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Exhibit 10.3
PERCEPTRON, INC.
SEVERANCE AGREEMENT
THIS SEVERANCE
AGREEMENT, dated as of September 8, 2005, is between
Perceptron, Inc. (the "Company") and
Wilfred J. Corriveau, who is currently
employed by the Company in the position of
Senior Vice President - Global
Automotive Business (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);
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(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
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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;
(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
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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;
(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
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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"):
(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,
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