Exhibit 10.15

 

AMENDED AND RESTATED
SEVERANCE PROTECTION AGREEMENT

 

THIS AGREEMENT is made as of the 22nd day of December, 2008, by and between
Axsys Technologies, Inc. (the “Company”) and David A. Almeida (the “Executive”).

 

WHEREAS, the Board of Directors of the Company (the “Board”) recognizes that the
possibility of a Change in Control (as hereinafter defined) exists and that the
threat or the occurrence of a Change in Control can result in significant
distraction of the Company’s key management personnel because of the
uncertainties inherent in such a situation;

 

WHEREAS, the Board has determined that it is essential and in the best interests
of the Company and its stockholders for the Company to retain the services of
the Executive in the event of a threat or occurrence of a Change in Control and
to ensure the Executive’s continued dedication and efforts in such event without
undue concern for the Executive’s personal financial and employment security;

 

WHEREAS, in order to induce the Executive to remain in the employ of the Company
and/or one of its Affiliates (the entity or entities employing the Executive,
the “Employing Affiliate”), particularly in the event of a threat or the
occurrence of a Change in Control, the Company desires to enter into this
Agreement with the Executive to provide the Executive with certain benefits in
the event the Executive’s employment is terminated as a result of, or in
connection with, a Change in Control; and

 

WHEREAS, the Company and the Executive desire for this Amended and Restated
Severance Protection Agreement to amend and supersede the Severance Protection
Agreement, originally dated May 13, 2003, and amended and restated as of June 9,
2005, between the Company and the Executive and any other severance agreements
entered into prior to the date hereof.

 

NOW, THEREFORE, in consideration of the respective agreements of the parties
contained herein, it is agreed as follows:

 

1.                                       Term of Agreement.  This Agreement
shall commence as of the date of this Agreement and shall continue in effect
until January 1, 2010 (the “Term”); provided, however, that on January 1, 2009,
and on each January 1 thereafter, the Term shall automatically be extended for
one year unless either the Executive or the Company shall have given written
notice to the other at least ninety days prior thereto that the Term shall not
be so extended; provided, further, however, that following the occurrence of a
Change in Control, the Term shall not expire prior to the expiration of
twenty-four months after such occurrence.

 

2.                                       Termination of Employment.  If, during
the Term, the Executive’s employment with the Company or an Employing Affiliate
shall be terminated within twenty-four months following a Change in Control, the
Executive shall be entitled to the following compensation and benefits:

 

Short-Term Deferral

 

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(a)                                  If the Executive’s employment with the
Company or an Employing Affiliate shall be terminated (1) by the Company for
Cause or Disability, (2) by reason of the Executive’s death, or (3) by the
Executive other than for Good Reason or pursuant to a Window Period Termination,
the Company shall pay to the Executive the Accrued Compensation.

 

(b)                                 If the Executive’s employment with the
Company or an Employing Affiliate shall be terminated for any reason other than
as specified in Section 2(a), or if the Executive terminates his employment with
or without Good Reason during the one month period ending on the earlier of
(i) the end of the second month of the calendar year following the calendar year
in which the Change in Control occurs, or (ii) the last day of the seventh month
following a Change in Control (a “Window Period Termination”), the Executive
shall be entitled to the following:

 

(1)                                  the Company shall pay the Executive the
Accrued Compensation;

 

(2)                                  the Company shall pay the Executive as
severance pay an amount equal to 2.99 times the sum of (a) the highest annual
base salary paid to the Executive during the 12-month period immediately prior
to the Termination Date and (b) the average of the annual cash bonuses paid to
the Executive during the 3 calendar years prior to the year in which the
Termination Date occurs (prorated for any lesser period during which the
Executive has been employed or for which bonuses have been determined, if
applicable, and, in the case of each of (a) and (b), determined without
reduction for any portion thereof that has been deferred by the Executive);
provided, however, that, if the Executive has been employed for less than a full
year as of the Termination Date, the amount of clause (b) hereof shall be equal
to the Executive’s target bonus amount for such year, prorated for the period
during which the Executive has been employed; and

 

