Document:

EXHIBIT
4.2

 

FIRST
AMENDMENT

TO
THE

SECOND
AMENDED AND RESTATED

DISTRIBUTION
REINVESTMENT PLAN

OF

BEHRINGER
HARVARD OPPORTUNITY REIT I, INC.

 

Behringer Harvard
Opportunity REIT I, Inc., a Maryland corporation (the “Company”), hereby
adopts this first amendment, effective as of May 11, 2009 (the “Amendment”),
to the second amended and restated distribution reinvestment plan of the
Company (the “Plan”), on the terms and conditions set forth below.  Any capitalized term used herein that is not
otherwise defined herein shall have the meaning ascribed to such term as
provided in the Plan.

 

1.                                       Amendment
to Paragraph 3. Paragraph 3 of the Plan is hereby amended by deleting it in
its entirety and replacing it with the following:

 

3. General Terms of
Plan Investments. The Administrator will apply all Distributions subject to
this Plan, as follows:

 

(a) Prior to the
termination of the Company’s public offering of the Shares reserved for
issuance under the Plan pursuant to the Company’s prospectus dated October 26,
2007, as thereafter amended or supplemented (the “DRP Offering”), the
Administrator will invest Distributions in Shares at a price equal to 95% of
the most recently disclosed estimated value per Share (the “Valuation”) as
determined in accordance with our valuation policy (the “Valuation Policy”), as
such Valuation Policy is amended from time to time, regardless of the price per
Share paid by the Participant for the Shares in respect of which the
Distributions are paid.  The Valuation
Policy in effect as of the effective date of this Amendment is attached hereto
as Exhibit A.

 

(b) After
termination of the DRP Offering, the Administrator will invest Distributions in
Shares that may (but are not required to) be supplied from either (1) Shares
registered with the Securities and Exchange Commission (the “Commission”)
pursuant to an effective registration statement for Shares for use in the Plan
(a “Future Registration”) or (2) Shares purchased by the Administrator for
the Plan in a secondary market (if available) or on a national stock exchange
(if listed) (collectively, the “Secondary Market”) and registered with the
Commission for resale pursuant to the Plan. 
Shares registered in a Future Registration that are not purchased by the
Administrator in the Secondary Market will be issued at a price equal to 95% of
the most recently disclosed Valuation. 
Shares purchased on the Secondary Market as set forth in (2) above
will be purchased at the then-prevailing market price, and the average price
paid by the Administrator for all such purchases for a single Distribution will
be utilized for purposes of determining the purchase price for Shares purchased
under the Plan on such investment date; however, in no event will the purchase
price for Shares purchased under the Plan be less than 95% of the market price
for Shares on the investment date. Shares acquired by the Administrator on the
Secondary Market or registered in a Future Registration for use in the Plan may
be at prices lower or higher than the per Share price that will be paid for the
Shares purchased for the Plan pursuant to the DRP Offering and any subsequent
offering. If the Administrator acquires Shares in the Secondary Market for use
in the Plan, the Administrator shall use reasonable efforts to acquire Shares for
use in the Plan at the lowest price then reasonably available. However, the
Administrator does not in any respect guaranty or warrant that the Shares so
acquired and purchased by the Participants in the Plan will be at the lowest
possible price. Further, irrespective of the Administrator’s ability to acquire
Shares in the Secondary Market or the Company’s ability to complete a Future
Registration for shares to be used in the Plan, neither the Administrator nor
the Company is in any way obligated to do either.

 

(c) Regardless of
the pricing determined pursuant to Paragraphs 3(a) and 3(b) above,
the Board may determine, from time to time, in its sole discretion, the price
at which the Administrator will invest Distributions in Shares; provided that
if the Board takes such action under this Paragraph 3(c), the Company shall deliver
a notice regarding the new price to each Participant at least 30

 

 

days prior to the
effective date of the new price.  No
advance notice of pricing pursuant to Paragraphs (a) or (b) above
shall be required.

 

(d) No selling
commission or dealer manager fee will be paid for Shares purchased pursuant to
the Plan.

 

(e) For each
Participant, the Administrator will maintain an account which shall reflect for
each month the Distributions received by the Administrator on behalf of such
Participant. A Participant’s account shall be reduced as purchases of Shares
are made on behalf of such Participant.

 

(f) Distributions
shall be invested in Shares by the Administrator promptly following the payment
date with respect to such Distributions to the extent Shares are available for
purchase under the Plan. If sufficient Shares are not available, any such funds
that have not been invested in Shares within 30 days after receipt by the
Administrator will be distributed to the Participants. Any interest earned on
such accounts will be paid to the Company and is and will become the property
of the Company.

 

(g) Fractional
Shares, computed to four decimal places, shall be purchased for each
Participant account, if applicable. The ownership of the Shares shall be
reflected on the books of the Company or its transfer agent.

 

2.                                       Amendment
to Paragraph 7. The first sentence of Paragraph 7 of the Plan is hereby
amended by deleting it in its entirety and replacing it with the following:

 

Within 60 days after the
end of each fiscal quarter, the Administrator will deliver to each Participant
a statement of account describing, as to such Participant, the Distributions
received during the quarter, the number of Shares purchased during the quarter
and the calendar year pursuant to the Plan, and the per Share purchase price
for such Shares.

