Exhibit 10.12

Execution Copy
July 24, 2003

Allied Motion Technologies, Inc.23 Inverness Way East, Suite 150
Englewood, Colorado 80112

Richard
D. Smith
8422 Newland Drive
Arvada, CO 80003

Dear
Mr. Smith:

Allied
Motion Technologies, Inc. (the "Company") has determined that it is essential to the best interests of the Company and its shareholders to foster the continuous employment
of key management personnel including you as CEO of the Company. The board of directors of the Company (the "Board") recognizes that, as is the case with many publicly held corporations, the
possibility of a change in control of the Company exists. Such possibility and the uncertainty and questions which it may raise among management, may result in the departure or distraction of
management personnel to the detriment of the Company and its shareholders. In addition, the Company seeks your unequivocal support in realizing the maximum value per share to shareholders in the event
of a disposition of the Company. In the event of a change of control, we also seek your cooperation in a smooth transition of
management. These objectives require employment arrangements that provide security to you in the face of uncertainty.

The
Board has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of members of management, including yourself, to their
assigned duties without distraction in the face of potentially disturbing circumstances arising from the possibility of a change in control of the Company.

In
order to induce you to remain in the employ of the Company, and in consideration of your agreements set forth in Section 2(ii), the Company agrees that you shall receive the
severance benefits set forth in this letter agreement ("Agreement") in the event your employment with the Company is terminated subsequent to a change in control of the Company (as defined in
Section 2 hereof) under the circumstances described below.

1.Term of Agreement.This Agreement shall commence on the date hereof and shall continue in effect through
December 31, 2003;provided, however,that commencing on January 1, 2004 and each January 1 thereafter, the term of this Agreement
shall automatically be extended for one additional year (meaning that as of each January 1 this Agreement shall then have a term of two years which shall reduce during the ensuing
12 months but shall again be extended on the next following January 1 to a term of two years) unless, not later than the September 30 immediately preceding each such
January 1, the Company shall have given notice that it does not wish to extend this Agreement;provided further,if a change in control of the
Company shall have occurred during the original or extended term of this Agreement, this Agreement shall continue in effect for a period of 24 months beyond the month in which such event
occurred.

2.(i)Change in Control of the Company.No benefits shall be payable hereunder unless there shall have been a
change in control of the Company, as set forth below. For purposes of this Agreement, a "change in control of the Company" shall be deemed to have occurred (A) if any "Person" (as such term is
used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as

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amended
(the "Exchange Act")), other than (1) a trustee or other fiduciary holding securities under an employee benefit plan of the Company, or any Person or entity organized, appointed or
established by the Company for or pursuant to the terms of any such plan, or (2) any Person who, on the date hereof, is a director or officer of the Company or whose shares of common stock of
the Company are treated as beneficially owned (as defined in Rule 13d-3 under the Exchange Act) by any such director or officer, is or becomes the beneficial owner, directly or
indirectly, of securities of the Company representing more than 45% of the combined voting power of the Company's then outstanding securities; or (B) upon the first purchase of outstanding
shares of the Company's outstanding common stock pursuant to a tender or exchange offer (other than a tender or exchange offer made by the Company, by an employee benefit plan established or
maintained by the Company or by any of their respective affiliates); or (C) if during any period of two consecutive years, individuals who, at the beginning of such period, constitute
the Board and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in clauses (A) or (D) of
this Subsection) whose election by the Board or nomination for election by the Company's shareholders was approved by a vote of at least two-thirds (2/3) of the Company
directors then still in office who either (1) were directors at the beginning of the period or (2) whose election or nomination for election was previously so approved, cease for any
reason to constitute a majority thereof; or (D) if the shareholders of the Company approve a merger or consolidation of the Company with any other corporation, other than a merger or
consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity) at least 80% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or
consolidation; or (E) the shareholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially
all of the Company's assets;

provided, however, a spinoff distribution to shareholders of the Company of all or part of the Company's equity interest in a subsidiary
entity shall not constitute a change in control of the Company.



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3.Termination Following Change in Control.If any of the events described in Section 2(i) hereof
constituting a change in control of the Company shall have occurred, you shall be entitled to the benefits provided in Section 4(iii) hereof upon the subsequent termination of your
employment during the term of this Agreement unless such termination is (A) because of your death, Disability or Retirement, (B) by the Company for Cause, or (C) by you other than
for Good Reason.



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4.Compensation Upon Termination or During Disability.Following a change in control of the Company, as defined
by Section 2(i), upon termination of your employment or during a period of Disability you shall be entitled to the following benefits:



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5.Termination Before Change in Control.If your employment by the Company shall be terminated by the Company
other than for Cause, Retirement or Disability, and a change in control of

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the
Company occurs within 90 days thereafter, you shall be entitled to the benefits provided in Section 4(iii) hereof.

6.Sucessors; Binding Agreement; Release of the Company.



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7.Notice.For the purpose of this Agreement, notices and all other communications provided for in the Agreement
shall be in writing and shall be deemed to have been duly given when delivered by overnight courier, transmitted electronically over the internet as long as confirmation of receipt is obtained from
the recipient or mailed by United States certified or registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth on the first page of this
Agreement, provided that all notices to the Company shall be directed to the attention of the Chairman of the Board of Directors with a copy to the Secretary of the Company to Allied Motion
Technologies, Inc., 23 Inverness Way East, Suite 150, Englewood, Colorado 80112, or to such other address as any such person may have furnished to the others in writing in accordance
herewith, except that notice of change of address shall be effective only upon receipt.

8.Miscellaneous.No provision of this Agreement may be modified, waived or discharged unless such waiver,
modification or discharge is agreed to in writing and signed by you and such officer as may be specifically designated by the Board. No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which
are not expressly set forth in this Agreement. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the state of incorporation of the Company.
All references to sections of the Exchange Act or the Code shall be deemed also to refer to any successor provisions to such sections. Any payments provided for hereunder shall be paid net of
any applicable withholding required under federal, state or local law. The obligations of the Company under Section 4 shall survive the expiration of the term of this Agreement.

9.Counterparts.This Agreement may be executed in several counterparts, each of which shall be deemed to be an
original but all of which together will constitute one and the same instrument.

10.Arbitration.Any dispute or controversy arising under or in connection with this Agreement shall be settled
exclusively by arbitration in the city where you reside or in an alternate location approved by you in accordance with the rules of the American Arbitration Association then in effect. Judgment may be
entered on the arbitrators award in any court having jurisdiction;provided, however, that you shall be entitled to seek specific performance of your
right to be paid until the Date of Termination during the pendency of any dispute or controversy arising under or in connection with this Agreement.

11.Severability.In the event that any provision or portion of this Agreement shall be determined to be invalid
or unenforceable for any reason, the remaining provisions and portions of this Agreement shall be unaffected thereby and shall remain in full force and effect to the fullest extent provided by law.

If
this letter sets forth our agreement on the subject matter hereof, kindly sign and return to the Company the enclosed copy of this letter which will then constitute our agreement on
this subject.

| |  | Sincerely,                      
| |  | --------------------------------
| |  | ALLIED MOTION TECHNOLOGIES, INC.
| |  | By:                             
| |  |                                 
| |  |                                 

APPROVED
July 24, 2003.

|/s/RICHARD D. SMITHRichard D. Smith | 
|----------------------------------- | 

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