iii).

     

    (g)           “Change in Control Severance
Benefits” is defined in Section 4(c).

     

    (h)           “Claimant” is defined
in Section 15(b).

     

    (i)           “Code” is defined in
Section 1.

     

    (j)           “Company” is defined
in the preamble.

     

    (k)           “Disability” shall
mean the Executive’s inability to substantially perform the Executive’s duties
for such period as would qualify the Executive for benefits under the long-term
disability insurance policy provided by the Company or, if no such policy is
provided, the Executive’s total and permanent disability which prevents the
Executive from performing for a continuous period exceeding six months the
duties assigned to the Executive.  The determination of Disability
shall be made by a medical board-certified physician mutually acceptable to the
Company and the Executive (or the Executive’s legal representative, if one has
been appointed), and if the parties cannot mutually agree to the selection of a
physician, then each party shall select such a physician and the two physicians
so selected shall select a third physician who shall make this
determination.

     

    (l)           “Executive” is defined
in the preamble.


    
      
         


      

      
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    (m)           “Good Reason” is
defined in Section 4(a)(ii).

     

    (n)           “Outside Date” is
defined in Section 16(e).

     

    (o)           “Perceptron Executive
Agreement Not to Compete” is defined in Section 23.

     

    (p)           “Prime Rate” is
defined in Section 3(c).

     

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

     

    (r)           “Proprietary Information and
Invention Agreement” shall mean the Proprietary Information and Invention
Agreement dated February 28, 2001 between the parties to this
Agreement.

     

    (s)           “Regular Severance
Benefits” is defined in Section 3(b).

     

    (t)           “Release” is defined
in Sections 3(b) and 4(c).

     

    (u)           “Termination of
Employment” is defined in Sections 3 and 4.

     

    3.           Termination
of Employment.  The Executive
shall be entitled to the Regular Severance Benefits (as defined in Section 3(b)
below) set forth in this Section 3 if the Executive has incurred a Termination
of Employment.  The severance benefit provided under this Section 3 is
in lieu of cash severance payments offered under the Company’s documented
severance policy, if any.

     

    (a)           For
purposes of Section 3 of the Agreement, “Termination of Employment” shall be
defined as the Executive’s involuntary termination by the Company for any reason
other than death, Disability or Cause; provided such termination constitutes a
“separation from service” as defined in Code Section 409A.

     

    (b)           Upon
satisfaction of the requirements set forth in this Section 3, upon the
Executive’s execution of a release (in the form attached hereto as Exhibit A)
(the “Release”), the Executive shall be entitled to (the “Regular Severance
Benefits”):

     

    (i)           A
cash severance benefit equal to one-half of the Executive’s current annual base
salary, as in effect at the time of the Termination of Employment;

     

    (ii)           A
prorated portion of any bonus that the Executive would have earned for the year
of termination had the Executive been employed by the Company at the end of the
applicable bonus period;


    
      
         


      

      
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    (iii)           Subject
to Section 6, continuation of Company-provided health (including vision and
dental, if provided by the Company at the date of termination) and welfare
benefits (including executive life insurance coverage, if provided by the
Company to the Executive at the date of termination) for six months or, if
earlier, the death of the Executive (the “Benefit Continuation Period”), at the
same level and on comparable terms as provided by the Company to its employees
from time to time during this period, with the Company paying any monthly
premiums otherwise required to be paid by the Executive to continue such
coverage.  Health benefits provided during the 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 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 the premiums do not exceed
the greater of (i) two times the annual premium paid by the Company for such
coverage at the date of termination 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.  Welfare benefits (other than health
benefits) shall be continued only to the extent permitted under the terms of
such plans;

     

    (iv)           Continuation
of the Executive’s then current car benefit for six months or, if earlier, the
death of the Executive, in accordance with the Company car policy in effect at
the time of termination.

     

    (c)           The
Executive’s cash severance benefit under Section 3(b)(i) shall be payable in the
same manner as the Executive’s base salary and the pro rata share of any bonus
under Section 3(b)(ii) shall be payable at the time set forth in the bonus
program, or, in each case, such earlier time as is required to avoid such
payments being subject to Section 409A of the Code.  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 and shall receive any payments
that are not exempt from Code Section 409A until the attainment of any
applicable Code Section 409A cap, at which time, the remaining non-exempt
payments shall be suspended.  When a period of six months has lapsed
from the Executive’s Termination of Employment or, if earlier, the death of the
Executive, 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 3 or Section 11(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 3 or Section 11(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 Sections 3, 4, 11(a) or 16 hereof).