 

3.                                       Amendment
to Paragraph 10(a). Paragraph 10(a) of the Plan is hereby amended by
deleting it in its entirety and replacing it with the following:

 

(a) A Participant
may terminate or modify his participation in the Plan at any time by written
notice mailed to the Administrator. To be effective for any Distribution, such
notice must be received by the Administrator at least ten days prior to the
last day of the month to which such Distribution relates.

 

4.                                       Amendment
to Paragraph 10(c). Paragraph 10(c) of the Plan is hereby amended by
deleting it in its entirety and replacing it with the following:

 

(c) The
Administrator may terminate a Participant’s individual participation in the
Plan, and the Company may suspend or terminate the Plan itself, at any time by
ten days’ prior written notice to a Participant, or to all Participants, as the
case may be.

 

5.                                       Amendment
to Paragraph 12. Paragraph 12 of the Plan is hereby amended by deleting it
in its entirety and replacing it with the following:

 

12.  Notice. Any notice or other
communication required or permitted to be given by any provision of this Plan
shall be in writing and, if to the Administrator, addressed to Behringer
Harvard Investment Services, 15601 Dallas Parkway, Suite 600, Addison,
Texas  75001, or such other address as
may be specified by the Administrator by written notice to all Participants.
Notices to a Participant may be given by letter addressed to the Participant at
the Participant’s last address of record with the Administrator or delivered by
electronic means to any address specified by the Participant. Each Participant
shall notify the Administrator promptly in writing of any change of address.

 

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6.                                       Amendment
to Paragraph 13.  Paragraph 13 of the
Plan is hereby amended by adding the following provision:

 

13.  Amendment. The terms and conditions of
this Plan may be amended or supplemented by the Company at any time, including
but not limited to an amendment to the Plan to substitute a new Administrator
to act as agent for the Participants, by delivering an appropriate notice to
each Participant at least 30 days prior to the effective date of the amendment
or supplement. Such amendment or supplement shall be deemed conclusively
accepted by each Participant except those Participants from whom the
Administrator receives written notice of termination prior to the effective date
thereof.

 

In the event that the
Plan is amended pursuant to this Paragraph 13 or suspended pursuant to
Paragraph 10(c) hereof, each Participant shall remain a Participant in the
Plan receiving cash distributions during such period that the Plan is suspended
or the Shares cannot otherwise be distributed hereunder, unless the Participant
terminates his participation in accordance with the procedures set forth under
Paragraph 10(a) above.  Once such
suspension or other inability to distribute Shares hereunder ceases, the
Participant will then receive Shares hereunder.

 

7.                                       Continuing
Effect.  Except as otherwise set
forth in this Amendment, the terms of the Plan shall continue in full force and
effect and shall not be deemed to have otherwise been amended, modified,
revised or altered.

 

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EXHIBIT A

 

POLICY FOR ESTIMATION OF COMMON STOCK VALUE

OF

BEHRINGER HARVARD OPPORTUNITY REIT I, INC.

 

In order to assist
fiduciaries in discharging their obligations under ERISA reporting requirements
and to assist broker-dealers in connection with their obligations under
applicable FINRA Rules with respect to customer account statements,
Behringer Harvard Opportunity REIT I, Inc. (the “Company”) has adopted
this policy in respect of estimating the per share value of its common stock
(the “Common Stock”) as of May 11, 2009. 
This policy may be amended by the Board of Directors of the Company (the
“Board”) at any time in its sole discretion. 
In addition, although this policy expresses the intent of the Board at
the time of its adoption, there is no limitation on the ability of the Board to
cause the Company to vary from this policy to the extent it deems appropriate,
with or without an express amendment of this policy.

 

The Company shall provide
its stockholders a per share estimated value of its common stock on a periodic
basis, generally annually.  Until 18
months have passed without a sale in an offering of the Common Stock (or other
securities from which the Board believes the value of a share of common stock
can be estimated), the Company shall use the gross offering price of a share of
the Common Stock in its most recent offering as the per share estimated value
thereof or, with respect to an offering of other securities from which the
value of a share of Common Stock can be estimated, the Company shall use the
value derived from the gross offering price of such other security as the per
share estimated value of the Common Stock. 
For purposes of the foregoing, an offering shall not include an offering
related to a distribution reinvestment plan, employee benefit plan or the
redemption of interests in the Company’s operating partnership.

 

No later than 18 months
after the last sale in an offering of the securities described above, the
Company shall disclose an estimated per share value that is not based solely on
the offering price of securities in the most recent offering.  This estimate shall be determined by the
Board, or a committee thereof, after consultation with Behringer Harvard
Opportunity Advisors I, LLC (the “Advisor”), or if the Company shall no longer
be administered by the Advisor, the Company’s officers and employees.  The Advisor or the Company may engage such
experts and third parties as it may deem appropriate.  If a committee of the Board of Directors
estimates the value, a majority of the voting members of the committee will be
independent directors; however, the committee may also include officers or
employees of the Company, the Advisor or the Advisor’s affiliates.

 

If the Company has sold
assets and made distributions to stockholders of net proceeds from such sales
since the termination of the most recent offering, the estimated value per
share shall generally be net of the amount of those distributions.

