Exhibit 10.1


DEFERRED COMPENSATION PLAN


Allied Motion
Technologies Inc., a Colorado corporation (the “Company”) hereby establishes
the Allied Motion Technologies Inc. Deferred
Compensation Plan (the “Plan”), effective as
of January 1, 2006.


The purposes of the Plan are
(1) to provide eligible key employees with the opportunity to defer the receipt
of certain compensation otherwise payable to them, and (2) to permit such
eligible key employees to participate in the success of the Company by
providing them with the opportunity to earn additional, performance based
compensation..


1.             Definitions.


The following definitions
shall apply for the purposes of the Plan:


1.01         “Account” means the bookkeeping account
established for each Participant under this Plan, as further described in Section
7.


1.02         “Appropriate Form” means a written or
electronic election or other form prescribed by the Board for use in connection
with this Plan.  The Board may modify,
update or replace any Appropriate Form, on a prospective basis, at any time,
and the new or modified form shall take effect with respect to each Participant
as soon as it is furnished to such Participant.


1.03         “Beneficiary” means a person or trust entitled
to receive payment under this Plan on account of the death of a Participant.


1.04         “Board” or “Board of Directors” means
the Board of Directors of the Company or, where applicable, any Committee of
the Board to which authority with respect to any matter relating to this Plan
is delegated.


1.05         “Bonus” means any bonus payable to a Participant
by the Company under the Employee Incentive Bonus Plan, or any other bonus plan
for the benefit of the Participants that is approved by the Board.


1.06         A “Change of Control”, for purposes of
the Plan, shall be defined in the manner set forth in Section 409A of the Code
and the Treasury Regulations thereunder.


1.07         “Code” means the Internal Revenue Code
of 1986, as amended.


1.08         “Deferral” means a portion of a
Participant’s Salary or Bonus which is deferred pursuant to Section 3.02 and credited
to the Participant’s Account in accordance with Section 3.03.


1.09         “Deferral Election” means each
Participant’s written election to defer the receipt of Salary or Bonus in
accordance with Section 3.02.









 



 


1.10         “Disabled” means suffering from any mental
or physical condition, other than use of alcohol or illegal use of drugs or
narcotics, which renders a Participant unable to perform substantially all of
the duties and services for the Company required of the Participant in a
satisfactory manner for 120 consecutive days, or 180 days during any 12-month
period.


1.11         “Discretionary Contribution” means an
unfunded contribution for the benefit of a Participant, as described in Section
6.


1.12         “Effective Date of the Plan” means January
1, 2006.


1.13         “Investment Funds” means those mutual
funds, available through Fidelity Investments, that are designated by the Board
from time to time as the investments available to measure adjustments to
Accounts, as provided in Section 7.03.


1.14         “Net Profit” means the after tax net
income of the Company for a Year, as stated in the Company’s certified
financial statements.


1.15         “Net Profit Target” means a threshold
amount of Net Profit for a Year, designated by the Board as a Performance
Criterion pursuant to Section 4.01.


1.16         “Participant” means an executive
employee of the Company who is designated by the Board as a participant in the
Plan.


1.17         “Performance Contribution” means an
unfunded contribution for the benefit of a Participant, as described in
Section 4.


1.18         “Performance Contribution Term” with
respect to any Participant means the period beginning on the Effective Date and
ending on the earlier of:


(a)           December 31, 2020;
or


(b)           December 31st of the
third calendar year which begins after the date of such Participant’s Separation
from Service; or


(c)           The date on which such
Participant


(i)            is terminated for “Cause”,
within the meaning of such Participant’s Employment Agreement with the Company,
or


(ii)           the date on which
the Participant directly or indirectly: (A) (whether as director, officer,
consultant, principal, employee, agent or otherwise) engages in or contributes
Participant’s knowledge and abilities to any business or entity in competition
with the Company; or (B) attempts in any manner to solicit from any customer
of the Company business of the type performed by the Company or persuade any
customer of the Company to cease doing business or reduce the amount of
business that such customer has customarily done with the Company.