    
      
         


      

      
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    4.           Termination
of Employment Following a Change in Control.  Subject to
Section 11(a) hereunder, the Executive shall be entitled to the Change in
Control Severance Benefits (as defined in Section 4(c) below) set forth in this
Section 4, in lieu of the severance benefits the Executive is entitled to under
Section 3 of this Agreement, if there has been a Change in Control and the
Executive has incurred a Termination of Employment.  The severance
benefit provided under this Section 4 is in lieu of cash severance payments
offered under the Company’s documented severance policy, if any.

     

    (a)           For
purposes of Section 4 of the Agreement, “Termination of Employment” shall be
defined as:

     

    (i)           The
Executive’s involuntary termination by the Company for any reason other than
death, Disability or Cause; provided such termination constitutes a “separation
from service” as defined in Code Section 409A; or

     

    (ii)           The
Executive’s termination for “Good Reason,” defined as the occurrence of any of
the following events without the Executive’s written consent, if the Executive
terminates employment within one (1) year following the occurrence of such
event:

     

    (A)             material
diminution in the Executive’s position, duties, responsibilities or status with
the Company from his position, duties, responsibilities or status with the
Company immediately prior to the Change in Control;

     

    (B)             Any
material diminution in the Executive’s base salary in effect immediately prior
to the Change in Control, which shall be a reduction in such base salary of five
(5%) percent or more unless a greater reduction is required by Code Section 409A
to constitute an “involuntary separation from service”;

     

    (C)             A
material required relocation of the Executive’s principal place of employment
which shall be a relocation of more than 50 miles from the Executive’s place of
employment prior to the Change in Control unless a relocation of a greater
distance is required by Code Section 409A to constitute an “involuntary
separation from service”; or

     

    (D)             The
Company’s breach of any provision in this Agreement.

     

    (b)           The
Executive who believes the Executive is entitled to a Termination of Employment
for Good Reason, as defined in Section 4 above, shall provide written notice of
the existence of the condition to the Company within 90 days after existence of
the condition and shall provide the Company with a period of at least 30 days in
which to cure the condition and not be required to pay the Good Reason
severance.  The submission of such written notification by the
Executive shall not constitute “Cause” for the Company to terminate the
Executive as defined under Section 2(a) hereof.  If the Executive’s
request for a Good Reason Termination of Employment is denied under both the
request and appeal procedures set forth in paragraphs (b) and (c) of Section 15
hereof, then the parties shall use their best efforts to resolve the claim
within 90 days after the claim is submitted to arbitration pursuant to Section
15(d).


    
      
         


      

      
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    (c)           Upon
satisfaction of the requirements set forth in Sections 4 or 11(a) hereof and
with respect to any one or more Changes in Control that may occur during the
term of this Agreement, upon the Executive’s execution of a release (in the form
attached hereto as Exhibit A) (the
“Release”), the Executive shall be entitled to (the “Change in Control Severance
Benefits”):

     

    (i)           A
cash severance benefit equal to one times the Executive’s current annual base
salary, as in effect at the time of the Change in Control;

     

    (ii)           A
prorated portion of the Executive’s target bonus for the year of termination,
based on the number of days worked in the year of termination;

     

    (iii)           Subject
to Section 6, continuation of Company-provided health (including vision and
dental, if provided by the Company immediately prior to the Change in Control)
and welfare benefits (including executive life insurance coverage, if provided
by the Company to the Executive immediately prior to the Change in Control) for
one year or, if earlier, the death of the Executive (the “Change in Control
Benefit Continuation Period”), in each case, at the same level and on comparable
terms as provided by the Company to the Executive immediately prior to the
Change in Control, with the Company paying any monthly premiums otherwise
required to be paid by the Executive to continue such
coverage.  Health benefits provided during the Change in Control
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 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 the premiums do not exceed
the greater of (i) two times the annual premium paid by the Company for such
coverage at the date of termination or (ii) two times the amount of the COBRA
premium under the Company’s group health plan for coverage comparable to that
elected by the Executive, (A) at the time of the Change of Control or (B) at the
time of the required payment, whichever is greater.  Any continuation
of group health plan coverage under this paragraph shall run concurrently with
the period  of required COBRA continuation coverage under the
Code.  Welfare benefits (other than health benefits) shall be
continued only to the extent permitted under the terms of such
plans;

     

    (iv)           Continuation
of the Executive’s then current car benefit for one year or, if earlier, the
death of the Executive, in accordance with the Company car policy in effect at
the time of termination.