 

The Board or committee
thereof will have the discretion to choose a methodology or combination of
methodologies as it deems reasonable under then current circumstances for
estimating the per share value of the Common Stock.  These methodologies may take account numerous
factors including, without limitation, the following:

 

·                  net amounts that might be realized in a
sale of the Company’s assets in an orderly liquidation;

 

·                  net amounts that might be realized in a
bulk portfolio sale of the Company’s assets;

 

·                  separate valuations of the Company’s
assets;

 

·                  private real estate market conditions;

 

·                  public real estate market conditions;

 

·                  the business plan of the Company and
characteristics and factors specific to the portfolio or securities;

 

A-1

 

·                  the prices at which the Company’s
securities were sold in other offerings, such as a distribution reinvestment
plan offering;

 

·                  the prices paid for Company securities in
other transactions, including secondary market trades;

 

·                  the relative prices paid for comparable
companies listed on a national securities exchange; and

 

·                  the Company’s going concern value.

 

The Board may rely
on the Advisor or a third-party valuation expert to assist in estimating the
value of the Company’s assets or its shares of Common Stock.  However, with respect to asset valuations,
the Board shall not be required to obtain asset-by-asset appraisals prepared by
appraisers certified by a Member of the Appraisal Institute or other trade
organization that monitors appraisers, nor must any appraisals conform to formats
or standards promulgated by any such trade organization.  The Company shall disclose the effective date
of the estimated valuation.  The Company
shall not release individual property value estimates or any of the data
supporting the estimated per share value, and the Board is under no obligation
to describe the factors on which it relied or the methodologies utilized in
estimating the estimated value of a share of Common Stock.

 

After first publishing an
estimate by the Board within 18 months after an offering as described above,
the Company shall repeat the process of estimating share value of the Common
Stock periodically thereafter.  However,
if deemed appropriate by the Board, the Company may return to the publication
of an estimated value based solely on the offering price of a share of Common
Stock or other securities if the Company has conducted another offering within
18 months of the disclosure of an estimated per share value.  The Company shall provide this information in
its annual report on Form 10-K.  The
Company may also disseminate this information by a posting on the web site
maintained for the Company and the Advisor and its affiliates at www.behringerharvard.com
or by other means.

 

Estimates based solely on
an offering price will be subject to numerous limitations.  For example, such estimates will not take
into account:

 

·                  individual or
aggregate values of the Company’s assets;

 

·                  real estate
market fluctuations affecting the Company’s assets generally;

 

·                  adverse or
beneficial developments with respect to one or more assets in the Company’s
portfolio;

 

·                  the Company’s
costs of the offering; or

 

·                  the Company’s
costs of acquiring assets.

 

After the estimated value
hereunder is based on factors in addition to the most recent offering price of
a share of Common Stock or other security, the estimated value will not reflect
developments that occur after the most recent estimated valuation date.  Further, such valuations will be estimates
only and may be based upon a number of estimates, assumptions and opinions that
may not be or may later prove not to be accurate or complete, which could make
the estimated valuations incorrect.

 

With respect to any
estimate of the value of Common Stock made pursuant to this policy, there can
be no assurance that:

 

·                  the estimated value per share would
actually be realized by the Company’s stockholders upon liquidation, bulk
portfolio sales of the Company’s assets, sale of the Company or listing of the
Common Stock on an exchange;

 

·                  any stockholder of the Company would be
able to realize estimated share values in any attempt to sell shares;

 

A-2

 

·                  the estimated value per share would be
related to any individual or aggregated value estimates or appraisals of the Company’s
assets; or

 

·                  the estimated value, or method used to
estimate value, would be found by any regulatory authority to comply with the
ERISA, FINRA or other regulatory requirements.

 

A-3Exhibit 10.1

 

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

Richard
S. Warzala

 

THIS
AMENDED AND RESTATED EMPLOYMENT AGREEMENT, dated and effective as of May 12,
2009 is between Allied Motion Technologies Inc., a Colorado corporation (the “Company”),
and Richard S. Warzala (“Employee”).

 

RECITALS:

 

WHEREAS,
the Employee has acknowledged skills and experience in the business conducted
by the Company and the Company desires to obtain the benefit of the Employee’s
knowledge, skills and experience and assure itself of the ongoing right to
Employee’s services from and after the date hereof, and is willing to do so on
the terms and conditions set forth in this Agreement; and

 

WHEREAS, Employee is willing
and able to render services to the Company, from and after the date hereof, on
the terms and conditions set forth in this Agreement; and

 

WHEREAS, the Company and
Employee entered into an Employment Agreement effective as of March 1,
2003; and

 

WHEREAS, the Company and
Employee desire to amend and restate that Employment Agreement in order to
recognize that the position and responsibilities of Employee have changed.

 

AGREEMENT:

 

NOW, THEREFORE, the Company
and Employee agree as follows:

 

1.                                      Employment.

 

1.1                               Title and Duties of Employee.  The
Company hereby employs Employee as President and Chief Executive Officer of the
Company and Employee hereby accepts such employment with the Company.

 

(a)                                  Powers and Duties.  Employee
shall have the powers and duties normally incident to the offices he holds as
provided in the bylaws of the Company and such other duties as shall be
determined from time to time by Company’s Board of Directors (the “Board”)
consistent with Employee’s qualifications and the best interest of the
Company.  Employee shall report to the
Board.  Subject to the authority of the
Board, Employee shall have supervision and final authority over all other
officers except the Chairman, and all of the business, property, affairs and
policies of the Company.

 

 

(b)                                  Contract Rights.  Failure of the
Board to elect Employee as President and Chief Executive Officer, or action by
the Board to remove Employee from such offices, shall be without prejudice to
the contract rights in this Agreement.

