Exhibit 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

 

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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.

 

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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.

 

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(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.

 

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(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

 

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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

 

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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

 

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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

 

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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

 

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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

 

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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.

 

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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.

 

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                                                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

 

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EX-10.3 4 a11-13572_1ex10d3.htm EX-10.3

EXHIBIT 10.3

 

AMENDMENT

TO

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

FOR

RICHARD S. WARZALA

 

THIS AMENDMENT TO THE AMENDED AND RESTATED EMPLOYMENT AGREEMENT, dated and effective as of June 1, 2011, is between Allied Motion Technologies Inc., a Colorado corporation (the “Company”), and Richard S. Warzala (“Employee”).

 

RECITALS:

 

WHEREAS, the Employee and the Company entered into the Amended and Restated Employment Agreement dated May 12, 2009 (the “Employment Agreement”);

 

WHEREAS, the Company and the Employee desire to amend the Employment Agreement to reflect the Company’s promise to pay supplemental executive retirement benefits for the Employee;

 

AMENDMENT:

 

1.                                      Effective May 31, 2011, a new Section 3.7 is added to the Employment Agreement to read in its entirety as follows:

 

3.7                               SERP Benefits:  In addition to the other benefits provided in this Section 3, the Employee shall be entitled to the following SERP benefits:

 

(a)                                  Contribution Amounts and Dates.  Subject to Section 3.7(b) below, the Company shall contribute the Contribution Amount set forth below to the Employee’s account in the Company’s Deferred Compensation Plan within 10 days after each Contribution Date; provided that the Employee is employed on each such Contribution Date.  If the Employee is not employed on any Contribution Date, no contribution will be made for that year or any future years, except as provided in Section 3.7(b).

 

Contribution Date

 

Contribution Amount

 

May 31, 2011

 

$

153,856.00

 

May 31, 2012

 

$

153,856.00

 

May 31, 2013

 

$

153,856.00

 

May 31, 2014

 

$

153,856.00

 

May 31, 2015

 

$

153,856.00

 

May 31, 2016

 

$

153,856.00

 

May 31, 2017

 

$

153,856.00

 

 



 

(b)                                  Contributions Upon Certain Termination Events.  Notwithstanding Section 3.7(a) above, if the Employee’s employment is terminated as a result of the Employee’s death, Disability, involuntary termination by the Company without Cause, or at any time and for any reason after a Change in Control (as defined in the Severance Agreement between the Company and the Employee), then any unpaid Contribution Amounts under the schedule set forth in Section 3.7(a) shall be contributed to the Employee’s account in the Company’s Deferred Compensation Plan in one lump sum payment within 15 days of such termination.

 

(c)                                  Distribution of Contribution Amounts.  The Contribution Amounts shall be treated as “Discretionary Contributions” under the Deferred Compensation Plan, and shall be distributed from the Deferred Compensation Plan in accordance with the terms of such plan and any permissible payment elections made by the Employee.

 

2.                                      Effective May 31, 2011,  Section 3.5 is amended to read in its entirety as follows:

 

3.5                                     Vacation.  Throughout the period of Employee’s employment hereunder, Employee shall be entitled to take, from time to time, 5 weeks of vacation annually with pay at such times as shall be mutually convenient to Employee and the Company.

 

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

 

 

ALLIED MOTION TECHNOLOGIES INC.

 

 

 

 

 

By:

 

 

 

Richard D. Smith – Chairman of the Board of Directors and CFO

 

 

 

 

 

 

 

 

 

 

 

Richard S. Warzala - Employee

 

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EX-10.7 5 a2191687zex-10_7.htm EX 10.7
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Exhibit 10.7

December 22, 2008

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

Richard S. Warzala

Dear Mr. Warzala:

        Allied Motion Technologies Inc. f/k/a Hathaway Corporation (the "Company") entered into an agreement with you dated May 1, 2002 (the "Agreement"), under which the Company agreed to provide you with certain severance benefits in the event your employment with the Company is Terminated following a change in control of the Company. In order to comply with the requirements of Section 409A of the Internal Revenue Code, as amended (the "Code"), as well as to incorporate certain changes to the Agreement approved by the board of directors of the Company (the "Board"), the Company and you hereby agree to amend and restate the Agreement as follows:

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

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

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

        1.     Term of Agreement.    As originally drafted, this Agreement commenced on May 1, 2002, and continued in effect through December 31, 2002. Commencing on January 1, 2003 and each January 1 thereafter, the term of this Agreement automatically extended for one additional year (meaning that as of each January 1 this Agreement shall then have a term of two years which shall reduce during the ensuing 12 months but shall again be extended on the next following January 1 to a term of two years) and shall continue to do so unless, not later than the September 30 immediately preceding each such January 1, the Company shall have given notice that it does not wish to extend this Agreement; provided further, if a change in control of the Company shall have occurred during the original or extended term of this Agreement, this Agreement shall continue in effect for a period of 24 months beyond the month in which such event occurred.

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


 

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

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

        (ii)   Potential Change in Control of the Company.    For purposes of this Agreement, a "potential change in control of the Company" shall be deemed to have occurred if (A) the Company enters into an agreement, the consummation of which would result in the occurrence of a change in control of the Company; (B) any Person (including the Company) publicly announces an intention to take or to consider taking actions which if consummated would constitute a change in control of the Company; (C) any Person, other than (1) a trustee or other fiduciary holding securities under an employee benefit plan of the Company, or (2) any Person or entity organized, appointed or established by the Company for or pursuant to the terms of any such plan, or (3) any Person who, on the date hereof, is a director or officer of the Company or whose shares of common stock of the Company are treated as beneficially owned by any such director or officer, increases his beneficial ownership of such securities by 8% or more of the shares of the Company issued and outstanding on the date of such determination; or (D) the Board adopts a resolution to the effect that, for purposes of this Agreement, a potential change in control of the Company has occurred. You agree that, subject to the terms and conditions of this Agreement, in the event of a potential change in control of the Company, you will remain in the employ of the Company until the earliest of (1) a date which is twelve (12) months after the occurrence of such potential change in control of the Company, (2) the Termination by you of your employment by reason of death or Disability or Retirement, as defined in Section 3(i), or (3) the occurrence of a change in control of the Company.

        3.     Termination Following Change in Control.    If any of the events described in Section 2(i) hereof constituting a change in control of the Company shall have occurred, you shall be entitled to the benefits provided in Section 4(iii) hereof upon the subsequent Termination of your employment during

2


 

the term of this Agreement unless such Termination is (A) because of your death, Disability or Retirement, (B) by the Company for Cause, or (C) by you other than for Good Reason.

        (i)    Disability; Retirement.    If, as a result of your incapacity due to physical or mental illness, you shall have been absent from the full-time performance of your duties with the Company for six (6) consecutive months, and within thirty (30) days after Notice of Termination is given you shall not have returned to the full-time performance of your duties, your employment may be Terminated for "Disability". Termination of your employment based on "Retirement" shall mean your Termination of employment in accordance with any retirement arrangement established with your consent.

        (ii)   Cause.    Termination by the Company of your employment for "Cause" shall mean Termination upon (A) an act of dishonesty constituting a felony under the laws of your domicile and resulting or intending to result in your gain or personal enrichment at the expense of the Company, or (B) use of drugs or excessive and habitual use of alcohol either of which substantially affects your ability to perform your duties with the Company, or (C) continued unauthorized and significant absences from duty (other than any such absences resulting from your incapacity due to physical or mental illness or any such actual or anticipated absences after the issuance of a Notice of Termination by you for Good Reason as defined in Sections 3(iv) and 3(iii), respectively) after a written notice is delivered to you by the Company, which notice specifically identifies the cause referred to above which is identified as the basis for Termination. Notwithstanding the foregoing, you shall not be deemed to have been Terminated for Cause unless and until there shall have been delivered to you a copy of a resolution duly adopted by the Board with the approval of not less than three-fourths (3/4) of the entire membership of the Board at a meeting of the Board called and held for such purpose (after reasonable notice to you and an opportunity for you, together with your counsel, to be heard before the Board), finding that in the good faith opinion of the Board you were guilty of conduct set forth above and specifying the particulars thereof in detail.