    
      
         


      

      
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    (v)           Continued
coverage, during the six (6) years following the Executive’s termination for his
actions or omissions as an officer and, if applicable, director of the Company
prior to the date of termination of his employment, 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
Executive’s termination of employment (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.

     

    (d)           Subject
to Section 11(a) hereof, and the Code Section 409A limitations set forth below,
the Executive’s cash severance benefit under Section 4(c)(i) and (ii) shall be
paid in a lump sum cash payment within ten (10) days following the Executive’s
Termination of Employment, as defined in Section 4.  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 4 or Section 11(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 4 or Section 11(a) hereof).  Notwithstanding
the foregoing, if at the time of Termination of Employment the Executive
constitutes a “Specified Employee”, as defined in Code Section 409A, commencing
at Termination of Employment, the Executive shall receive the benefits that are
exempt from Code Section 409A and shall receive the non-exempt payments until
attainment of any applicable Code Section 409A cap, at which time the remaining
non-exempt payments shall be suspended.  When a period of six months
has lapsed from the Executive’s Termination of Employment or, if earlier, the
death of the Executive, 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.

     

    (e)           Section
4 of this Agreement shall terminate upon the first of the following events to
occur:

     

    (i)           Three
years from the date hereof if a Change in Control has not occurred within such
three-year period;

     

    (ii)           Termination
of the Executive’s employment with the Company prior to a Change in Control,
provided, however, if there is a Change in Control within six months after the
termination of the Executive’s employment with the Company, other than a
termination due to the Executive’s death or Disability, an involuntary
termination by the Company for Cause or a termination of employment by the
Executive, then the Agreement shall not be deemed to have terminated and the
Executive shall be entitled to receive the Change in Control Severance Benefits
provided in Section 4, less any Regular Severance Benefits the Executive has
been paid under Section 3, in lieu of the severance benefits the Executive is
entitled to under Section 3;

     

    (iii)           The
expiration of two years following a Change in Control;


    
      
         


      

      
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    (iv)           Termination
of the Executive’s employment with the Company following a Change in Control due
to the Executive’s death or Disability;

     

    (v)           Termination
of the Executive’s employment by the Company for Cause following a Change in
Control; or

     

    (vi)           Termination
of employment by the Executive for other than Good Reason following the date of
a Change in Control.

     

    Unless
Section 4 of this Agreement has first terminated under clauses (ii) through (vi)
hereof, commencing on the third anniversary of the date of this Agreement, and
on each one-year anniversary thereafter, Section 4 of this Agreement shall be
extended for one additional year, unless at least 180 days prior to any such
anniversary, the Company notifies the Executive in writing that it shall not
extend the term of Section 4 of this Agreement.

     

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

     

    6.           No
Mitigation or Duty to Seek Reemployment.  The Executive
shall be under no duty or obligation to seek or accept other employment after
Termination of Employment and shall not be required to mitigate the amount of
any payments provided for by this Agreement by seeking employment or
otherwise.  The Regular Severance Benefit and Change in Control
Severance Benefits payments shall not be reduced or suspended if the Executive
accepts other employment, except that Company is not required to continue any
health or welfare benefit payments which duplicate employee benefits and
perquisites received in such other employment.

     

    7.           Pro Rata
Share of Bonus.  For purposes of
this Agreement, a pro rata share of any bonus or target bonus shall mean the
total bonus or target bonus payable multiplied by a fraction, the numerator of
which is the number of days in the applicable bonus period prior to the date of
the Executive’s Termination of Employment, Disability or death and the
denominator of which is the number of days in the bonus period.

     

    8.           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.

     

    9.           Non-Competition
and Restrictive Covenant.  If, during the
term that the Executive is receiving benefits under this Agreement, the
Executive violates the terms of this Agreement, the Release, the Proprietary
Information and Invention Agreement, or the Perceptron Executive Agreement Not
to Compete or any other non-competition agreement with the Company, the
Company’s obligations to the Executive under this Agreement shall automatically
terminate.


