CREDIT AGREEMENT



This Credit Agreement is dated September 24, 2001 (this "Agreement"), and is

between PERCEPTRON, INC., a Michigan corporation (the "Borrower"), whose address

is 47827 Halyard Drive, Plymouth, Michigan 48170, and BANK ONE, MICHIGAN, a

Michigan banking corporation (the "Bank"), whose address is 611 Woodward Avenue,

Detroit, Michigan 48226. The parties agree as follows:



                             ARTICLE 1 - DEFINITIONS



"Adjusted EBITDA" for any period means EBITDA for such period, plus Rental

Expense for such period, minus Capital Expenditures for such period, minus the

aggregate amount of all dividends, payments and other distributions (including,

without limitation, any such payments and distributions in connection with any

redemption, purchase, retirement or other acquisition of the Borrower's capital

stock ) paid, payable or otherwise accumulating with respect to any class of the

Borrower's capital stock.



"Advance" shall mean any Loan and any Letter of Credit Advance.



"Applicable Margin" means the percent per annum added to the Eurodollar Rate if

that rate is chosen by the Borrower, and as determined pursuant to Section 2.9

and by reference to the following matrix, based upon the ratio of the Funded

Debt of the Borrower to the EBITDA of the Borrower calculated in accordance with

Section 6.12 hereof:



<TABLE>

<CAPTION>

                  Funded Debt/                       Eurodollar

                     EBITDA                          Rate plus

<S>                                                  <C>

                 Less than 5.00 to 1.00

                but equal to or greater                 1.625%

                          than

                      3.00 to 1.00



                 Less than 3.00 to 1.00

                  but greater than or                    1.50%

                 equal to 1.00 to 1.00



                       Less than

                      1.00 to 1.00                       1.25%



</TABLE>







<PAGE>   2



"Borrowing Base Certificate" for any date shall mean an appropriately completed

report as of such date in substantially the form of Exhibit A hereto, certified

as true and correct as of such date by a duly authorized officer of the

Borrower.



"Business Day" means (i) with respect to any borrowing, payment or rate

selection of Eurodollar Rate Loans, a day other than Saturday or Sunday on which

the Bank is open for business in Detroit and banks are open for business in New

York and on which dealings in United States dollars are carried on in the London

interbank market, and (ii) for all other purposes, a day other than Saturday or

Sunday on which the Bank is open for business in Detroit.



"Capital Expenditures" for any period means net capital expenditures of the

Borrower and its Subsidiaries for such period, as determined on a consolidated

basis in accordance with GAAP.



"Commitment" shall mean Facility A Commitment or Facility B Commitment.



"Consolidated" or "consolidated" means, when used with reference to any

financial term in this Agreement, the aggregate for two or more persons of the

amounts signified by such term for all such Persons determined on a consolidated

basis in accordance with GAAP.



"Default" means an event described in Section 7.



"EBITDA" means, for any period, the operating income (before the deduction of

Interest Expense and income tax expense) of the Borrower and its Subsidiaries on

a consolidated basis for such period, plus each of the following with respect to

the Borrower and its Subsidiaries for such period to the extent utilized in

determining such income, without duplication: (i) depreciation and (ii)

amortization of deferred costs and other intangibles.



"Effective Date" shall mean September 24, 2001.