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1.19         “Performance Criteria” means such Net
Profit Targets or other organizational criteria, the satisfaction of which is a
condition to the Participants’ earning Performance Contributions.


1.20         “Plan” means the Plan set forth herein,
as it may be amended from time to time in accordance with Section 11.01.


1.21         “Retirement” or “Retire” means any
termination of employment with the Company on or after the Effective Date of
the Plan.


1.22         “Salary” means the base salary payable
to each Participant by the Company.


1.23         “Separation from Service” means, with
respect to a Participant, such Participant’s death, retirement or other
termination of employment with the Company. 
For purposes of the Plan, such term will be interpreted and applied in a
manner consistent with Section 409A of the Code and the Treasury
regulations thereunder.


1.24         “Term” means the period of time during
which the Plan is in effect, beginning on the Effective Date of the Plan and
ending on the effective date of the Plan’s termination pursuant to Section 11.01
or 11.02.


1.25         “Year” means each calendar year during
the Term of this Plan


2.             Participation.


2.01         Commencement.  An employee of the Company will become a
Participant in the Plan upon being so designated by the Board, effective as of
such date as the Board shall designate (which may be prior to the date of such
designation).  As of the Effective Date
of the Plan, the only two Participants are Richard D. Smith and Richard S. Warzala.


2.02         Termination of Participation.  Once designated as a Participant, an
individual will continue as a Participant until all benefits to which he is
entitled under the Plan have been distributed to him.


3.             Deferrals.


3.01         Deferral of Salary or Bonus.


(a)           Each Participant may
elect to defer receipt of up to 100 percent of the Salary and any Bonus
otherwise payable to such Participant for a given Year.


(b)           A Participant may
defer an item of compensation only to the extent that the Participant is
entitled to receive such item of compensation. 
Upon electing such a Deferral, the Participant will have no further
right to such deferred compensation other than as provided under the Plan.



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3.02         Deferral Election.


(a)           To elect to defer Salary or a Bonus, each
Participant shall file a Deferral Election, on the Appropriate Form, with the Secretary
of the Company in accordance with this Section 3.02.


(b)           Except as provided
in subsection (e), an election to defer Salary for a Year shall be filed by
December 31 of the Year preceding the Year in which the election is to take
effect.  The election shall be effective
with respect to Salary payable for all payroll periods ending in the Year in
which it is effective.


(c)           Except as provided
in subsection (e), an election to defer a Bonus shall be filed before the
beginning of the Year during which the performance, on which the Bonus will be
based, is measured; provided, however, that if the Board determines that such
Bonus constitutes “performance based compensation”, within the meaning of
Section 409A(4)(B)(iii) of the Code and the Treasury Regulations thereunder,
and that the other applicable requirements of such Regulations are met with
respect to such Bonus, such election to defer may be made up until six months
before the end of the Year during which the applicable Performance criteria are
measured.


(d)           A Deferral Election
that is made prior to the due date for its filing, as herein provided, may be
rescinded, and a new election made, before such due date.  If not rescinded, an election to defer shall
become irrevocable at the expiration of the time for its filing, except as
provided in Section 3.05 (unforeseen emergency).


(e)           For the Year in
which an employee first becomes a Participant, such Participant may file a
Deferral Election with respect to Salary or Bonus paid for services performed
after the date such Deferral Election is filed, at any time thirty (30)
days after such employee first becomes a Participant.


3.03         Credit to Account.  The Company shall credit any Deferral to a “Deferral
Sub-Account” of each Participant’s Account, as described in Section 7.01,
 as of the date it would have otherwise
been paid to each Participant.


3.04         Vesting.  A Participant’s interest in his Deferral
Sub-Account shall be fully vested at all times.


3.05         Unforeseen Emergency.  Upon payment to a Participant pursuant to
Section 8.05 on account of an unforeseeable emergency, any Deferral Election such
Participant has in effect for the Year of the payment shall automatically
terminate.


