Exhibit
10.1

    


    COLFAX
CORPORATION

    


    ANNUAL
INCENTIVE PLAN

    


    Subject
to approval of the Plan by shareholders, Colfax Corporation, a Delaware
corporation (the “Company”) hereby adopts the terms of its Annual Incentive Plan
(the “Plan”), as follows:

    


    1.           PURPOSE

    


    The Plan
is intended to enhance the Company’s and its Affiliates’ (as defined herein)
ability to attract and retain highly qualified officers and key employees, and
to motivate such persons to serve the Company and its Affiliates. Remuneration
payable under the Plan is intended to constitute “qualified performance-based
compensation” for purposes of Section 162(m) of the Internal Revenue Code of
1986, as amended and Section 1.162-27 of the Treasury Regulations thereunder and
the Plan shall be construed consistently with this purpose.

    


    2.           DEFINITIONS

    


    For
purposes of interpreting the Plan and related documents the following
definitions shall apply:

    


    2.1           “
Affiliate ” means, with
respect to the Company, any company or other trade or business that is
controlled by the Company within the meaning of Rule 405 of Regulation C under
the Securities Act, including, without limitation, any Subsidiary.

    


    2.2           “
Annual Incentive Award ”
means a bonus payable subject to attainment of performance goals over a
Performance Period of up to one year (the Company’s fiscal year, unless
otherwise specified by the Committee).

    


    2.3           “
Board ” means the Board
of Directors of the Company.

    


    2.4           “
Cause ” means, as
determined by the Board and unless otherwise provided in an applicable agreement
with the Company: (i) gross negligence or willful misconduct in connection with
the performance of duties; (ii) conviction of a criminal offense (other than
minor traffic offenses); or (iii) material breach of any term of any employment,
consulting or other services, confidentiality, intellectual property or
non-competition agreements, if any, between the Participant and the Company or
any Affiliate of the Company.

    


    2.5           “
Code ” means the
Internal Revenue Code of 1986, as now in effect or as hereafter
amended.

    


    2.6           “
Committee ” means the
Compensation Committee of the Board, which shall be comprised of not less than
three directors of Colfax, each of whom shall qualify in all respects as an
“outside director” for purpose of Code Section 162(m) and Section 1.162-27(e)(3)
of the Regulations.

    


    2.7           “
Company ” means Colfax
Corporation.

    


    2.8           “
Participant ” means,
with respect to a Performance Period, each eligible office or key employee
designated by the Committee to receive an annual bonus payment contingent of
achievement of specified performance goals.

    


    2.9           “
Performance Measure s”
means measures as described in Section 5.1.4 on which the performance goals are
based and which are approved by the Company’s shareholders pursuant to this Plan
in order to qualify Annual Incentive Awards as performance-based compensation
under Section 162(m).


    
      
         


      

      
         

        
          

        

      

      
         


      

    


    2.10           “
Performance Period ”
means the period of time during which the performance goals must be met in order
to determine the degree of payout and/or vesting with respect to an Annual
Incentive Award.

    


    2.11           “
Plan ” means this Colfax
Corporation Annual Incentive Plan.

    


    2.12           “
Stock ” means the common
stock, per value $0.001 per share of the Company; provided, however, that to the
extent an annual bonus payment made pursuant to this Plan is paid in Stock, the
number of shares of Stock so delivered shall be drawn solely from Stock
available for awards under the Colfax Corporation 2008 Omnibus Incentive
Plan.

    


    2.13           “
Subsidiary ” means any
subsidiary corporation of the Company within the meaning of Section 424(f) of
the Code.

    


    3.           ADMINISTRATION
OF THE PLAN

    


    3.1.           Committee.

    


    The Plan
shall be administered by the Committee.  The Committee shall have the
authority to establish and administer the performance goal and to certify the
attainment of the performance goals as described in Section 5.2
below.  The Committee shall have the full power and authority to
construe, interpret and administer the Plan and shall have the exclusive right
to make awards under the Plan and to exercise negative discretion pursuant to
Section 5.1.3 below.  The Committee may take action at a meeting or by
written consent in accordance with the Company’s bylaws.  The
performance goals may be ratified by the Board.