        (iii)  Good Reason.    You shall be entitled to Terminate your employment for Good Reason within two years following the initial existence of one or more of the circumstances described below. For purposes of this Agreement, "Good Reason" shall mean, without your express written consent, the occurrence after a change in control of the Company of any of the following circumstances, after you have given the Company notice within ninety (90) days following the initial existence of the circumstances, and the Company has failed to remedy such circumstances within thirty (30) days of receiving such notice:

        (A)  any change in your title or corporation office, to the extent such change results in a material diminution of your authority, duties or responsibilities; the assignment to you of any duties inconsistent with your status as CEO of the Company; or a substantial adverse alteration in the nature or status of your responsibilities (including reporting responsibilities) from those in effect immediately prior to the change in control of the Company;

        (B)  the change of the principal business of the Company (for purposes of this Agreement, as it is composed immediately prior to the change in control of the Company) as evidenced by, but not limited to, any sale of assets of the Company producing more than 50% of the Company's revenue, or comprising more than 50% of the Company's total assets, in any of the three most recent fiscal years prior to such sale, to the extent such change results in a material negative change to your duties, the conditions under which such duties are to be performed, or to your compensation;

        (C)  a reduction, without your consent, in your annual base salary as in effect on the date hereof or as the same may be increased from time to time;

3


        (D)  the relocation of your principal office to a location more than 50 miles from the location where such office is located immediately prior to the change in control of the Company except for required travel on Company business to an extent substantially consistent with your present business travel obligations;

        (E)  the failure, without your consent, to pay to you any portion of your current compensation or to pay to you any portion of an installment of deferred compensation under any deferred compensation program applicable to you, within seven (7) days of the date such compensation is due, to the extent such failure constitutes a material breach of this agreement or results in a material negative change to your compensation;

        (F)  the failure by the Company to continue in effect, except upon expiration in accordance with their terms, any compensation plan in which you participate immediately prior to the change in control of the Company which is material to your total compensation, including but not limited to the Company's Management Incentive Bonus Plan, Tax-Advantaged Investment Plan, Employee Stock Ownership Plan and Trust, and 1991 Incentive and Nonstatutory Stock Option Plan, or any plans adopted in substitution of existing plans prior to the change in control of the Company, unless an equitable arrangement (embodied in an ongoing substitute or alternative plan) has been made with respect to such plan, or the failure by the Company to continue your participation therein (or in such substitute or alternative plan) on a basis not materially less favorable, both in terms of the amount of benefits provided and the level of your participation relative to other participants, as existed at the time of the change in control of the Company, to the extent such failure constitutes a material breach of this agreement or results in a material negative change to your compensation;

        (G)  the failure by the Company to continue to provide you with benefits substantially similar to those enjoyed by you under any of the Company's life insurance, medical, health and accident, or disability plans in which you were participating at the time of the change in control of the Company, the taking of any action by the Company which would directly or indirectly materially reduce any of such benefits or deprive you of any material fringe benefit enjoyed by you at the time of the change in control of the Company, or the failure by the Company to provide you with the number of paid vacation days to which you are entitled on the basis of years of service with the Company in accordance with the Company's normal vacation policy in effect at the time of the change in control of the Company, to the extent such failure constitutes a material breach of this agreement or results in a material negative change to your compensation;

        (H)  the events described as a breach in Section 7 (i) or (ii) hereof;

or

        (I)   any purported Termination of your employment which is not effected pursuant to a Notice of Termination satisfying the requirements of Subsection (iv) below (and, if applicable, the requirements of Subsection (ii) above); for purposes of this Agreement, no such purported Termination shall be effective.

Your right to Terminate your employment pursuant to this Subsection (iii) shall not be affected by your incapacity due to physical or mental illness. Your continued employment shall not constitute consent to, or a waiver of rights with respect to, any circumstance constituting Good Reason hereunder.

        (iv)  Notice of Termination.    Any purported Termination of your employment by the Company or by you shall be communicated by written Notice of Termination to the other party hereto in accordance with Section 8 hereof. For purposes of this Agreement, a "Notice of Termination" shall mean a notice which shall indicate the specific Termination provision in this Agreement relied

4


upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for Termination of your employment under the provision so indicated.