4.             Performance
Contributions.


4.01         Basis of Performance Contributions;
Performance Criteria.  


(a)           For each
Year during the Performance Contribution Term, the Company will credit
Performance Contributions to the Accounts of Participants for a Year if the 



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Company achieves the
Performance Criteria for such Year, and the other terms of conditions of this Plan
are satisfied.


(b)           For the first Year of
the Plan, the Performance Criteria shall be:


(i)            A Net Profit
Target, which shall be a threshold amount of Net Profit, equal to a stated
return on investment (“ROI”), determined in the manner stated in Schedule 1
hereto; and


(ii)           A stated percentage
of the excess of (A) the Company’s Net Profit for the Year, over (B) the Net
Profit Target for such Year, determined in the manner stated in Schedule 1.


(c)           For each succeeding
Year during the Term, the Board shall designate the applicable Performance
Criteria for the Year on or before the ninetieth (90th) day of such Year, or as soon thereafter
as is practicable.


4.02         Credit to Account.  The Company shall credit any Performance
Contributions to a “Performance Contribution Sub-Account” of each Participant’s
Account, as described in Section 7.01, 
as of the date on which the amount of such Performance Contribution is
determined by the Board.


4.03         Vesting.


(a)           A Participant’s
interest in a Performance Contribution made on his behalf for a Year shall
become fully vested if he


(i)            is employed by the
Company on December 31 of such Year, or


(ii)           Retires, dies or
becomes Disabled during such Year.


(b)           If a Participant
Retires, dies or become Disabled during the Year, the Performance Contribution
shall nevertheless be computed with respect to the entire Year, and the
Participant shall be entitled to receive the entire Performance Contribution
for such Year.


5.             Benefits
Upon a Change of Control.


5.01         Calculation of Change of Control
Benefit.  


(a)           In the event of a
Change of Control with respect to the Company which occurs during the
Performance Contribution Term,  a special
benefit will be paid, at the time hereafter provided, to all Participants.  Such benefit will be equal to the sum of the
following:


(i)            An amount equal to
a pro rata portion of the Performance
Contribution that would have been paid to such Participant for the Year in
which 



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the Change of
Control occurs, based on the number of days in such Year which precede the
Change of Control; plus


(ii)           An amount
determined by multiplying


(A)                              the average of the
Performance Contributions for the benefit of such Participant for the preceding
three (3) years, or the number of years since the Effective Date of the Plan,
if less, by


(B)                                the lesser of (I) three
(3), or (II) the number of Years, or fractions thereof, remaining after the
date of the Change of Control until December 31, 2020.


(b)           For purposes of
computing the portion of special benefit described in clause (i), above:


(A)                              Performance Criteria
shall be measured for the period ending on the last day of the month preceding
the month that includes the effective date of the Change of Control; and


(B)                                Extraordinary costs
arising out of the transactions that constitute the Change of Control shall be
disregarded.


5.02         Payment of Change of Control Benefit.  The Change of Control Benefit shall be determined
by the Board prior to the effective date of the Change of Control, and paid to
each Participant on the date of the Change of Control, or as soon thereafter as
is reasonably practicable, but in any case within the time prescribed in
Section 8.


6.             Discretionary
Contributions.


6.01         Designation
of Eligible Participants and Other Matters.


(a)           The Board may, from
time to time, allocate additional Discretionary Contributions to one or more
Participants, in such amount(s) as the Board shall designate.  


(b)           No later than the
date on which the Board designates the Participant(s) who shall receive such Discretionary
Contributions, and the amount thereof, it shall also designate when and how
such amounts shall be distributed to the eligible Participants, from among the
options stated in Section 8.02.


6.02         Credit to Account.  The Company shall credit any Discretionary Contributions
to a “Discretionary Contribution Sub-Account” in each Participant’s Account as
of the date on which the Board makes the designations described in Section 6.01.