    


    In
administering the Plan, the Committee may at its option employ compensation
consultants, accountants and counsel and other persons to assist or render
advice to the Committee, all at the expense of the Company.  Any
determinations made by the Committee in connection with the Plan shall be final
and binding on the Company, its Affiliates, Subsidiaries and their respective
stockholders and each Participant in the Plan.

    


    3.2.           Deferral
Arrangement.

    


    The Board
may permit or require the deferral of any award payment into a deferred
compensation arrangement, subject to such rules and procedures as it may
establish, which may include provisions for the payment or crediting of interest
or earnings.  Any such deferrals shall be made in a manner that
complies with Code Section 409A.

    


    4.           ELIGIBILITY

    


    Eligibility
under this Plan is limited to eligible executives designated by the Committee,
in its discretion.  Upon such designation for a Performance Period,
the executive shall become a “Participant” under the Plan.

    


    5.           ANNUAL
INCENTIVE AWARDS

    


    5.1.           Granting
Annual Incentive Awards.

    


    The
Committee may grant an Annual Incentive Award to each Participant.  In
doing so, the Committee shall establish the performance goals applicable to
determination of each such Participant’s Annual Incentive Award.  The
maximum Annual Incentive Award payable to a Participant under this Plan for a
fiscal year shall be $3,000,000.


    
      
         


      

      
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    5.1.1.             Performance
Goals Generally.

    


    The
performance goals for Annual Incentive Awards shall consist of one or more
business criteria and a targeted level or levels of performance with respect to
each of such criteria, as specified by the Committee consistent with this
Section 5.1.  Performance goals shall be objective and shall otherwise
meet the requirements of Code Section 162(m) and regulations thereunder
including the requirement that the level or levels of performance targeted by
the Committee result in the achievement of performance goals being
“substantially uncertain.”  The Committee may determine that such
Awards shall be granted and/or settled upon achievement of any one performance
goal or that two or more of the performance goals must be achieved as a
condition to grant and/or settlement of such Annual Incentive
Awards.  Performance goals may differ for Annual Incentive Awards
granted to any one Participant or to different Participants.

    


    5.1.2.             Timing
For Establishing Performance Goals.

    


    Performance
goals shall be established not later than 90 days after the beginning of any
Performance Period applicable to the Annual Incentive Awards, or at such other
date as may be required or permitted for “performance-based compensation” under
Code Section 162(m).

    


    5.1.3.             Settlement
of Awards; Other Terms.

    


    Settlement
of Annual Incentive Awards shall be in cash, Stock or other property, in the
discretion of the Committee.  The Committee may, in its discretion,
reduce the amount of a settlement otherwise to be made in connection with an
Annual Incentive Award.  The Committee shall specify the circumstances
in which Annual Incentive Awards shall be paid or forfeited in the event of
termination of service by the Participant prior to the end of a Performance
Period or settlement of awards.

    


    5.1.4.             Performance
Measures.

    


    The
performance goals established by the Committee shall be based on one or more of
the following Performance Measures:

    


    
      	
               
      

            	
              (a)

            	
              net earnings or net
      income;

            


    

    


    
      	
               
      

            	
              (b)

            	
              operating
      earnings;

            


    

    


    
      	
               
      

            	
              (c)

            	
              pretax
      earnings;

            


    

    


    
      	
               
      

            	
              (d)

            	
              earnings per
      share;

            


    

    


    
      	
               
      

            	
              (e)

            	
              share price, including growth
      measures and total stockholder
return;

            


    

    


    
      	
               
      

            	
              (f)

            	
              earnings before interest and
      taxes;

            


    

    


    
      	
               
      

            	
              (g)

            	
              earnings before interest, taxes,
      depreciation and/or
amortization;

            


    

    


    
      	
               
      

            	
              (h)

            	
              sales or revenue growth, whether
      in general, by type of product or service, or by type of
      customer;

            


    

    


    
      	
               
      

            	
              (i)

            	
              gross or operating
      margins;

            


    

    


    
      	
               
      