"Eligible Accounts Receivable" shall mean, as of any date, those trade accounts

receivable owned by the Borrower or any Guarantor which are payable in Dollars

and in which the Borrower or Guarantor has granted to the Bank a first-priority

perfected security interest pursuant to the Security Agreement, valued at the

face amount thereof less sales, excise or similar taxes and less returns,

discounts, claims, credits and allowances of any nature at any time issued,

owing, granted, outstanding, available or claimed, but shall not include any

such account receivable (a) that is not a bona fide existing obligation created

by the sale and actual delivery of inventory, goods or other property or the

furnishing of services or other good and sufficient consideration to customers

of the Borrower in the ordinary course of business, (b) that is more than 180

days past due or that remains outstanding more than 180 days after the earlier

of the date of the invoice or the shipment of the related inventory, goods or

other property or the furnishing of the related services or other consideration,

(c) that is subject to any dispute, contra-account, defense, offset or

counterclaim or any Lien (except those in favor of the Bank under the Security

Documents), or the inventory, goods, property, services or other consideration

of which such account receivable constitutes proceeds is subject to any such

Lien, (d) in respect of which the inventory, goods, property, services or other

consideration have been rejected or the amount is in dispute, (e) that is due

from any Affiliate or Subsidiary of the Borrower, (f) that has been classified

by the Borrower as doubtful or







                                       2

<PAGE>   3



has otherwise failed to meet established or customary credit standards of the

Borrower, (g) that is payable by any person located outside the United States

(which shall not be deemed to include any territories of the United States) or

Canada and are not supported by letters of credit issued to the Bank by

commercial banks, and in form and substance, acceptable to the Bank, (h) with

respect to which any representation or warranty contained in Section 5.9 is

incorrect at any time, (i) that is payable by the United States or any of its

departments, agencies or instrumentalities or by any state or other governmental

entity, (j) that is payable by any person as to which 50% or more of the

aggregate amount of such accounts receivable payable by such person to the

Borrower do not otherwise constitute Eligible Accounts Receivable, (k) that is

payable by any person that is the subject of any proceeding seeking to

adjudicate it a bankrupt or insolvent or seeking liquidation, winding up or

reorganization, arrangement, adjustment, protection, relief or composition of it

or its debts under any law relating to bankruptcy, insolvency or reorganization

or relief or protection of debtors or seeking the appointment of a receiver,

trustee, custodian or other similar official for it or for any substantial part

of its property, or that is not generally paying its debts as they become due or

has admitted in writing its inability to pay its debts generally or has made a

general assignment for the benefit of creditors, (l) that is evidenced by a

promissory note or other instrument, (m) that is subordinate or junior in right

or priority of payment to any other obligation or claim, or (n) that for any

other reason is at any time reasonably deemed by the Bank to be ineligible.



"Eligible Inventory" shall mean, as of any date, that inventory owned by the

Borrower or any Guarantor that constitutes raw materials or finished goods in

which the Borrower or such Guarantor has granted to the Bank a first-priority

perfected security interest pursuant to the Security Agreement, valued at the

lower of cost or market on a FIFO, but shall not include any such inventory (a)

that does not constitute raw materials or finished goods readily salable or

usable in the business of the Borrower or such Guarantor, as the case may be,

(b) that is located outside the United States (which shall not be deemed to

include any territories of the United States), (c) that is subject to, or any

accounts or other proceeds resulting from the sale or other disposition thereof

could be subject to, any Lien (except those in favor of the Bank under the

Security Documents), including any sale on approval or sale or return

transaction or any consignment, (d) that is not in the possession of the

Borrower or Guarantor, (e) that is held for lease or is the subject of any

lease, (f) that is subject to any trademark, trade name or licensing

arrangement, or any law, rule or regulation, that could limit or impair the

ability of the Bank to promptly exercise all rights of the Bank under the

Security Documents, (g) if such inventory is located on premises not owned by

the Borrower or Guarantor and the landlord or other owner of such premises shall

not have waived its distraint, lien and similar rights with respect to such

inventory and shall not have agreed to permit the Bank to enter such premises

pursuant to a waiver and agreement of such person in favor of and in form and

substance acceptable to the Bank, (h) with respect to which any insurance

proceeds are not payable to the Bank as a loss payee or are payable to any loss

payee other than the Bank or the Borrower or the Guarantor, as the case may be,

or (i) that for any other reason is at any time reasonably deemed by the Bank to

be ineligible.



"Environmental Certificate" shall mean an appropriately completed environmental

certificate in the form of Exhibit B attached hereto, delivered by the Borrower,

certified as true and correct as of such date by an executive officer of the

Borrower acceptable to the Bank.









                                       3

<PAGE>   4



"Eurodollar Base Rate" means the rate determined by the Bank to be the rate at

which deposits in U.S. dollars are offered to the Bank by first class banks in

the London interbank market at approximately 11 a.m. (London time) two Business

Days prior to the first day of that Eurodollar Interest Period, in the

approximate amount of the relevant Eurodollar Rate Loan and having a maturity

approximately equal to that Eurodollar Interest Period.