(3)                                  for twelve months following the Termination
Date (the “Continuation Period”), the Company shall continue on behalf of the
Executive and his dependents and beneficiaries the life insurance, disability,
medical, dental, prescription drug and hospitalization coverages and benefits
provided to the Executive immediately prior to a Change in Control (the
“Benefits Continuation”), or, if greater, the coverages and benefits provided at
any time thereafter.  The coverages and benefits (including deductibles and
costs to the Executive) provided in this Section 2(b)(3) during the Continuation
Period shall be no less favorable to the Executive and his dependents and
beneficiaries than the most favorable of such coverages and benefits referred to
above.  Notwithstanding the foregoing, or any other provision of this Agreement,
for purposes of determining the period of continuation coverage to which the
Executive or any of the Executive’s dependents is entitled pursuant to
Section 4980B of the Internal Revenue Code of 1986, as amended (the “Code”),
under the Company’s medical, dental and other group health plans, or successor
plans, the Executive’s “qualifying event” will be the termination of the
Continuation Period and the Executive will be considered to have remained
actively employed on a full-time basis through that date.  The Company’s
obligation hereunder with respect to the foregoing coverages and benefits shall
be reduced to the extent that the Executive obtains any such coverages and
benefits pursuant to a subsequent employer’s benefit plans, in which case the
Company may reduce any of the coverages or benefits it is required to provide
the Executive hereunder so long as the aggregate coverages and benefits
(including deductibles and costs to the Executive) of the combined benefit plans
are no less favorable to the

 

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Executive than the coverages and benefits required to be provided hereunder. 
This Section 2(b)(3) shall not be interpreted so as to limit any benefits to
which the Executive, his dependents or beneficiaries may be entitled under any
of the Company’s employee benefit plans, programs or practices following the
Executive’s termination of employment, including but not limited to retiree
medical and life insurance benefits.  To the extent the Benefit Continuation
involves the reimbursement of expenses pursuant to the Company’s supplemental
medical plan, such reimbursement will occur in all events prior to the last day
of the calendar year following the calendar year in which the Executives
incurred the expense.  In no event will the amount of expenses so reimbursed by
the Company in one year affect the amount of expenses eligible for
reimbursement, or in-kind benefits to be provided, in any other taxable year.

 

(c)                                  The cash amounts provided for in Sections
2(a) and 2(b) shall be paid in a single lump sum cash payment within ten days
after the Termination Date (or earlier, if required by applicable law).

 

(d)                                 The Executive may terminate his employment
for Good Reason and be eligible for the cash amount provided for in
Section 2(b) only if he gives notice to the Company of the occurrence of any of
the conditions described in Section 16.8 within ninety days following his
knowledge of such condition and the Company fails to remedy such condition
within thirty days following the Executive’s written notice of such condition. 
The severance pay and benefits provided for in this Section 2 shall be in lieu
of any other severance pay to which the Executive may be entitled under any
severance or employment agreement with the Company or any other plan, agreement
or arrangement of the Company or any other Affiliate of the Company.  The
Executive’s entitlement to any compensation or benefits other than as provided
herein shall be determined in accordance with the employee benefit plans of the
Company and any of its Affiliates and other applicable agreements, programs and
practices as in effect from time to time.

 

(e)                                  If the Executive’s employment is terminated
by the Company or an Employing Affiliate without Cause prior to the date of a
Change in Control but the Executive reasonably demonstrates that such
termination (1) was at the request of a third party who has indicated an
intention or taken steps reasonably calculated to effect a Change in Control (a
“Third Party”) and who effectuates a Change in Control or (2) otherwise arose in
connection with, or in anticipation of, a Change in Control which has been
threatened or proposed and which actually occurs, such termination shall be
deemed to have occurred after a Change in Control, it being agreed that any such
action taken following shareholder approval of a transaction which if
consummated would constitute a Change in Control, shall be deemed to be in
anticipation of a Change in Control provided such transaction is actually
consummated.

 

3.                                       Effect of Section 280G of the Internal
Revenue Code.

 

(a)                                  Anything in this Agreement to the contrary
notwithstanding, in the event that this Agreement becomes operative and it is
determined (as hereafter provided) that any payment (other than the Gross-Up
payments provided for in this Section 3 and Annex A) or distribution by the
Company or any of its Affiliates to or for the benefit of the Executive, whether
paid or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise pursuant to or by reason of any other agreement, policy,
plan, program or arrangement, including without limitation any stock option,
performance share, performance unit, stock

 