        (v)   Date of Termination, Etc.    "Date of Termination" shall mean (A) if your employment is terminated for Disability, thirty (30) days after Notice of Termination is given (provided that you shall not have returned to the full-time performance of your duties during such thirty (30) day period), and (B) if your employment is terminated pursuant to Subsection (ii) or (iii) above 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 Subsection (ii) above shall be not less than thirty (30) days, and in the case of a termination pursuant to Subsection (Hi) above shall be not less than fifteen (15) nor more than sixty (60) days, respectively, your separation from the date such Notice of Termination is given); provided, however, that in each case the Date of Termination constitutes a separation from service as defined in Code Section 409A. If a dispute arises regarding your Termination of employment, you shall continue to perform your duties for the Company and the Company will continue to pay you your full compensation in effect when the notice giving rise to the dispute was given (including, but not limited to, base salary) and continue you as a participant in all compensation, benefit and insurance plans in which you were participating when the notice giving rise to the dispute was given, until the dispute is finally resolved. Amounts paid under this Subsection 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.     Compensation Upon Termination or During Disability.    Following a change in control of the Company, as defined by Section 2(i), upon Termination of your employment or during a period of Disability you shall be entitled to the following benefits:

        (i)    During any period that you fail to perform your full-time duties with the Company as a result of incapacity due to physical or mental illness, but during which you continue to be employed by the Company, you shall continue to receive your base salary at the rate in effect at the commencement of any such period, together with all compensation payable to you under the Management Incentive Compensation Plan or other plan during such period, until this Agreement is terminated pursuant to Section 3(i) hereof. Thereafter, or in the event your employment shall be Terminated by the Company or by you for Retirement, or by reason of your death, your benefits shall be determined pursuant to agreements between you and the Company and the Company's insurance and other compensation programs then in effect in accordance with the terms of such programs.

        (ii)   If your employment shall be Terminated by the Company for Cause or by you other than for Good Reason, Disability, death or Retirement, the Company shall pay you your full base salary through the Date of Termination at the rate in effect at the time Notice of Termination is given, plus all other amounts to which you are entitled under any compensation plan of the Company at the time such payments are due, and the Company shall have no further obligations to you under this Agreement.

        (iii)  If your employment by the Company shall be Terminated (a) by the Company other than for Cause, Retirement or Disability or (b) by you for Good Reason, then you shall be entitled to the benefits provided below:

        (A)  the Company shall pay you your full base salary through the Date of Termination at the rate in effect at the time Notice of Termination is given, plus all other amounts to which you are entitled under any compensation plan of the Company, at the time such payments are due, except as otherwise provided below;

        (B)  in lieu of any further salary payments to you for periods subsequent to the Date of Termination, the Company shall pay you a lump sum severance payment equal to 2.5

5


 

times the sum of (x) your annual base salary in effect immediately prior to the occurrence of the circumstance giving rise to the Notice of Termination given in respect thereof and (y) the highest amount paid or payable to you pursuant to the Management Incentive Compensation Plan for any of the three (3) fiscal years ending prior to the Notice of Termination; provided however, that for purposes of computing the payment under this clause (B), your entitlement to incentive compensation shall be determined solely based on whether the parameters that have been determined by the Board for the applicable year have been achieved, and without regard to any discretionary or other right of the Board under the terms of any such incentive compensation plan to deny payment notwithstanding that such parameters have been achieved;

        (C)  notwithstanding any provision of any incentive compensation plan applicable to you, the Company shall pay to you a lump sum amount equal to the sum of (x) any incentive compensation paid or payable to you, or that has been allocated or awarded to you, for a fiscal year or other measuring period preceding the Date of Termination but which has not yet been paid, and (y) an allocation under any annual or long-term incentive plan applicable to you for the current fiscal year with all tests for income adjusted pro rata according to the number of calendar months, including the month in which the Date of Termination occurs, that have elapsed in the fiscal year of Termination; provided however, that for purposes of computing the payment under this clause (C), your entitlement to incentive compensation shall be determined solely based on whether the parameters that have been determined by the Board for the applicable year have been achieved, and without regard to any discretionary or other right of the Board under the terms of any such incentive compensation plan to deny payment notwithstanding that such parameters have been achieved;