            	
              (j)

            	
              return measures, including return
      on assets, capital, investment, equity, sales or
      revenue;

            


    

    


    
      	
               
      

            	
              (k)

            	
              cash flow, including operating
      cash flow, free cash flow, cash flow return on equity and cash flow return
      on investment;

            


    

    


    
      	
               
      

            	
              (l)

            	
              productivity
      ratios;

            


    


    
      
         


      

      
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              (m)

            	
              expense
      targets;

            


    

    


    
      	
               
      

            	
              (n)

            	
              market
    share;

            


    

    


    
      	
               
      

            	
              (o)

            	
              financial ratios as provided in
      credit agreements of the Company and its
    subsidiaries;

            


    

    


    
      	
               
      

            	
              (p)

            	
              working capital
      targets;

            


    

    


    
      	
               
      

            	
              (q)

            	
              completion of acquisitions of
      business or companies;

            


    

    


    
      	
               
      

            	
              (r)

            	
              completion of divestitures and
      asset sales; and

            


    

    


    
      	
               
      

            	
              (s)

            	
              any combination of any of the
      foregoing business criteria.

            


    

    


    Any
Performance Measure(s) may be used to measure the performance of the Company,
Subsidiary, and/or Affiliate as a whole or any business unit of the Company,
Subsidiary, and/or Affiliate or any combination thereof, as the Committee may
deem appropriate, or any of the above Performance Measures as compared to the
performance of a group of comparator companies, or published or special index
that the Committee, in its sole discretion, deems appropriate, or the Company
may select Performance Measure (e) above as compared to various stock market
indices.

    


    5.1.5.             Evaluation
of Performance.

    


    The
Committee may provide with respect to Annual Incentive Awards that any
evaluation of performance may include or exclude any of the following events
that occur during a Performance Period: (a) asset write-downs; (b) litigation or
claim judgments or settlements; (c) the effect of changes in tax laws,
accounting principles, or other laws or provisions affecting reported results;
(d) any reorganization and restructuring programs; (e) extraordinary
nonrecurring items as described in Accounting Principles Board Opinion No. 30
and/or in management’s discussion and analysis of financial condition and
results of operations appearing in the Company’s annual report to shareholders
for the applicable year; (f) acquisitions or divestitures; and (g) foreign
exchange gains and losses.

    


    5.1.6.             Adjustment
of Performance-Based Compensation.

    


    The
Committee shall retain the discretion to adjust any Awards downward, either on a
formula or discretionary basis, or any combination as the Committee
determines.  Annual Incentive Awards may not be adjusted upward from
the level of performance achieved.

    


    5.1.7.
              Board
Discretion.

    


    In the
event that applicable tax and/or securities laws change to permit Board
discretion to alter the governing Performance Measures without obtaining
shareholder approval of such changes, the Board shall have sole discretion to
make such changes without obtaining shareholder approval provided the exercise
of such discretion does not violate Code Section 409A. In addition, in the event
that the Committee determines that it is advisable to grant Awards that shall
not qualify as performance-based compensation under Section 162(m), the
Committee may make such grants without satisfying the requirements of Code
Section 162(m) and grant and/or settlement on Performance Measures other than
those set forth in Section 5.1.4.

    


    5.2.           Determination
of Annual Incentive Award.

    


    Payment
of a Participant’s Annual Incentive Award, if any, is subject to certification
by the Committee that the performance goals have been satisfied to a particular
extent and any other material terms and conditions for the earning and payment
of the Annual Incentive Award have been satisfied.  The amount of
payment shall be further subject to the Committee’s right, in its sole
discretion, to reduce the Annual Incentive Award amount as so
determined.  The Committee’s determination is final and binding and
the Participant shall have no right to receive the amount by which the Annual
Incentive Award potential was reduced from the amount designated as payable upon
achievement of the performance goals at a particular level.  In no
event shall an Annual Incentive Award be paid to a Participant unless and until
the Plan has been approved by the Company’s stockholders in the manner and to
the extent required by Section 162(m).