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appreciation right or similar right, or the lapse or termination of any
restriction on or the vesting or exercisability of any of the foregoing (a
“Payment”), would be subject to the excise tax imposed by Section 4999 of the
Code (or any successor provision thereto) by reason of being considered
“contingent on a change in ownership or control” of the Company, within the
meaning of Section 280G of the Code (or any successor provision thereto) or to
any similar tax imposed by state or local law, or any interest or penalties with
respect to such tax (such tax or taxes, together with any such interest and
penalties, being hereafter collectively referred to as the “Excise Tax”), then
the Executive will be entitled to receive an additional payment or payments
(collectively, a “Gross-Up Payment”).  The Gross-Up Payment will be in an amount
such that, after payment by the Executive of all taxes (including any interest
or penalties imposed with respect to such taxes), including any Excise Tax
imposed upon the Gross-Up Payment, the Executive retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payment.

 

(b)                                 The obligations set forth in
Section 3(a) will be subject to the procedural provisions described in Annex A.

 

4.                                       Notice of Termination.  Following a
Change in Control, any intended termination of the Executive’s employment by the
Company or an Employing Affiliate shall be communicated by a Notice of
Termination from the Company to the Executive, and any intended termination of
the Executive’s employment by the Executive for Good Reason or pursuant to a
Window Period Termination shall be communicated by a Notice of Termination from
the Executive to the Company.

 

5.                                       Fees and Expenses.  The Company shall
pay, as incurred, all legal fees and related expenses (including the costs of
experts, evidence and counsel) that the Executive may reasonably incur following
a Change in Control as a result of or in connection with (a) the Executive’s
contesting, defending or disputing the basis for the termination of the
Executive’s employment, (b) the Executive’s hearing before the Board of
Directors of the Company as contemplated in Section 16.4 or (c) the Executive’s
seeking to obtain or enforce any right or benefit provided by this Agreement or
by any other plan or arrangement maintained by the Company or one of its
Affiliates under which the Executive is or may be entitled to receive benefits. 
All reimbursements under this Section 5 shall be for expenses incurred by the
Executive during his lifetime.  Reimbursement shall be made within 90 days
following the Executive submitting evidence of such incurrence of such expenses,
and in all events prior to the last day of the calendar year following the
calendar year in which the Executive incurred the expense.  In no event will the
amount of expenses so reimbursed by the Company in one year affect the amount of
expenses eligible for reimbursement, or in-kind benefits to be provided, in any
other taxable year.

 

6.                                       Unauthorized Disclosure.

 

(a)                                  The Executive agrees and understands that
during the Executive’s employment with the Company or an Employing Affiliate,
the Executive has been and will be exposed to and receive information relating
to the affairs of the Company considered by the Company to be confidential and
in the nature of trade secrets (including but not limited to procedures,
memoranda, notes, records and customer lists, whether such information has been
or

 

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is made, developed or compiled by the Executive or otherwise has been or is made
available to him) (any and all such information, the “Confidential
Information”).  The Executive agrees that, during the Term and thereafter, he
shall keep such Confidential Information confidential and will not disclose such
Confidential Information, either directly or indirectly, to any third person or
entity without the prior written consent of the Company; provided, however, that
(i) the Executive shall have no such obligation to the extent such Confidential
Information is or becomes publicly known other than as a result of the
Executive’s breach of his obligations hereunder or is received by the Executive
following the Termination Date and (ii) the Executive may, after giving prior
notice to the Company to the extent practicable under the circumstances,
disclose such Confidential Information to the extent required by applicable laws
or governmental regulations or judicial or regulatory process.

 

(b)                                 The Executive agrees that all Confidential
Information is and will remain the property of the Company.  The Executive
further agrees that, during the Term and thereafter, he shall hold in the
strictest confidence all Confidential Information, and shall not, directly or
indirectly, duplicate, sell, use, lease, commercialize, disclose or otherwise
divulge to any person or entity any portion of the Confidential Information or
use any Confidential Information for his own benefit or profit or allow any
person or entity, other than the Company and its authorized employees, to use or
otherwise gain access to any Confidential Information.

 

(c)                                  All memoranda, notes, records, customer
lists and other documents made or compiled by the Executive or otherwise made
available to him concerning the business of the Company or its subsidiaries or
Affiliates shall be the Company’s property and shall be delivered to the Company
upon the termination of the Executive’s employment with the Company or an
Employing Affiliate or at any other time upon request by the Company, and the
Executive shall retain no copies of those documents.  The Executive shall never
at any time have or claim any right, title or interest in any material,
invention or matter of any sort created, prepared or used in connection with the
business of the Company or its subsidiaries or Affiliates.