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6.03         Vesting.  A Participant’s interest in his Discretionary
Sub-Account shall be fully vested at all times.


7.             Participants’
Accounts.


7.01         Establishment of Accounts and
Sub-Accounts.  


(a)           The Company shall establish an
Account for each Participant on the Company’s books to which deferrals and contributions
under this Plan shall be credited.


(b)           Deferrals pursuant
to Section 3, and any adjustments thereto pursuant to Section 7.03, shall
be credited to a Deferral Sub-Account within the Account of the Participant
who makes such Deferral.  Performance
Contributions on behalf of a Participant pursuant to Section 4, and
any adjustments thereto pursuant to Section 7.03, shall be credited to a
Performance Contribution Sub-Account within the Account of such
Participant.  Discretionary Contributions
on behalf of a Participant pursuant to Section 6 and any adjustments thereto
pursuant to Section 7.03, shall be credited to a Discretionary Contribution
Sub-Account within the Account of such Participant.


7.02         Performance Contributions Subject to
Forfeiture.


(a)           Until and except to the extent that Performance
Contributions become vested in accordance with Section 4.03, the interest of
each Participant in his Performance Contribution Sub-Account is contingent only
and is subject to forfeiture as provided in Section 4.03.


7.03         Imputed
Investment Experience.  


(a)           Each Participant may
designate one or more Investment Funds in which stated portions of such
Participant’s Account shall hypothetically be invested, by completing the
Appropriate Form and following such procedures as the Board shall designate.  Each Participant may allocate his Account or
any Sub-Account among different Investment Funds in increments of 10%.  Furthermore, each Participant may change his
designation of Investment Funds once every month.  The Investment Funds so designated are
referred to herein as the “Designated Investment Funds”.  


(b)           Each month during
the period of a Participant’s participation in the Plan,  the Company shall adjust the
balance credited to each Participant’s Account to reflect the investment
performance of the Designated Investment Funds.


7.04         Accounting.  


(a)           The Company shall,
on a periodic basis, deliver to each Participant a written report of the
adjusted value of the Participant’s Account. 
The report shall separately show all Deferrals and other contributions with
respect to the Account, all 



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investment returns
with respect to each portion of the Account for which the Participant has made
an investment designation, and any payments to the Participant.


(b)           If the Company has
engaged a trustee, custodian, or brokerage firm to hold securities and other
property acquired with respect to the Account, an accounting or report by such trustee,
custodian, or brokerage firm shall be deemed to be the Company’s report for
purposes of this Plan, except to the extent the Company may inform the
Participants otherwise.


8.             Distributions.



8.01         Default Rule.  Except as provided in Section 8.04, a
Participant’s Discretionary Sub-Account and, unless the Participant elects
otherwise in accordance with Section 8.02, a Participant’s Deferral Sub-Account
and Performance Contribution Sub-Account shall be distributed in a lump sum
within thirty (30) days after the earliest of the following dates:


(a)           The end of the
Performance Contribution Term; or 


(b)           The effective date
of a Change of Control.


8.02         Election of Time and Form of Payment.  


(a)           Each Participant may
elect to have payment of his Deferral Sub-Account or Performance Contribution
Sub-Account made to him in one of the methods described in this Section 8.02
instead of in the method described in Section 8.01, subject to the requirements
stated in subsection (b) and in Section 8.03. 



(b)           To be effective with
respect to any contribution or Deferrals with respect to any Year:


(i)            An election with
respect to a Deferral must be made before the expiration of the time for filing
the Participant’s Deferral Election, as provided in Section 3.02.


(ii)           An election with
respect to a Performance Contribution must be made at least six months before
the end of the Year during which the applicable Performance Criteria are
measured.


(c)           The optional methods
are as follows:


(i)            Monthly
installments over a period of three (3) years, beginning on such date as is
designated in the Participant’s election, subject to the provisions of Section
8.03.