 

(c)                                  Service on the Board.  So long as Employee
is willing to serve on the Board and has not been terminated for cause, the
Board shall nominate Employee for election to the Board.  Failure to elect to, or removal from, the
Board of Directors shall not constitute resignation from or termination of
employment as Chief Executive Officer. Failure to elect to, or removal from,
the position of Chief Executive Officer or termination of this Agreement for
any reason shall not constitute resignation from the Board of Directors or
termination of Employee’s service on the Board.

 

1.2                               Performance.  Throughout
the period of Employee’s employment hereunder, Employee shall devote Employee’s
full business time, attention, knowledge and skills, faithfully, diligently,
and to the best of Employee’s ability, to the active performance of Employee’s
duties and responsibilities hereunder; provided, however, Employee may serve as
a director of other corporations and entities and may engage in other
activities to the extent they do not inhibit the performance of Employee’s
duties hereunder, or conflict with the business of the Company.  Employee shall disclose to the Company the
name of any corporation or entity on which he serves as a director or in a
similar capacity and describe other activities that are not personal in nature
in which he engages.  Employee shall do
such traveling as reasonably may be required in connection with the performance
of such duties and responsibilities. 
Employee shall not be required to relocate Employee’s residence and
Employee may conduct work out of his residence from time to time as he
determines appropriate.

 

2.                                      Term of Employment.  Unless terminated
as provided in Section 4 hereof, the term of this Agreement shall extend
to May 12, 2014 (the “Initial Period”), and thereafter shall automatically
continue on a year to year basis (each a “Subsequent Period”) unless the
Company or Employee shall give the other party notice at least 60 days prior to
the termination of the Initial Period or any Subsequent Period of its or his
election not to renew the term of employment, in which case this Agreement
shall terminate at the end of the period in which the notice is given;
provided, however, the Company’s obligation to pay compensation pursuant to Section 3
or perform any other acts with respect to the last year for which this
Agreement is effective shall continue and be enforceable notwithstanding the
termination of this Agreement.

 

3.                                      Compensation Benefits.

 

3.1                               Base Salary.  As compensation for services to be rendered
by Employee hereunder, the Company shall pay to Employee an annual salary of
not less than $275,000 per year, payable in periodic installments (but in no
event less frequently than monthly) in accordance with the standard payroll
practices of the Company in effect from time to time.  Employee’s 

 

2

 

salary
shall be reviewed annually for increase (but not decrease) on a merit
basis.  Such review shall be conducted at
the first meeting of the Board after the end of a fiscal year but not later
than February 28 of each year and the effective date of any such increase
shall be March 1.  The Employee’s
annual salary in effect from year to year is herein referred to as the “Base
Salary”.

 

3.2                               Annual Bonus.

 

(a)                                  Performance Criteria.  The Company shall
pay to Employee an Annual Bonus with respect to each fiscal year in amounts
determined as provided by the Board based on achieving performance criteria
established at the beginning of each fiscal year.  Such performance criteria will recognize the
overall financial performance of the Company and the improvements made in
financial results.

 

(b)                                  Time of Payment.  The first payment
of the Annual Bonus to Employee pursuant to Section 3.2 (a) shall be
with respect to the fiscal year ended December 31, 2009.  An Annual Bonus provided herein shall be
paid, subject to achieving the performance criteria, with respect to each
fiscal year thereafter during the term of this Agreement.  All Annual Bonuses payable under Section 3.2
(a) shall be paid in cash immediately following the first Board meeting
held after the end of the applicable fiscal year at which the Annual Bonus
calculation is approved by the Board.  In
no event shall payment be made later than March 15th of the year following
the year in which the Annual Bonus was earned.

 

3.3                               Long-Term Incentive Payment Plan.  On or before the
first Board meeting held in a current fiscal year, the Board shall consider
whether to award restricted Common Stock (“Restricted Stock”) or to grant
options to purchase the Company’s Common Stock (“Stock Options”) to Employee,
including the terms and the provisions of any Restricted Stock or Stock
Options.  Awards of Restricted Stock or grants
of Stock Options provided under this Section 3.3 are referred to herein as
“Long-Term Incentive Payout”.  In making
its determination the Board shall consider, among other things, the Employee’s
responsibilities and efforts and performance under this Agreement in relation
to the business plan and forecast, the relationship between the benefits of Restricted
Stock or Stock Options and improving shareholder value, the development of the
Company’s products and the performance of the Company’s products in the
marketplace, impact of the Company’s products and product development on future
prospects for the Company, and an increase in the trading price per share of
the Company’s Common Stock.  The Board
shall also consider customary business practices and Long-Term Incentive
Payment Plan benefits granted to Employee in comparison to such benefits
provided to other executives in positions similar to the Employee.

 

3

 

3.4                               Expenses.  The Company promptly shall reimburse
Employee, upon presentation of appropriate receipts and vouchers, for any
reasonable business expenses incurred by Employee in connection with the
performance of his duties and responsibilities hereunder.

 

3.5                               Vacation.  Throughout the period of Employee’s
employment hereunder, Employee shall be entitled to take, from time to time, 4
weeks of vacation annually with pay at such times as shall be mutually
convenient to Employee and the Company.