        (D)  the Company shall also pay to you all legal fees and expenses incurred by you as a result of such Termination (including all such fees and expenses, if any, incurred in contesting or disputing any such Termination or in seeking to obtain or enforce any right or benefit provided by this Agreement or in connection with any tax audit or proceeding to the extent attributable to the application of Code Section 4999 to any payment or benefit provided hereunder). The right to reimbursement of legal fees and expenses that are not otherwise exempt from Code Section 409A: (i) shall be available to you for as long as you have enforceable rights under this Agreement; (ii) shall be payable without regarding to any amounts that have been reimbursed in prior tax years under this Agreement; (iii) shall be paid to you on or before the last day of the tax year following the year in which you incurred the expense; and (iv) shall not be subject to liquidation or exchange for another benefit;

        (E)  in the event that you become entitled to payments (the "Severance Payments") provided under paragraphs (B), (C), and (D), above, and Subsection (iv), below, if any of the Severance Payments will be subject to the tax (the "Excise Tax") imposed by Section 4999 of the Code, the Company shall pay to you at the time specified in paragraph (F), below, an additional amount (the "Gross-Up Payment") such that the net amount retained by you, after deduction of any Excise Tax on the Severance Payments and any federal and state and local income tax and Excise Tax upon the payment provided for by this paragraph, shall be equal to the Severance Payments. For purposes of determining whether any of the Severance Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) any other payments or benefits received or to be received by you in connection with a change in control of the Company or your Termination of employment (whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any person whose actions result

6


 

in a change in control or any person affiliated with the Company or such person) shall be treated as "parachute payments" within the meaning of Section 280G(b)(2) of the Code, and all "excess parachute payments" within the meaning of Section 280G (b)(1) shall be treated as subject to the Excise Tax, unless in the opinion of tax counsel selected by the Company's independent auditors and acceptable to you, such other payments or benefits (in whole or in part) do not constitute parachute payments, or such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered within the meaning of Section 280G(b)(4) of the Code in excess of the base amount within the meaning of Section 280G(b)(3) of the Code, or are otherwise not subject to the Excise Tax, (ii) the amount of the Severance Payments which shall be treated as subject to the Excise Tax shall be equal to the lesser of (A) the total amount of the Severance Payments or (B) the amount of excess parachute payments within the meaning of Section 280G(b)(1) (after applying clause (i), above), and (iii) the value of any non-cash benefits or any deferred payment or benefit shall be determined by the Company's independent auditors in accordance with the principles of Sections 280G(d)(3) and (4) of the Code. For purposes of determining the amount of the Gross-Up Payment, you shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made and state and local income taxes at the highest marginal rate of taxation in the state and locality of your residence on the Date of Termination, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes. In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the time of Termination of your employment, you shall repay to the Company at the time that the amount of such reduction in Excise Tax is finally determined the portion of the Gross-Up Payment attributable to such reduction (plus the portion of the Gross-Up Payment attributable to the Excise Tax and federal and state and local income tax imposed on the Gross-Up Payment being repaid by you if such repayment results in a reduction in Excise Tax and/or a federal and state and local income tax deduction) plus interest on the amount of such repayment at the rate provided in Section 1274(b)(2)(B) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the Termination of your employment (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional gross-up payment in respect of such excess (plus any interest payable with respect to such excess) at the time that the amount of such excess if finally determined;

        (F)  the payments provided for in paragraphs (B), (C) and (E) above, shall be made not later than the fifth day following the Date of Termination, provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company, shall pay to you on such day an estimate, as determined in good faith by the Company, of the minimum amount of such payments and shall pay the remainder of such payments (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the thirtieth day after the Date of Termination. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to you payable on the fifth day after demand by the Company (together with interest at the rate provided in Section 1274 (b) (2) (B) of the Code). In no event shall the Gross-Up Payment be made later than the end of the tax year following the year in which you paid the Excise Tax.

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        (iv)  If your employment shall be Terminated (A) by the Company other than for Cause, Retirement or Disability or (B) by you for Good Reason, then for a 24-month period immediately following such Termination of employment, the Company shall pay you on a monthly basis, pursuant to the Company's regular payroll timing, an amount equal to 25% of your monthly Base Salary being paid on your Date of Termination, to assist you in purchasing whatever benefits you choose during such period.

        (v)   You shall not be required to mitigate the amount of any payment provided for in this Section 4 by seeking other employment or otherwise, nor shall the amount of any payment or benefit provided for in this Section 4 be reduced by any compensation earned by you as the result of employment by another employer, by retirement benefits, by offset against any amount claimed to be owed by you to the Company, or otherwise.

