PERCEPTRON,
      INC.

    SEVERANCE
      AGREEMENT

    


    THIS
      SEVERANCE AGREEMENT,
      dated as
      of May 18, 2007, is between Perceptron, Inc. (the “Company”) and Paul J.
      Eckhoff, who is currently employed by the Company in the position of Senior
      Vice
      President - Commercial Products (the “Executive”).

    


    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.

    


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

    


    (a) “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, or 

    


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

    


    (b) “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.

    


    (c) “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.

    


    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.

    


    (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 Executive shall be entitled to (the “Regular Severance
      Benefits”):

    


    (i) A
      cash
      severance benefit equal to one-half 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;

    


    (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, on the
      terms (or comparable terms) provided by the Company to its employees from time
      to time during this period. Health benefits shall be provided through continued
      coverage under the Company’s group health plan, if allowed under the terms of
      such plan, or by the reimbursement of COBRA continuation coverage premiums
      paid
      by the Executive, as determined by the Company; provided, however, if the health
      plan is self-insured by the Company, then the determination shall be made by
      the
      Executive. Any continuation of group health plan coverage under this paragraph
      shall run concurrently with the period of required COBRA continuation coverage
      under the Code. If COBRA continuation coverage is not available, the Company
      shall reimburse the Executive for premiums for comparable coverage, provided,
      however, that the reimbursement shall 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 coverage comparable to that elected by the
      Executive. Welfare benefits (other than health benefits) shall be continued
      only
      to the extent permitted under the terms of such plans; 

    


    
      
         

      

      
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    (iv) Continuation
      of the Executive’s then current car benefit for six months 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 Internal Revenue Code of 1986,
      as
      amended (the “Code”).

    


    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; 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) Any
      reassignment of the Executive to substantial duties materially inconsistent
      with
      the Executive’s position, duties, responsibilities and status with the Company
      immediately prior to the Change in Control or a substantial 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; provided that the fact that the Company is
      no
      longer a publicly traded company or the Executive no longer has duties and
      responsibilities associated exclusively with a publicly traded company, such
      as
      Securities and Exchange Commission or stock exchange reporting responsibilities
      or investor or analyst relations responsibilities, shall not
      be
      deemed to be a reassignment of the Executive to substantial duties materially
      inconsistent with the Executive’s position, duties, responsibilities and status
      with the Company immediately prior to the Change in Control or a substantial
      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;

    


    
      
         

      

      
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    (B) Any
      reduction in the Executive’s base salary or targeted incentive bonus or
      commissions in effect immediately prior to the Change in Control, or failure
      by
      the Company to continue any bonus, stock or other incentive plans in effect
      immediately prior to the Change in Control (without the implementation of
      comparable successor plans that provide comparable award
      opportunities/benefits), or any removal of the Executive from participation
      in
      such aforementioned plans;

    


    (C) The
      discontinuance or reduction in benefits to the Executive under any qualified
      or
      nonqualified retirement or welfare plan maintained by the Company immediately
      prior to the Change in Control (without the implementation of comparable
      successor plans that provide comparable benefits), or the discontinuance of
      any
      fringe benefits or other perquisites that the Executive received immediately
      prior to the Change in Control (without the implementation of comparable
      successor plans that provide comparable benefits);

    


    (D) Required
      relocation of the Executive’s principal place of employment more than 50 miles
      from the Executive’s place of employment prior to the Change in Control;
      or

    


    (E) The
      Company’s breach of any provision in this Agreement, provided that the Company
      has not cured such breach within 10 days following written notice by the
      Executive to the Company of such breach.

    


    (b) The
      Executive who believes the Executive is entitled to a Termination of Employment
      for Good Reason, as defined in Section 4 above, may apply in writing to the
      Company for confirmation of such entitlement prior to the Executive’s actual
      separation from employment, by following the claims procedure set forth in
      Section 15 hereof. The submission of such a request 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).

    


    (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
      Executive shall be entitled to (the “Change in Control Severance
      Benefits”):

    


    
      
         

      

      
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    (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, on the terms (or comparable terms) provided by the Company to the
      Executive immediately prior to the Change in Control. Health benefits shall
      be
      provided through continued coverage under the Company’s group health plan, if
      allowed under the terms of such plan, or by the reimbursement of COBRA
      continuation coverage premiums paid by the Executive, as determined by the
      Company; provided, however, if the health plan is self-insured by the Company,
      then the determination shall be made by the Executive. Any continuation of
      group
      health plan coverage under this paragraph shall run concurrently with the period
      of required COBRA continuation coverage under the Code. If COBRA continuation
      coverage is not available, the Company shall reimburse the Executive for
      premiums for comparable coverage, provided, however, that the reimbursement
      shall 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.
      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 in accordance with the
      Company car policy in effect at the time of termination.

    


    (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.

    


    
      
         

      

      
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    (d) Subject
      to Section 11(a) hereof, 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 made later than 10 days following the Executive’s Termination of
      Employment (or applicable due date under 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 Section 11(a) hereof). For purposes
      of
      this Section 4, “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 Section 11(a) hereof).

    


    (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; 

    


    (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.

    


    
      
         

      

      
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    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,
      Executive violates the terms of this Agreement or the Perceptron Executive
      Agreement Not to Compete (as defined below) or any other non-competition
      agreement with the Company, the Company’s obligations to the Executive under
      this Agreement shall automatically terminate. 

    


    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.

    


    
      
         

      

      
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    (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.

    


    (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.

    


    
      
         

      

      
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    (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
      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.

    


    
      
         

      

      
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    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.

    


    (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 this Section 16,
      “prime rate” shall be determined by reference to the prime rate established by
      Comerica Bank as in effect from time to time during the period from the date
      such amounts should have been paid to the date of actual payment. 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.

    


    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.

    


    
      
         

      

      
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    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.

    


    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 even date herewith (“Perceptron
      Executive Agreement Not to Compete”) 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 other severance pay provisions
      in
      effect on the date of this Agreement.

    


    
      
         

      

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

     

    
      	 	 	 
	 	
              PERCEPTRON,
                INC.

            
	 
 	 
 	 
 
	 	By:  	/s/
              A.
              A. Pease
	 	
              

              Alfred
                A. Pease, President and Chief Executive Officer

            
	 	 


    

    
      	 	 	 
	 
 	 
 	 
 
	 	 	/s/
              Paul
              J. Eckhoff
	 	
              

              Paul
                J. Eckhoff

            
	 	 


    

     

     

    
      
         

      

      
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