 

3.6                               Benefits and Perquisites.

 

(a)                                  Participation.  The Company shall make available to Employee,
throughout the period of employment hereunder, such benefits and perquisites as
are generally provided by the Company to its employees.  Without limiting the foregoing, Employee
shall be eligible to participate in any bonus plan, stock option plan, stock
purchase plan, pension plan and group life, health and accident insurance plans
as the Company shall continue to provide or which may hereafter be adopted by
the Company for the benefit of its employees generally.  The Company shall provide and pay the premium
on long term disability insurance for Employee. 
The Company shall not make any changes in such plans or arrangements
which would adversely affect the Employee’s rights or benefits thereunder,
unless such changes occur pursuant to a program applicable to all employees of
the Company and do not result in a proportionately greater reduction in the
rights of, or benefits to, the Employee as compared with any other employee of
the Company.

 

(b)                                  Office Space.  The Company shall provide office space and at
the Company’s offices suitable to Employee’s position and will provide the
equipment, including a computer, printer and phone, for Employee to maintain an
office at his home.

 

(c)                                  Life Insurance.  The Company shall
provide whole life insurance on the life of Employee with death benefits of
$500,000 with all premiums paid by the Company. 
In addition, the Company shall pay an additional $10,000 in annual
premiums toward an additional life insurance policy on the life of the
Employee. Employee may designate the beneficiary or beneficiaries of such policies.

 

(d)                                  Automobile.  The Company shall provide a new automobile no
less frequently than every 3 years for Employee’s sole use and the Company
shall pay all costs of operating and maintaining or repairing such
automobile.  At or before the time of
replacement, Employee shall have the right to purchase, at its depreciated cost
to the Company, the automobile previously provided.

 

4

 

(e)                                  Benefit Plans.  The Company will make non-qualified
contributions for Employee’s benefit under the Company’s IRS §401(k) plan
on the same basis as it makes contributions for other employees.

 

(f)                                    Retirement Plan Benefits.  The Company will
provide to Employee retirement plan benefits under any plan on the same basis
it provides benefits to other employees.

 

4.                                      Termination.  This Agreement may be terminated by the
Company or Employee as provided in this Section 4.  Notwithstanding anything in this Agreement to
the contrary, any payment that is subject to Code Section 409A and is
payable upon termination of this Agreement due to Retirement, Disability, or
termination of employment other than for cause, shall only be made if such
termination otherwise meets the definition of a “separation from service” as
defined under Code Section 409A. 
Furthermore, if Employee is a “specified employee” within the meaning of
Code Section 409A, the payment of any amount that is both subject to Code Section 409A
and due upon termination of this Agreement shall not be made until at least six
months following Employee’s separation from service.  At that time, all amounts, if any, that would
have been paid during the six-month period shall be paid to Employee, and
thereafter all payments shall be made as if there had been no six-month delay.

 

4.1                               Cause.

 

(a)                                  Definition.  This Agreement may be terminated at any time
at the option of the Company for Cause (as such term is hereinafter defined),
effective as provided in Section 4.9. 
As used herein, the term “Cause” shall mean and be limited to: (i) conviction
of, the indictment for (or its procedural equivalent), or the entering of a
guilty plea or plea of no contest with respect to, a felony; (ii) the
willful violation of the terms of this Agreement; (iii) gross negligence
by Employee in connection with the performance of Employee’s duties,
responsibilities, agreements and covenants hereof, which violation or
negligence shall continue uncorrected for a period of 45 days after receipt by
Employee of a written notice from the Company; (iv) the appropriation (or
attempted appropriation) of a material business opportunity of the Company,
including attempting to secure or securing any personal profit in connection
with any transaction entered into on behalf of the Company; (v) the
misappropriation (or attempted misappropriation) of any of the Company’s funds
or property; or (vi) the excessive use (following at least one written
warning) of alcohol or any illegal use of drugs or narcotics.  For purposes of this Section, no act or
failure to act on the Employee’s part shall be considered “willful” unless
done, or omitted to be done, by him not in good faith and without reasonable
belief that his action or omission was in the best interest of the
Company.  Notwithstanding the foregoing,
Employee shall not be deemed to have been terminated for Cause without written
notice pursuant to Section 13 and providing Employee an opportunity to be
heard before the Board with the provisions relied upon for termination provided
in reasonable detail.

 

5

 

(b)                                  Salary; Benefits; Bonuses.  Upon termination
for Cause, the Company shall (i) continue the Base Salary through the Date
of Termination, (ii) pay all fringe benefits through the end of the
calendar month in which termination occurs, and (iii) pay any annual
bonuses pursuant to Section 3.2 treating the effective Date of Termination
as being the last day of the fiscal year in which termination under this Section 4
occurs.

 

4.2                               Retirement.  Termination of employment based on “Retirement”
shall mean termination in accordance with any retirement arrangement
established with Employee’s consent, including settlement for the Annual Bonus
pursuant to Section 3.2.

 

4.3                               Death of Employee.  This Agreement
shall terminate upon the death of Employee; provided, however, the Company
shall (i) continue Employee’s Base Salary through the month in which death
occurs and for the following three months and (ii) shall make payments as
provided in Section 4.5 in place of (x) Annual Bonus payments
provided in Section 3.2 and (y) the Long-Term Incentive Payout pursuant
to Section 3.3.

 

4.4                               Disability of Employee.

 

(a)                                  Termination; Definition.            In
the event Employee becomes mentally or physically disabled during the term of
employment hereunder, this Agreement shall terminate as of the date such
disability is established.  As used in
this Section, the term “Disabled” or “Disability” means suffering from any
mental or physical condition, other than use of alcohol or illegal use of drugs
or narcotics, which renders Employee unable to perform substantially all of
Employee’s duties and services under this Agreement in a satisfactory manner
for 120 consecutive days, or 180 days during any 12-month period.  If, by reason of Disability, Employee is
absent from the full-time performance of his duties with the Company for the
periods above provided, Notice of Termination may be given and if Employee has
not returned to the full-time performance of his duties within 30 days
thereafter, Employee’s Disability shall be deemed “established” at the end of
such 30-day period.