        5.     Termination Before Change in Control.    If your employment by the Company shall be terminated by the Company other than for Cause, Retirement or Disability, and a change in control of the Company occurs within 90 days thereafter, you shall be entitled to the benefits provided in Section 4(iii) hereof.

        6.     Definition of Termination of Employment.    With respect to any payment triggered upon your "termination" of employment, such payment may not be made unless and until such termination constitutes your separation from service with the Company, as defined under Code Section 409A. Furthermore, if you are a "specified employee" within the meaning of Code Section 409A, as determined by the Company, the payment of any amount that is subject to Code Section 409A and that is due under this Agreement upon your Termination of employment shall not be made until at least six months following your separation from service. At that time, all amounts, if any, that would have been paid during the six-month period shall be paid to you, and thereafter all payments shall be made as if there had been no six-month delay.

        7.     Successors; Binding Agreement; Release of the Company.

        (i)    In the event there is a disposition of the Company in a transaction as described in Section 2(i)(A), (B) (C) or (D), and the Company under new ownership or any successor to the Company in such transactions, and any business entity beneficially owning directly or indirectly 50% or more equity interest in the Company or any such successor, (A) does not assume and agree to perform this Agreement in the same manner and to the same extent the Company would be required to perform it if no succession had taken place, or (B) alternatively, does not offer to provide you an agreement with benefits substantially similar to this Agreement, resulting in your Termination of employment, then such failure to obtain the events described in clauses (A) or (B) above of this Section 7(i), prior to the effectiveness of such succession shall be a breach of this Agreement and shall entitle you to compensation from the Company in the same amount and on the same terms as you would be entitled to hereunder if you Terminated your employment for Good Reason following a change in control of the Company, except that for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the Date of Termination. However, if you enter into an employment agreement with the Company or such successor as a part of the transaction or if the Company or any such successor, (l) does assume and agree to perform this Agreement in the same manner and to the same extent the Company would be required to perform it if no succession had taken place, or (2) alternatively, does offer to provide you an agreement with benefits substantially similar to this Agreement, then the obligation hereunder of the Company shall be released from all obligations under this Agreement.

        (ii)   In the event there is a disposition in a transaction described in Section 2(i)(E) and any transferee entity in such a transaction, and any business entity beneficially owning directly or indirectly 50% or more equity interest in such transferee entity (A) does not assume and agree to

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perform this Agreement in the same manner and to the same extent the Company would be required to perform it if no succession had taken place, or (B) alternatively, does not offer to provide you an agreement with benefits substantially similar to this Agreement, resulting in your Termination of employment, then such failure to obtain the events described in clauses (A) or (B) above of this Section 7(ii), prior to the effectiveness of such succession shall be a breach of this Agreement and shall entitle you to compensation from the Company in the same amount and on the same terms as you would be entitled to hereunder if you Terminated your Employment for Good Reason following a change in control of the Company, except that for purposes of implementing the foregoing the date on which any such succession becomes effective shall be deemed the Date of Termination. However, if you enter into an employment agreement with the transferee entity as a part of the transaction or if such transferee entity (1) does assume and agree to perform this Agreement in the same manner and to the same extent the Company would be required to perform it if no succession had taken place, or (2) alternatively, does offer to provide you an agreement with benefits substantially similar to this Agreement, then the obligation hereunder of the Company shall be released from all obligations under this Agreement.

        (iii)  This Agreement shall inure to the benefit of and be enforceable by your personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If you should die while any amount would still be payable to you hereunder if you had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to your devisee, legatee or other designee or, if there is no such designee, to your estate.

        (iv)  Your obligations hereunder shall inure to the benefit of and be enforceable by the Company and each of its successors and assigns by contract, operation of law or otherwise.

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

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

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

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

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

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


 


 


Sincerely,


 


 


ALLIED MOTION TECHNOLOGIES INC.


 


 


By:


 


/s/ RICHARD D. SMITH


 

 

Name:

 

Richard D. Smith

 

 

Title:

 

CEO


APPROVED: December 22, 2008.


 


 


 


 


/s/ RICHARD S. WARZALA


Richard S. Warzala


 


 


 


 

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Exhibit 10.7