 

7.                                       Non-competition.

 

(a)                                  By and in consideration of the Company’s
entering into this Agreement and the payments to be made and benefits to be
provided by the Company hereunder and further in consideration of the
Executive’s exposure to the proprietary information of the Company, the
Executive agrees that the Executive will not, during the Term, and thereafter
during the Non-competition Term (as hereinafter defined), directly or
indirectly, own, manage, operate, join, control, be employed by, or participate
in the ownership, management, operation or control of, or be connected in any
manner with, including but not limited to holding any position as a shareholder,
director, officer, consultant, independent contractor, employee, partner, or
investor in, any Restricted Enterprise (as defined below); provided, however,
that in no event shall ownership of less than one percent of the outstanding
equity securities of any issuer whose securities are registered under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), standing
alone, be prohibited by this Section 7.  For purposes of this paragraph, the
term “Restricted Enterprise” shall mean any person, corporation, partnership or
other entity that is engaged in the precision systems or industrial components
business or otherwise competes, directly or indirectly, with any business or
activity conducted or proposed to be conducted by the Company or any of its
subsidiaries or Affiliates as of the date of the Executive’s termination of

 

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employment.  Following termination of employment, upon request of the Company,
the Executive shall notify the Company of the Executive’s then current
employment status.  For purposes of this Agreement, the “Non-competition Term”
shall mean the period beginning on the Termination Date and ending on the first
anniversary of such date.  Any material breach of the terms of this paragraph
shall be considered Cause under Section 16.4.

 

(b)                                 The Executive agrees that any breach of the
terms of this Section 7 would result in irreparable injury and damage to the
Company and/or its subsidiaries or Affiliates for which the Company and/or its
subsidiaries or Affiliates would have no adequate remedy at law; the Executive
therefore also agrees that in the event of said breach or any threat of breach,
the Company and/or its subsidiaries or Affiliates, as applicable, shall be
entitled to an immediate injunction and restraining order to prevent such breach
and/or threatened breach and/or continued breach by the Executive and/or any and
all persons and/or entities acting for and/or with the Executive, without having
to prove damages, in addition to any other remedies to which the Company and/or
its subsidiaries or Affiliates may be entitled at law or in equity.  The terms
of this paragraph shall not prevent the Company and/or its subsidiaries or
Affiliates from pursuing any other available remedies for any breach or
threatened breach hereof, including but not limited to the recovery of damages
from the Executive.  The Executive and the Company further agree that the
provisions of the covenants contained in this Section 7 are reasonable and
necessary to protect the businesses of the Company and its subsidiaries or
Affiliates because of the Executive’s access to Confidential Information and his
material participation in the operation of such businesses.  Should a court or
arbitrator determine, however, that any provision of the covenants contained in
this Section 7 is not reasonable or valid, either in period of time,
geographical area, or otherwise, the parties hereto agree that such covenants
should be interpreted and enforced to the maximum extent which such court or
arbitrator deems reasonable or valid.

 

The existence of any claim or cause of action by the Executive against the
Company and/or its subsidiaries or Affiliates, whether predicated on this
Agreement or otherwise, shall not constitute a defense to the enforcement by the
Company of the covenants contained in this Section 7.

 

8.                                       Notice.  For the purposes of this
Agreement, notices and all other communications provided for in this Agreement
(including any Notice of Termination) shall be in writing, shall be signed by
the Executive if to the Company or by a duly authorized officer of the Company
if to the Executive, and shall be deemed to have been duly given when personally
delivered or sent by certified mail, return receipt requested, postage prepaid,
addressed to the respective addresses last given by each party to the other,
provided that all notices to the Company shall be directed to the attention of
the Board with a copy to the Secretary of the Company.  All notices and
communications shall be deemed to have been received on the date of delivery
thereof or on the third business day after the mailing thereof (whichever is
earlier), except that notice of change of address shall be effective only upon
receipt.

 

9.                                       Non-Exclusivity of Rights.  Nothing in
this Agreement shall prevent or limit the Executive’s continuing or future
participation in any benefit, bonus, incentive or other plan or program provided
by the Company or any other Affiliate of the Company for which the Executive may
qualify, nor shall anything herein limit or reduce such rights as the Executive
may have under any other agreements with the Company or any other Affiliate of
the Company. 