8.03         Changes to Payment Method.  A Participant’s election to revoke the
default payment method of Section 8.01 and to elect another payment method
under Section 8.02, or to change the payment method elected under Section 8.02,
shall be subject to the following restrictions:



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(a)           The election to
revoke or change shall not take effect until twelve (12) months after the
date it is made.


(b)           Except in the case
of an election under Section 8.05 (unforeseeable emergency), the election to
revoke or change may not provide for payment sooner than five (5) years
from the date payment would otherwise have been made or begun.


(c)           An election to
revoke or change with respect to payments scheduled to be made or begin at a
time specified by each Participant may not be made less than 12 months before
the time originally specified for payment to be made or begin.


(d)           For the purposes of
this Section 8.03, a series of installment payments shall be considered a
single payment.


8.04         Payment on Death.


(a)           Upon a Participant’s
death before the termination of his employment with the Company, the Company
shall pay the balance of the Account to each Participant’s Beneficiary or
estate, within thirty (30) days after the date of his death.


(b)           Upon a Participant’s
death after the termination of his employment with the Company, the Company
shall pay any balance of the Account to such Participant’s Beneficiary or
estate, as provided in subsection (c), in the method in effect under Section 8.01
or 8.02, as applicable.


(c)           Each Participant may
designate one or more primary and contingent Beneficiaries to receive any
amounts payable under this Plan on his death. 
The designation of Beneficiary shall be in writing, shall be made on the
Appropriate Form, shall not be effective unless filed with the Secretary of the
Company before the Participant’s death, and may be changed or revoked at any
time without notice to any beneficiary by the Participant’s filing of a
subsequent designation with the Secretary of the Company.  If a Participant designates more than one Beneficiary,
each shall share equally unless such Participant specifies a different
allocation or preference.  If any Participant
fails to designate a Beneficiary, or should no designated Beneficiary survive
him or be in existence after the Participant’s death, payment shall be made to such
Participant’s estate.


(d)           If a Beneficiary (who
is a natural person) entitled to payment should die after a Participant’s death
but before receiving payment of the entire amount payable to him, the balance
of any amounts payable shall be paid when due to the surviving Beneficiary or Beneficiaries
designated by such Participant in accordance with such Participant’s designation.  If there should be no designated Beneficiaries
surviving or in existence on the date of such Beneficiary’s death, the balance
of such payments shall be paid when due to the executor or administrator of the
last Beneficiary to die.



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8.05         Unforeseeable Emergency.


(a)           A Participant or his Beneficiary may,
in the case of an unforeseeable emergency (as defined in subsection (b)), elect
and shall be entitled to payment of an amount credited to such Participant’s
Account subject to the following conditions:


(b)           The amount payable shall
not exceed the amount reasonably necessary to satisfy the emergency need (which
may include amounts necessary to pay any Federal, State, or local income taxes
or penalties reasonably anticipated to result from the payment), taking into
account the termination of any Deferral Elections pursuant to Section 3.05.


(c)           The Company shall not
pay any amount on account of an unforeseeable emergency to the extent the
emergency is or may be relieved through reimbursement or compensation from
insurance or otherwise; or by liquidation of each Participant’s or the beneficiary’s
assets, to the extent the liquidation of such assets would not cause severe
financial hardship; or by cessation of Deferrals under this Plan.


(d)           For purposes of this
Plan, “unforeseeable emergency” means a severe financial hardship of each
Participant or his beneficiary resulting from an illness or accident of each
Participant or beneficiary or each Participant or beneficiary’s spouse or
dependent (as defined in section 152(a) of the Code); loss of each Participant’s
or beneficiary’s property due to casualty; or other similar extraordinary and
unforeseeable circumstances arising as a result of events beyond the control of
each Participant or beneficiary.  The
Company shall, in its discretion, determine whether each Participant or
beneficiary is faced with an unforeseeable emergency permitting a distribution
under this Section 8.05.  In doing so,
the Company shall refer to the definition of “unforeseeable emergency” set
forth in Treasury Regulations under Section 409A of the Code, and shall base
its determination on such definition and the relevant facts and circumstances
of each case.