 

(b)                                  Salary, Benefits.  During any period
that Employee fails to perform his full duties with the Company because he is
Disabled, Employee shall continue to receive Base Salary until this Agreement
is terminated pursuant to Section 4.8 at the rate in effect at the
commencement of any such period adjusted for any compensation payable to him
under any Company paid disability plan during such period.  In the event of termination for Disability
the Company shall continue (i) Employee’s Base Salary adjusted for any compensation
payable to him under any Company paid disability plan during such period and (ii) the
same coverage under medical, dental, long-term disability and life 

 

6

 

insurance
for the greater of (x) the remaining term of this Agreement or (y) until
long term disability insurance coverage becomes effective.

 

(c)                                  Bonuses.  In the event of termination upon established
Disability the Company shall make payments as provided in Section 4.5 in
place of (i) the Annual Bonus payment provided in Section 3.2 and (ii) the
Long-Term Incentive Payout pursuant to Section 3.3.

 

4.5                               Death and Disability of Employee.  In the event of
termination upon death the Company shall make payments to Employee’s personal
representative, and in the event of termination for Disability the Company
shall make payments to Employee, as hereinafter provided.  Such payments shall be made immediately
following the first meeting of the Board held after the end of the fiscal year
in which death or Disability occurred, but in no event later than February 28
of the year following the year of such death or disability.

 

(a)                                  Annual Bonus.  With respect to the Annual Bonus payment
provided in Section 3.2(a) the Company shall make a separate
determination of the Annual Bonus based on the factors provided in Section 3.2(a) for
the fiscal year in which death or Disability occurs

 

(b)                                  Long Term Incentive Plan.  With
respect to the Long-Term Incentive Payout provided in Section 3.3 the
Company shall make a separate determination of the Long-Term Incentive Payout
based on the factors provided in Section 3.3 for the fiscal year in which
death or Disability occurs.

 

4.6                               Other than for Cause.  If Employee’s
employment shall be terminated by the Company other than for Cause, Retirement,
death or Disability, prior to a change in control of the Company or potential
change in control of the Company as defined in the Severance Agreement referred
to in Section 4.7, then Employee shall be entitled to the payments
provided below:

 

(a)                                  Base Salary.  On the effective Date of Termination the
Company shall pay Employee his full Base Salary through the end of the month in
which termination occurs at the rate in effect at the time Notice of
Termination is given, and for one full year thereafter with payments being made
over the following 12 months and no less frequently than once per month.

 

(b)                                  Benefits.  The Company shall continue providing medical,
dental, long-term disability and life insurance equal to the coverages existing
at the time Notice of Termination is given for one full year.

 

(c)                                  Annual and Long Term Bonus.  On the effective
Date of Termination the Company shall make payments to and issue to Employee
with respect to, and in place of (i) the Annual Bonus payment provided in 

 

7

 

Section 3.2
an amount in cash equal to 0.9 multiplied by Base Salary for the year in which
employment is terminated and (ii) the Long Term Incentive Payout provided
in Section 3.3 for the fiscal year in which employment is terminated under
this Section.

 

4.7                               Change in Control.

 

(a)                                  Severance Agreement Continued.  The letter
agreement dated May 1, 2002 as subsequently amended, (Severance Agreement)
between the Company and Employee providing certain benefits to Employee upon a
change in control of the Company is continued and upon a change in control of
the Company the Severance Agreement shall apply and have priority over this
Agreement so that in the event of any conflict between this Agreement and the
Severance Agreement the Severance Agreement shall apply.  Any payments made or benefits provided
pursuant to the Severance Agreement are not to be duplicated by any
requirements of this Agreement.

 

(b)                                  Definition.  As used in this Agreement the term “change in
control of the Company” shall have the meaning expressed in the Severance
Agreement.

 

4.8                               Notice of Termination.  Any purported
termination of employment by the Company or by Employee, other than for death,
may be communicated orally or in writing. 
If communicated orally, such communication shall be followed within 10
days by a written communication which, and if communicated by written
communication the communication, shall indicate the specific termination provisions
in this Agreement relied upon, shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of employment
under the provisions so indicated and shall state an effective date of
termination.

 

4.9                               Date of Termination, Etc.  “Date of Termination”
shall mean: (i) if employment is terminated for Disability, the date as
provided in Section 4.4(a), and (ii) if employment is terminated for
Cause pursuant to Section 4.1 or for any other reason (other than
Disability), the date specified in the Notice of Termination (which, in the
case of a termination pursuant to Section 4.1 shall be the end of a
calendar month but not less than 15 days). 
Amounts paid under this Section are in addition to all other
amounts due under this Agreement and shall not be offset against or reduce any
other amounts due under this Agreement.

 

4.10                        Termination by Employee.  Employee may
terminate this Agreement by resigning as President and Chief Executive Officer
upon at least 30 days prior written notice of the effective Date of
Termination.  In such event the Company
shall continue Employee’s Base Salary and all fringe benefits to the effective
Date of Termination.  Termination of this
Agreement under 

 

8

 

this Section does
not affect the Company’s obligation to make all payments to Employee which were
fixed and determined prior to the effective Date of Termination.