 

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Amounts which are vested benefits or which the Executive is otherwise entitled
to receive under any plan or program of the Company or any other Affiliate of
the Company shall be payable in accordance with such plan or program, except as
explicitly modified by this Agreement.

 

10.                                 (a)                                  Full
Settlement.  The Company’s obligation to make the payments provided for in this
Agreement and otherwise to perform its obligations hereunder shall not be
affected by any circumstances, including but not limited to any set-off,
counterclaim, defense, recoupment, or other claim, right or action which the
Company may have against the Executive or others.

 

(b)                                 No Mitigation.  The Executive shall not be
required to mitigate the amount of any payment provided for in this Agreement by
seeking other employment or otherwise and no such payment shall be offset or
reduced by the amount of any compensation or benefits provided to the Executive
in any subsequent employment except as provided in Section 2(b)(3).

 

11.                                 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 the Executive and the
Company.  No waiver by any party hereto at any time of any breach by any 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 any
party which are not expressly set forth in this Agreement.

 

12.                                 Successors; Binding Agreement.

 

(a)                                  This Agreement shall be binding upon and
shall inure to the benefit of the Company and its Successors and Assigns.  The
Company shall require its Successors and Assigns 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 or assignment had
taken place.

 

(b)                                 Neither this Agreement nor any right or
interest hereunder shall be assignable or transferable by the Executive, his
beneficiaries or legal representatives, except by will or by the laws of descent
and distribution.  This Agreement shall inure to the benefit of and be
enforceable by the Executive’s legal personal representative.

 

13.                                 Governing Law.  This Agreement shall be
governed by and construed and enforced in accordance with the laws of the State
of Delaware without giving effect to the conflict of laws principles thereof. 
Any action brought by any party to this Agreement shall be brought and
maintained in a court of competent jurisdiction in the State of Delaware.

 

14.                                 Severability.  The provisions of this
Agreement shall be deemed severable and the invalidity or unenforceability of
any provision shall not affect the validity or enforceability of the other
provisions hereof.

 

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15.                                 Entire Agreement.  This Agreement
constitutes the entire agreement between the parties hereto, and supersedes all
prior agreements, if any, understandings and arrangements, oral or written,
between the parties hereto, with respect to the subject matter hereof.

 

16.                                 Definitions.

 

16.1                           Accrued Compensation.  For purposes of this
Agreement, “Accrued Compensation” shall mean all amounts of compensation for
services rendered to the Company or an Employing Affiliate that have been earned
or accrued through the Termination Date but that have not been paid as of the
Termination Date, including (a) base salary, (b) reimbursement for reasonable
and necessary business expenses incurred by the Executive on behalf of the
Company or an Employing Affiliate during the period ending on the Termination
Date and (c) vacation pay; provided, however, that Accrued Compensation shall
not include any amounts described in clause (a) that have been deferred pursuant
to any salary reduction or deferred compensation elections made by the
Executive.  Any reimbursement for reasonable and necessary business expenses
incurred by the Executive that is included within the meaning of Accrued
Compensation will be made in accordance with the Company’s expense reimbursement
policy and in all events no later than the last day of the calendar year
following the calendar year in which the Executive incurred the expense.  In no
event will the amount of expenses so reimbursed by the Company in one year
affect the amount of expenses eligible for reimbursement, or in-kind benefits to
be provided, in any other taxable year.

 

16.2                           Affiliate.  For purposes of this Agreement,
“Affiliate” means, with respect to any Person, any entity, directly or
indirectly, controlled by, controlling or under common control with such Person.

 

16.3                           [Intentionally Omitted.]

 

16.4                           Cause.  For purposes of this Agreement, a
termination of employment is for “Cause” if the Executive

 

(a)                                  has been convicted of a felony (including a
plea of nolo contendere);

 

(b)                                 intentionally and continually failed
substantially to perform his reasonably assigned duties with the Company or an
Employing Affiliate (other than a failure resulting from the Executive’s
incapacity due to physical or mental illness or from the assignment to the
Executive of duties that would constitute Good Reason) which failure continued
for a period of at least thirty days after a written notice of demand for
substantial performance, signed by a duly authorized officer of the Company, has
been delivered to the Executive specifying the manner in which the Executive has
failed substantially to perform such duties; or

 

(c)                                  intentionally engaged in illegal conduct or
willful misconduct which is demonstrably and materially injurious to the Company
or an Employing Affiliate.