"Eurodollar Interest Period" means a period of one, two or three months

commencing on a Business Day selected by the Borrower pursuant to this

Agreement. The Eurodollar Interest Period ends on the day which corresponds

numerically to that date one, two or three months thereafter. If there is no

numerically corresponding day in the next, second or third succeeding month,

that Eurodollar Interest Period ends on the last Business Day of the relevant

month. If a Eurodollar Interest Period would otherwise end on a day which is not

a Business Day, that Eurodollar Interest Period ends on the next succeeding

Business Day, unless that Business Day falls in a new month in which case that

Eurodollar Interest Period ends on the immediately preceding Business Day.



"Eurodollar Rate" means the sum of (i) the quotient of (a) the Eurodollar Base

Rate applicable to that Eurodollar Interest Period divided by (b) one minus the

Reserve Requirement (expressed as a decimal) applicable to that Eurodollar

Interest Period plus (ii) the Applicable Margin per annum. The Eurodollar Rate

will be rounded, if necessary, to the next higher 1/16 of 1%.



"Existing Credit Agreement" shall mean the credit agreement dated as of May 28,

1999 between the Borrower and the Bank, as amended prior to the date hereof.



"Facility A" means the credit facility described in Section 2.1(a).



"Facility A Advance" means each Facility A Loan and each Letter of Credit issued

under Facility A.



"Facility A Borrowing Base" means, as of any date, the sum of (a) an amount

equal to 80% of the value of Eligible Accounts Receivable plus (b) an amount

equal to 35% of the value of Eligible Inventory constituting raw material,

provided, that, the total amount of reliance under this clause (b) plus the

reliance on the Facility B Borrowing Base may not exceed $5,000,000, plus (b) an

amount equal to $4,800,000, representing 80% of the appraised value of the

Mortgaged Property.



"Facility A Commitment" means the obligation of the Bank (a) to make Facility A

Loans not exceeding $17,000,000 minus any outstanding Letters of Credit, and (b)

to issue Letters of Credit not exceeding $1,000,000 so long as the aggregate of

the Letters of Credit plus the outstanding balance of Loans does not exceed

$17,000,000, as such amount may be reduced from time to time pursuant to Section

2.2.



"Facility A Loan" means each Loan made by the Bank under Facility A.



"Facility A Note" means a promissory note in substantially the form of Exhibit

C-1 evidencing the Facility A Loans, duly executed and delivered to the Bank by

the Borrower, including any amendment or replacement.









                                       4

<PAGE>   5



"Facility B" means the credit facility described in Section 2.1(b).



"Facility B Borrowing Base" means, as of any date, an amount equal to 50% of the

value of Eligible Inventory constituting finished goods, provided, that, the

total amount of reliance in Facility B Borrowing Base plus the reliance on raw

material Eligble Inventory in the Facility A Borrowing Base may not exceed

$5,000,000.



"Facility B Commitment" means the obligation of the Bank to make Facility B

Loans not exceeding $1,500,000, as such amount may be reduced from time to time

pursuant to Section 2.2.



"Facility B Loan" means each Loan made by the Bank under Facility B.



"Facility B Note" means a promissory note in substantially the form of Exhibit

C-2 evidencing the Facility B Loans, duly executed and delivered to the Bank by

the Borrower, including any amendment or replacement.



"Fixed Charge Coverage Ratio" means the ratio of Adjusted EBITDA to Fixed

Charges.



"Fixed Charges" for any period means the sum, without duplication, of the

following for such period, determined for the Borrower and its Subsidiaries on a

consolidated basis: (i) Interest Expense, plus (ii) Rental Expense, plus (iii)

income tax expense, plus (iv) the aggregate amount of all dividends, payments

and other distributions (including, without limitation, any such payments and

distributions in connection with any redemption, purchase, retirement or other

acquisition of the Borrower's capital stock) paid, payable or otherwise

accumulating with respect to any class of the Borrower's capital stock, plus (v)

all scheduled payments of principal or other sums paid or payable by the

Borrower and its Subsidiaries in respect of Funded Debt.



"Floating Rate" means a rate per annum equal to (a) with respect to Facility A,

the difference of (i) the Prime Rate minus (ii) 1/2% per annum, and (b) with

respect to Facility B, the sum of (i) the Prime Rate plus (ii) 1/4% per annum,

in each case changing when and as the Prime Rate changes.



"Funded Debt" of any Person means, without duplication, all indebtedness of such

Person to the Bank, all lease obligations of such person which, in accordance

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