 

5.                                      Confidential Information

 

5.1                               Definition.  Confidential Information means:

 

(a)                                  Any and all (i) trade secrets concerning the business
and affairs of the Company, product specifications, data, know-how, formula,
compositions, processes, designs, sketches, photographs, graphs, drawings,
samples, inventions and ideas, past, current, and planned research and development,
current and planned manufacturing or distribution methods and processes,
customer lists, current and anticipated customer requirements, price lists,
market studies, business plans, computer software and programs (including
object code and source code), computer software and database technologies,
systems, structures, architectures (and related formula), improvements,
devices, discoveries, concepts, ideas, methods and information, and any other
information, however documented, that is a trade secret within the meaning of
Colorado Revised Statutes § 7-74-101 et seq.; and

 

(b)                                  information concerning the business and affairs of the
Company (which includes historical financial statements, financial projections
and budgets, historical and projected sales, capital spending budgets and
plans, the names and backgrounds of key personnel, personnel training and
techniques and materials), however documented; and

 

(c)                                  notes, analyses, compilations, studies, summaries and other
material prepared by or for the Company containing or based, in whole or in
part, on any information included in the foregoing.

 

5.2                               Disclosure and Use.  Employee shall not
disclose, either during or subsequent to Employee’s employment with the
Company, any Confidential Information or proprietary data of the Company,
whether or not developed by Employee, except (i) as may be required for
Employee to perform Employee’s employment duties with the Company; (ii) to
the extent such information has been disclosed to Employee by a third party who
is not subject to restriction on the dissemination of such information; (iii) as
such information becomes generally available to the public other than as a
result of a disclosure by Employee; (iv) information which must be
disclosed as a result of a subpoena or other legal process, or (v) if
Employee shall first secure the Company’s prior written authorization.  This covenant shall survive the termination
of the Employee’s employment with the Company, and shall remain in effect and
be enforceable against Employee for so long as any such Confidential
Information or proprietary 

 

9

 

data
retains economic value, whether actual or potential, from not being generally
known to other persons who can obtain economic value from its disclosure or
use.

 

5.3                               Return of Materials.  The Employee will
not remove from the Company’s premises (except to the extent such removal is
for the purposes of the performance of Employee’s duties at home or while
traveling), any Confidential Information Employee recognizes that, as between
the Company and Employee, all the Confidential Information, whether or not
developed by the Employee, are the exclusive property of the Company.  Upon termination of employment by the
Company, Employee shall promptly deliver to the Company all Confidential
Information, and all other materials of a secret or confidential nature
relating to the Company’s business, which are in the possession or under the
control of Employee and Employee shall not retain copies of any such
Confidential Information.

 

6.                                      Inventions and Discoveries.  Employee hereby
assigns to the Company all of the Employee’s rights, title and interest in and
to all inventions, techniques, discoveries, processes, designs or improvements
(whether patentable or not), any industrial design (whether registrable or
not), or uses Confidential Information as described in Section 5.1, or
other intellectual property rights pertaining thereto, that relates in any way
to, or is useful in any manner in, the business then being conducted or
proposed to be conducted by the Company, and any such item created by the
Employee, either solely or in conjunction with others, following termination of
Employee’s employment with the Company (hereinafter referred to collectively as
the “Inventions”).  Promptly upon the
development or making of any Invention or improvement thereon, Employee shall
disclose the same to the Company and shall execute and deliver to the Company
such reasonable documents as the Company may request to confirm the assignment
of Employee’s rights therein and if requested by the Company, shall assist the
Company in applying for and prosecuting any patents which may be available in
respect thereof.  Employee acknowledges
that all of Employee’s Company-related writing, works of authorship, specially
commissioned works and other Employee Inventions are works made for hire,
property of the Company, including all copyrights, patents, and other
intellectual property rights pertaining thereto.  If it is determined that any such works are
not works made for hire, the Employee hereby assigns to the Company all of the
Employee’s right, title, and interest, including all rights of copyright,
patent, and other intellectual property rights, to or in such Inventions.

 

7.                                      Restrictive Covenant.

 

(a)                                  While the Employee is an employee of the Company and during
a period in which the Company is making continuation payments of Base Salary
pursuant to Section 4 hereof, Employee shall not, without the prior
written consent of the Company, (i) engage directly or indirectly in any
Competing Business in the geographical area where the Company does business
(including, without limitation, the United States and any country in which the
Company has a sales representative at the time of termination) whether as an
employee, consultant or advisor, or owner as 

 

10

 

principal,
shareholder or partner of any equity interest in excess of 5% of any business
entity (which shall include any proprietorship, trust, joint venture,
partnership or any type of corporation or association), or (ii) serve as
an officer, director, trustee, partner or the like in any such business entity.

 

(b)                                  The term “Competing Business” as used in this Section 7
includes any business conducted by the Company, which initially includes the
design, production and marketing of motion control products and any other
products manufactured or marketed by the Company at the date of termination of
this Agreement.

