INCENTIVE STOCK OPTION AGREEMENT TERMS - OFFICER UNDER THE PERCEPTRON, INC. 2004 STOCK INCENTIVE PLAN

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EXHIBIT 10.2

INITIAL USAGE DATE: 1/1/05

INCENTIVE STOCK OPTION AGREEMENT TERMS - OFFICER

UNDER THE PERCEPTRON, INC. 2004 STOCK INCENTIVE PLAN

THESE STOCK OPTION AGREEMENT TERMS pertain to stock options granted

effective ________________ under the 2004 Stock Incentive Plan (the "Plan") as

detailed in the accompanying Notice of Grant of Stock Options and Option

Agreement (the "Notice) between Perceptron, Inc., a Michigan corporation ("the

Corporation"), and the employee named in the Notice who is currently employed by

the Corporation or one of its subsidiaries (the "Optionee"). A copy of the 2004

Stock Incentive Plan is not attached hereto but is available upon written

request made to the Secretary of the Corporation.

1. GRANT OF OPTION. Subject to the terms and conditions hereof, the

Corporation hereby grants to the Optionee an option to purchase from

the Corporation up to, but not exceeding in the aggregate, the number

of shares of the Corporation's Common Stock detailed in the

accompanying Notice at the price per share designated in the Notice.

This option is intended to constitute an "incentive stock option"

within the meaning of Section 422 of the Internal Revenue Code

("Code").

2. RIGHT TO EXERCISE OPTION. Unless otherwise indicated in the Notice, the

Optionee may purchase from the Corporation on and after the first

anniversary of the date of grant, 25% of the shares covered by this

option, and on each succeeding one year anniversary thereof may

exercise an additional 25% of the shares covered by the option, so that

on the fourth anniversary of the date of grant this option shall be

fully exercisable. To the extent not exercised, installments shall

accumulate and the Optionee may exercise them in whole or in part in

any subsequent period. Unless a shorter period is specified in the

Notice under the "Expiration" column, and notwithstanding any provision

of this Agreement, no portion of this option shall be exercisable on or

after the tenth anniversary of the date of grant. The Committee (as

defined in the Plan), in its sole discretion, may accelerate the time

at which this option may be exercised in whole or in part.

3. TERMINATION OF EMPLOYMENT. If, prior to the date that this option shall

first become exercisable, the Optionee's employment with the

Corporation or any of its subsidiaries shall be terminated for any

reason, the Optionee's right to exercise this option shall terminate

and all rights hereunder shall cease. As used in this Agreement, the

term "subsidiary" of the Corporation means any "subsidiary corporation"

as defined in Section 424(f) of the Code, the term "employment" means

employment with the Corporation or any subsidiary of the Corporation,

and the term "disability" means "total and permanent disability," as

defined in Section 22(e) of the Code.

If, on or after the date that this option shall first become

exercisable, the Optionee's employment shall be terminated for any

reason other than death or disability, the Optionee shall have the

right to exercise this option to the extent that it shall have been

exercisable and

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unexercised on the date of such termination of services, at any time on

or before the earlier of: (i) the expiration date of the option, or

(ii) three (3) months after the date of such termination of employment,

subject to any other limitation on the exercise of such option in

effect at the date of exercise.

If on or after the date that this option shall first become exercisable

the Optionee's employment shall be terminated due to death or

disability, the Optionee or the executor or administrator of the estate

of the Optionee (as the case may be) or the person or persons to whom

the option shall have been transferred by will or by the laws of

descent and distribution, shall have the right to exercise this option,

at any time on or before the earlier of: (i) the expiration date of the

option, or (ii) one (1) year from the date of the Optionee's death or

disability, to the extent that it was exercisable and unexercised on

the date of the Optionee's death or disability, subject to any other

limitation on exercise in effect at the date of exercise.

The transfer of the Optionee from one corporation to another among the

Corporation and any of its subsidiaries, or a leave of absence with the

written consent of the Corporation, shall not be a termination of

services for purposes of this option.

4. CHANGE IN CONTROL. Notwithstanding the provisions of Section 2 "Right

to Exercise Option" and Section 3 "Termination of Employment" of this

Agreement, (i) in the event of a termination by the Corporation of the

Optionee's employment Without Cause (as defined below) or Diminishment

of the Optionee's Responsibilities Without Cause (as defined below),

following a Change in Control of the Corporation, or (ii), in the event

of a Change in Control, if one of the corporations surviving the Change

in Control or the person purchasing the Corporation's assets in the

Change in Control does not assume this option, any portion of this

option that is then not exercisable shall become immediately

exercisable. For purposes hereof, "Without Cause" shall mean the

Optionee's employment is terminated by the Corporation, or there is a

Diminishment of the Optionee's Responsibilities, for any reason except

(i) personal dishonesty; (ii) willful misconduct; (iii) breach of

fiduciary duty to the Corporation; (iv) conviction for violation of any

law (other than traffic violations or similar offenses); or (v)

repeated or intentional failure to perform duties, after written notice

is delivered identifying the failure, and it is not cured within ten

(10) days following receipt of such notice. For purposes hereof,

"Diminishment of the Optionee's Responsibilities" shall mean the

Corporation, or any successor thereto, (i) reassigning the Optionee

substantial duties which are materially inconsistent with the

Optionee's position, duties and responsibilities with the Corporation

immediately prior to the Change in Control, except for reassignments of

duties which constitute a bona fide promotion of the Optionee, or (ii)

reducing the Optionee's compensation such that (a) the Optionee's

annual base salary is less than eighty (80%) percent of the Optionee's

annual base salary prior to the Change in Control; and (b) the

Optionee's annual base salary and the annual cash bonus which the

Optionee is eligible to earn (including any performance based bonus),

combined, is not at least equal to the combination of the Optionee's

annual base salary prior to the Change in Control and the average of

the annual cash bonuses which the Optionee was eligible to earn

(including any performance based bonus, but excluding any bonus payable

to the Optionee for completing the Change in Control), whether or not

actually earned, for the year in which

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the Change in Control occurred and for the year prior thereto. For

purposes hereof, a "Change in Control" shall be deemed to have occurred

in the event of (i) a merger involving the Corporation in which the

Corporation is not the surviving corporation (other than a merger with

a wholly-owned subsidiary of the Corporation formed for the purpose of

changing the Corporation's corporate domicile); (ii) a share exchange

in which the shareholders of the Corporation exchange their stock in

the Corporation 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 Corporation, immediately prior to the transaction,

exchange, on a pro rata basis, their voting stock of the Corporation

for more than 50% of the voting stock of such other corporation); (iii)

the sale of all or substantially all of the assets o