8.06         Taxes.  Payments under this Plan shall be subject to
any applicable tax withholding as required under Federal, State, and local law.


9.             Source
of Payments


9.01         Unsecured Creditor.  Nothing contained in this Plan shall create a
trust or create a fiduciary relationship of any kind between the Company and each
Participant.  To the extent that any
person acquires a right to receive payments from the Company under this Plan,
such right shall be no greater than the right of any unsecured general creditor
of the Company.


9.02         Unfunded.  The Company and each Participant acknowledge
it is their intent and they agree that for purposes of Title I of the Employee
Retirement Income Security Act of 1974, as amended, and for purposes of the
Code, and for all other purposes, this Plan constitutes an unfunded arrangement
maintained for the purpose of providing deferred compensation for an individual
who is a member of a select group of management or highly compensated
employees.



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10.          Prohibition
Against Assignment.


10.01       No Assignment.  Except to the extent required by law, the
right of each Participant or any beneficiary to payment of each Participant’s
interest in his Account shall not be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or
garnishment by creditors of each Participant or beneficiary.


11.          Amendment
and Termination.


11.01       Action by Company.  The Company may amend or terminate this Plan
at any time by resolution of the Board of Directors, but no such amendment or
termination shall adversely affect each Participant’s rights with respect to
the amounts previously credited to his Account.


11.02       Liquidation.  This Plan shall terminate automatically upon
the liquidation or dissolution of the Company. 
Subject to Section 10.03, payment of each Participant’s Account shall be
made to him or, if each Participant is deceased, his beneficiary, in a lump sum
as soon as practicable following such liquidation or dissolution.


11.03       Conformance to Section 409A.  Notwithstanding any contrary provision of
this Section 11 or Section 8:


(a)           If the termination
of a Participant’s employment with the Company does not qualify as a separation
from service, as that term is used under Section 409A of the Code, and such Participant
is not disabled, as that term is defined under Section 409A of the Code,
then payment under Section 8.01 or 8.02 shall not be made or begin before the
relevant time has elapsed after each Participant’s separation from service with
the Company.


(b)           The time or schedule
of any payment under this Plan may not be accelerated except as otherwise
provided in this Plan and then only to the extent such acceleration would not
cause this Plan to fail to meet the requirements of section 409A of the
Internal Revenue Code.


11.04       Intent To Defer Tax  The Company and each Participant intend that
this Plan meet the requirements of Section 409A of the Code for the deferral
(until payment) of the income taxation of the compensation deferrable under this
Plan, and this Plan shall be construed accordingly.  To the extent this Plan is more restrictive
than necessary to meet the requirements of Section 409A of the Code, the
Company reserves the right to amend this Plan, provided such amendment would
not cause the Plan to fail to meet those requirements.


12.          Miscellaneous.


12.01       No Contract of Employment.  Nothing contained in this Plan shall be
deemed to create a contract of continuing employment between the Company and each
Participant.


12.02       Administration.  The Board shall administer this Plan in
accordance with the Plan’s terms and shall have full power and authority
necessary or appropriate for carrying out 



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its duties.  The Board shall have the full power to establish
any rules and procedures it finds appropriate for the administration of this Plan.  The Board may correct any defect or reconcile
any inconsistency in the Plan to the extent the Board finds it necessary to
carry out the purposes of the Plan.  The Board
shall have full power and authority to interpret the Plan and to decide all
matters arising in connection with the administration of the Plan.  In exercising its power and authority, the Board
shall have complete discretion and its determinations shall be final.


12.03       Participant Responsible for Investment
Designations.  Neither the Company
nor the Board shall have any duty to question any investment designations of a Participant
or to make recommendations to any  Participant with respect to investment
designations.  Neither the Company nor
the Board shall be liable for any reduction in the amount credited to a Participant’s
Account that is the result of each Participant’s investment designations or a
failure of each Participant to make or change an investment designation.