 

8.                                      Arbitration.  Any controversy or claim arising out of or
relating to this Agreement or the breach thereof shall be settled by
arbitration in the City and County of Denver in accordance with the rules of
the American Arbitration Association. 
Judgment upon the award rendered by the arbitrators may be entered in
any court having jurisdiction thereof. 
The Company shall pay all costs of arbitration.  In the event that it shall be necessary or
desirable for Employee to retain legal counsel and/or incur other costs and
expenses in connection with interpretation of his rights under this Agreement,
including any procedure in arbitration, Employee shall be entitled to recover
from the Company reasonable attorneys’ fees and costs and expenses incurred by
him in connection with such interpretation or arbitration, regardless of the
final outcome, unless the arbitrator shall determine that under the
circumstances such payment would be unjust. 
Reimbursement of attorneys’ fees, costs and expenses shall be subject to
the following requirements:  (a) such
reimbursement shall be available to the Employee for as long as he has
enforceable rights under this Agreement; (b) reimbursements provided
during the Employee’s taxable year may not affect the reimbursements provided
in any other taxable year; (c) reimbursement must be made on or before the
last day of the Employee’s taxable year following the taxable year in which the
expense was incurred; and (d) no reimbursement provided under this
paragraph shall be subject to liquidation or exchange for another benefit.

 

9.                                      Mitigation.  Employee shall not be required to mitigate
the amount of any payment provided in this Agreement by seeking other
employment or otherwise, nor shall the amount of any payment or benefit
provided in this Agreement be reduced by any compensation earned by Employee as
the result of employment by another employer, by retirement benefits, by offset
against any amount claimed to be owed by Employee to the Company, or otherwise.

 

10.                               Announcements.  No public
announcement regarding termination of employment of the Employee or any change
in status of the Employee of the Company shall be made without Employee’s
approval except the Company may announce Employee’s termination if Company is
otherwise required to do so pursuant to the rules of the Securities and
Exchange Commission or to any other legal requirement.  All matters with respect to termination of
employment of Employee, retirement of Employee or other action taken pursuant
to this Agreement shall be kept confidential and neither Company nor Employee
will make unfavorable comments about the other in connection with this
Agreement.

 

11.                               Severability.  If any provision of this Agreement, including
the Restrictive Covenant in Section 7, is held invalid or unenforceable,
either in its entirety or by virtue of its 

 

11

 

scope
or application to given circumstances, such provision shall thereupon be deemed
modified only to the extent necessary to render same valid, or not applicable
to given circumstances, or excised from this Agreement, as the situation may
require, and this Agreement shall be construed and enforced as if such
provision had been included herein as so modified in scope or application, or
had not been included herein, as the case may be.

 

12.                               Non-Assignability.  In light of the
unique personal services to be performed by Employee hereunder, it is
acknowledged and agreed that any purported or attempted assignment or transfer
by Employee of this Agreement or any of Employee’s duties, responsibilities or
obligations hereunder shall be void. 
This Agreement may not be assigned by the Company without the prior
written consent of Employee.

 

13.                               Notices.  Any notice, request, demand or other
communication required or permitted under this Agreement shall be in writing
and shall be deemed to have been given when delivered personally or on the date
of receipt when mailed by certified mail, return receipt requested, addressed
as follows:

 

	
  If
  to the Company:

  	
  Allied
  Motion Technologies Inc.

  
	
   

  	
  23
  Inverness Way East, Ste 150

  
	
   

  	
  Englewood,
  Colorado 80112

  
	
   

  	
  Attention:
  Chairman

  
	
   

  	
   

  
	
  If
  to the Employee:

  	
  Richard
  S. Warzala

  
	
   

  	
  10365
  Via Balestri Drive

  
	
   

  	
  Miromar
  Lakes, FL 33913

  

 

or
to such other address or addresses as may be specified from time to time by notice;
provided however, that any notice of
change of address shall not be effective until its receipt by the party to be
charged therewith.

 

14.                               General.

 

14.1                        Amendments.  Neither this Agreement nor any of the terms
or conditions hereof may be waived, amended or modified except by means of a
written instrument duly executed by the party to be charged therewith.

 

14.2                        Captions and Headings.  The captions and
paragraph headings used in this Agreement are for convenience of reference
only, and shall not affect the construction or interpretation of this Agreement
or any of the provisions hereof.

 

14.3                        Governing Law.  This Agreement, and
all matters or disputes relating to the validity, construction, performance or
enforcement hereof, shall be governed, construed and controlled by and under
the laws of the State of Colorado without regard to principles of conflicts of
law.

 

12

 

14.4                        Successors and Assigns.  This Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective heirs, personal representatives, successors and permitted
assigns.

 

(a)                                  The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or substantially
all of the business and/or assets of the Company, by agreement in form and
substance satisfactory to Employee, to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place.  Failure of the Company to obtain such
agreement prior to the effectiveness of any such succession shall be a breach
of this Agreement and shall entitle Employee to all rights for breach
hereunder.

 

(b)                                  If Employee should die while any amounts would still be
payable to him hereunder if he had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to Employee’s personal representatives or to his estate.

 

14.5                        Counterparts.  This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original hereof, but
all of which together shall constitute one and the same instrument.

 

14.6                        Entire Agreement.  Except as otherwise
set forth or referred to in this Agreement, this Agreement constitutes the sole
and entire agreement and understanding between the parties hereto as to the
subject matter hereof, and supersedes all prior discussions, agreements and understandings
of every kind and nature between them as to such subject matter.

 

13

 

                                                IN WITNESS
WHEREOF, the parties hereto have executed this Agreement on and as of the date
first set forth above.

 

	
   

  	
  ALLIED
  MOTION TECHNOLOGIES INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Richard D. Smith          

  
	
   

  	
  Richard D. Smith - Chairman

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Richard S. Warzala

  
	
   

  	
  Richard S. Warzala - Employee

  

 

14

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