    
      
         


      

      
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    6.           GENERAL
PROVISIONS

    


    6.1.           Disclaimer
of Rights.

    


    No
provision in the Plan or in any Annual Incentive Award shall be construed to
confer upon any individual the right to remain in the employ or service of the
Company or any Affiliate, or to interfere in any way with any contractual or
other right or authority of the Company either to increase or decrease the
compensation or other payments to any individual at any time, or to terminate
any employment or other relationship between any individual and the
Company.  The obligation of the Company to pay any benefits pursuant
to this Plan shall be interpreted as a contractual obligation to pay only those
amounts described herein, in the manner and under the conditions prescribed
herein.  The Plan shall in no way be interpreted to require the
Company to transfer any amounts to a third party trustee or otherwise hold any
amounts in trust or escrow for payment to any Participant under the terms of the
Plan.

    


    6.2.           Nonexclusivity
of the Plan.

    


    Neither
the adoption of the Plan nor the submission of the Plan to the stockholders of
the Company for approval shall be construed as creating any limitations upon the
right and authority of the Board to adopt such other incentive compensation
arrangements (which arrangements may be applicable either generally to a class
or classes of individuals or specifically to a particular individual or
particular individuals) as the Board in its discretion determines
desirable.

    


    6.3.           Withholding
Taxes.

    


    The
Company or an Affiliate, as the case may be, shall have the right to deduct from
payments of any kind otherwise due to a Participant any federal, state, or local
taxes of any kind required by law to be withheld with respect to the vesting of
or other lapse of restrictions applicable to an Award or upon the issuance of
any shares of Stock, if any, pursuant to an award.

    


    6.4.           Captions.

    


    The use
of captions in this Plan or any Award Agreement is for the convenience of
reference only and shall not affect the meaning of any provision of the Plan or
such Award Agreement.

    


    6.5.           Other
Provisions.

    


    Each
Award granted under the Plan may contain such other terms and conditions not
inconsistent with the Plan as may be determined by the Board, in its sole
discretion.

    


    6.6.           Number
and Gender.

    


    With
respect to words used in this Plan, the singular form shall include the plural
form, the masculine gender shall include the feminine gender, etc., as the
context requires.


    
      
         


      

      
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    6.7.           Severability.

    


    If any
provision of the Plan or any Award Agreement shall be determined to be illegal
or unenforceable by any court of law in any jurisdiction, the remaining
provisions hereof and thereof shall be severable and enforceable in accordance
with their terms, and all provisions shall remain enforceable in any other
jurisdiction.

    


    6.8.           Governing
Law.

    


    The
validity and construction of this Plan and the instruments evidencing the Awards
hereunder shall be governed by the laws of the State of Delaware, other than any
conflicts or choice of law rule or principle that might otherwise refer
construction or interpretation of this Plan and the instruments evidencing the
Awards granted hereunder to the substantive laws of any other
jurisdiction.

    


    6.9.           Section
409A of the Code.

    


    The Board
intends to comply with Section 409A of the Code (“Section 409A”), or an
exemption to Section 409A, with regard to awards hereunder that constitute or
otherwise would constitute nonqualified deferred compensation within the meaning
of Section 409A.  To the extent that the Board determines that a
Participant would be subject to the additional 20% tax imposed on certain
nonqualified deferred compensation plans pursuant to Section 409A as a result of
any provision of any Award granted under this Plan, such provision shall be
deemed amended to the minimum extent necessary to avoid application of such
additional tax.  The nature of any such amendment shall be determined
by the Board.

    


    6.10           Amendment
and Termination.

    


    The Board
shall have the right to amend, modify, suspend or terminate the Plan from time
to time, but no such amendment, modification, suspension or termination shall,
without prior approval of the Company’s stockholders, alter the business
criteria on which the performance goals are based, increase the dollar maximum
for an annual bonus under Section 5.1 or materially modify the requirements
regarding eligibility for participation in the Plan, nor shall any such
amendment, modification or termination impair, without the consent of the
Participant affected, any Annual Incentive Award payment that has been certified
and approved by the Committee prior to the effective date of the amendment,
modification, suspension or termination.


    
      
         


      

      
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