    
      
         


      

      
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    10.           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 provided in connection with the Executive’s Termination of Employment,
the Company may require the Executive to promptly remit to the Company
sufficient cash to satisfy all applicable income and employment withholding
taxes.

     

    11.           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 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 severance compensation provided under Section 4,
irrespective of whether the Executive’s employment has then
terminated.  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 compensation payments under Section 4 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 Section
4 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 Section 4.

     

    (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.

     

    12.           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.

     

    13.           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.

     

    14.           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.


    
      
         


      

      
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    (b)           Subject
to the exception for cash severance payments under the Company’s documented
severance policy referenced in Sections 3 and 4 above, this Agreement shall not
be construed to exclude the Executive from participation in any other
compensation or benefit programs in which the Executive is specifically eligible
to participate either prior to or following the execution of this Agreement, or
any such programs that generally are available to other executive personnel of
the Company, nor shall it affect the kind and amount of other compensation to
which the Executive is entitled.

     

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

     

    15.           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 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.


    
      
         


      

      
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    (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 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.

     

    16.           Legal Fees and
Expenses.

     

    (a)           Except
as otherwise provided in Section 16(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 16(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 4 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.


    
      
         


      

      
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    (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 16, “prevails” means that the Executive receives an
award of severance 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
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.

     

    17.           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.

     

    18.           ERISA.  This Agreement is
an unfunded compensation arrangement for a member of a select group of the
Company’s management and any exemptions under ERISA, as applicable to such an
arrangement, shall be applicable to this Agreement.

     

    19.           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.

     

    20.           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.

     

    21.           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.


    
      
         


      

      
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    22.           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.

     

    23.           Entire
Agreement.  This document
represents the entire agreement and understanding of the parties with respect to
the subject matter of the Agreement (other than the Perceptron Executive
Agreement Not to Compete dated September 26, 2005 (“Perceptron Executive
Agreement Not to Compete”) and the Proprietary Information and Invention
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 other
severance pay provisions in effect on the date of this Agreement, including but
not limited to, those contained in the Prior Agreement and Perceptron Executive
Agreement Not to Compete dated September 26, 2005.

     

    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/ Mark S. Hoefing

            
	 
      	
              Mark
      S. Hoefing

            


    

     

    
      
         


      

      
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    EXHIBIT
A

    RELEASE
AGREEMENT

     

    THIS
AGREEMENT (“Agreement”) is made by and between _____________________
(“Employee”) and Perceptron, Inc. (the “Company”).

     

    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, it is hereby agreed between Employee and Company as
follows:

     

    AGREEMENT

     

    1.           In
exchange for the good and valuable consideration set forth in that certain
Agreement, made as of ______________, between the Company and Employee (the
“Severance Agreement”), 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 and those arising
under the Severance Agreement between the Parties dated
_______________.

     

    2.           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.  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.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    3.           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.

     

    4.           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.

     

    5.           Employee
further agrees that he has read this Agreement carefully and understands all of
its terms.

     

    6.           Employee
understands and agrees that he was advised to consult with an attorney and did
so prior to executing this Agreement.

     

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

     

    8.           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
Perceptron, Inc., 47827 Halyard Drive, Plymouth, Michigan  48170 or
(b) hand delivered within seven (7) days of execution of this Agreement to
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.

     

    9.           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.

     

    10.         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.

     

    
      
        
        

      

      
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    11.         This
Agreement shall not be construed as an admission of wrongdoing by
Company.

     

    12.         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.

     

    13.         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.

     

    14.         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.

     

    15.         If
there is a breach or threatened breach of the provisions of this Agreement,
Company 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 hereto have entered into this Agreement as of this _____ day of _____,
______.

     

    
      	 
      	
              PERCEPTRON,
      INC.

            
	 
      	 
      
	 
      	 
      
	 
      	
              By:

            	
                     

            
	 
      	 
      	 
      
	 
      	
              Name:

            	
                     

            
	 
      	 
      	 
      
	 
      	
              Title:

            	
                     

            
	 
      	 
      
	 
      	
              EMPLOYEE

            
	 
      	 
      
	 
      	
                     

            


    

    


    
      
        
        

      

      
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