Notwithstanding
any other provision of this Plan, a Participant’s investment designation shall
not be given effect if the Board in its discretion determines that such an
investment would be unlawful or impracticable if actually made by the Company.


12.04       Investment Designations upon Death,
Incapacity, or Disability.  The
provisions of this Section 12.04 shall apply notwithstanding any contrary
provisions of the Plan.


(a)           Upon a Participant’s
death, such Participant’s Beneficiary or Beneficiaries to the extent of their
interests, or, if each Participant fails to designate a Beneficiary or no Beneficiary
survives him, the executor or administrator of each Participant’s estate, shall
succeed to each Participant’s right to make investment designations with
respect to the Account, and all references to each Participant in Section 7.03
and Section 12.03 shall be interpreted as references to the Beneficiary, Beneficiaries,
executor, or administrator, as appropriate.


(b)           If, in the Board’s
opinion, each Participant or a Beneficiary entitled to make investment
designations under this Plan is under a legal disability or incapacitated in
any way so as to be unable to manage his financial affairs, and if the Board
determines that a legal representative of each Participant or his beneficiary
is authorized to make such designations on behalf of each Participant or his Beneficiary,
then such legal representative shall be considered the each Participant or
beneficiary for all purposes of Section 7.03 and Section 12.03.


(c)           If, in the situation
described in paragraph (b) (involving each Participant’s legal disability or
incapacity), the Board determines that no legal representative is authorized to
make such designations on behalf of each Participant or his beneficiary, then
neither the Board nor the Company shall be under any obligation to take any
action with respect to the investment designations in effect with respect to
the Account.  However, in such a
situation, the Board may, from time to time, in its discretion, make investment
designations on each Participant’s behalf, but only from among Investment Funds
substantially all of the assets of which are certificates of deposit or
interest bearing accounts in banks, savings banks, or savings and loan 



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associations;
obligations of the United States government and obligations guaranteed as to
principal and interest by the United States government; obligations of a state,
a territory, or a possession of the United States, or of any political
subdivision of any of the foregoing, or of the District of Columbia; and cash
deposit accounts.  Neither the Board, the
Company, nor any trustee shall be liable to each Participant, his beneficiary,
or his estate for taking no action with respect to investment designations in
effect with respect to the Account or for taking the action described in the
preceding sentence.


12.05       Waivers.  No provision of this Plan may be modified,
waived, or discharged except by an instrument in writing executed by each
Participant and an authorized officer of the Company.  A waiver by either party of any breach of, or
compliance with, any condition or provision of this Plan shall not be deemed a
waiver of similar or dissimilar provisions or conditions at the same or any
prior or subsequent time.  No agreements
or representations, oral or otherwise, with respect to the subject matter of
this Plan have been made by either party that are not expressly set forth in
this Plan.


12.06       Construction.  The validity, interpretation, construction,
and performance of this Plan shall be governed by the internal laws of the
State of Colorado, without regard to the principles of conflicts of law.


12.07       Enforceability.  The invalidity or unenforceability of any
provision of this Plan shall not affect the validity of any other provision of
this Plan, which shall remain in full force and effect.


12.08       Successors.  This Plan shall be binding on and inure to
the benefit of the Company, its successors and assigns, each Participant, and each
Participant’s heirs, executors, administrators, and legal representatives.



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Schedule 1


Determination
of Performance Criteria


For 2006, the
Performance Contribution will be based on a Net Profit Target equivalent to an
8% return on investment, with the investment used for such determination being
shareholders’ equity at the beginning of the year adjusted for the issuance of
any Company stock during the year.


If the Company’s
net profit for 2006 exceeds this Net Profit Target amount, 25% of the excess
shall be allocated evenly to Richard D. Smith and Richard S. Warzala.


 



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