 

For purposes of this Agreement, no act, or failure to act, on the Executive’s
part shall be considered “intentional” unless the Executive has acted, or failed
to act, with a lack of good faith and with a lack of reasonable belief that the
Executive’s action or failure to act was in the best interest of the Company or
an Employing Affiliate.  Any act, or failure to act, based upon

 

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authority given pursuant to a resolution duly adopted by the Board or upon the
instructions of the Company’s Chairman of the Board, Chief Executive Officer or
a senior officer of the Company or based upon the advice of counsel for the
Company shall be conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of the Company or an Employing
Affiliate.  The termination of employment of the Executive shall not be deemed
to be for Cause pursuant to subparagraph (b) or (c) above unless and until there
shall have been delivered to the Executive a copy of a resolution duly adopted
by the affirmative vote of not less than three-fourths of the entire membership
of the Board at a meeting of the Board called and held for such purpose (after
reasonable notice is provided to the Executive and the Executive is given an
opportunity, together with counsel, to be heard before the Board) finding that,
in the good faith opinion of the Board, the Executive is guilty of the conduct
described in subparagraph (b) or (c) above, and specifying the particulars
thereof in detail.  Notwithstanding anything contained in this Agreement to the
contrary, no failure to perform by the Executive after a Notice of Termination
is given to the Company by the Executive shall constitute Cause for purposes of
this Agreement.

 

16.5                           Change in Control.  A “Change in Control” shall
mean the occurrence during the Term of:

 

(a)                                  An acquisition (other than directly from
the Company) of any common stock of the Company (“Common Stock”) or other voting
securities of the Company entitled to vote generally for the election of
directors (the “Voting Securities”) by any “Person” (as the term “person” is
used for purposes of Section 13(d) or 14(d) of the Exchange Act), immediately
after which such Person has “Beneficial Ownership” (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of fifty percent or more of the
then outstanding shares of Common Stock or the combined voting power of the
Company’s then outstanding Voting Securities; provided, however, in determining
whether a Change in Control has occurred, Common Stock or Voting Securities
which are acquired in a Non-Control Acquisition (as hereinafter defined) shall
not constitute an acquisition which would cause a Change in Control.  A
“Non-Control Acquisition” shall mean an acquisition by (i) an employee benefit
plan (or a trust forming a part thereof) maintained by (A) the Company or
(B) any corporation or other Person of which a majority of its voting power or
its voting equity securities or equity interest is owned, directly or
indirectly, by the Company (a “Subsidiary”), (ii) the Company or its
Subsidiaries or (iii) any Person in connection with a Non-Control Transaction
(as hereinafter defined);

 

(b)                                 The individuals who, as of the date of this
Agreement, are members of the Board (the “Incumbent Board”), cease for any
reason to constitute at least a majority of the members of the Board; provided,
however, that if the election, or nomination for election by the Company’s
shareholders, of any new director was approved by a vote of at least two-thirds
of the Incumbent Board, such new director shall, for purposes of this Agreement,
be considered a member of the Incumbent Board; provided further, however, that
no individual shall be considered a member of the Incumbent Board if such
individual initially assumed office as a result of either an actual or
threatened election contest (with respect to the election or removal of
directors) or other actual or threatened solicitation of proxies or consents by
or on behalf of a Person other than the Board (a “Proxy Contest”) including by
reason of any agreement intended to avoid or settle any election contest or
Proxy Contest; or

 

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(c)                                  The consummation of:

 

(1)                                  A merger, consolidation, reorganization or
other business combination with or into the Company or in which securities of
the Company are issued, unless such merger, consolidation, reorganization or
other business combination is a “Non-Control Transaction.”  A “Non-Control
Transaction” shall mean a merger, consolidation, reorganization or other
business combination with or into the Company or in which securities of the
Company are issued where:

 

(a)                                  the shareholders of the Company,
immediately before such merger, consolidation, reorganization or other business
combination own directly or indirectly immediately following such merger,
consolidation, reorganization or other business combination, at least fifty
percent of the combined voting power of the outstanding voting securities of the
corporation resulting from such merger or consolidation, reorganization or other
business combination (the “Surviving Corporation”) in substantially the same
proportion as their ownership of the Voting Securities immediately before such
merger, consolidation, reorganization, or other business combination,

 

(b)                                 the individuals who were members of the
Incumbent Board immediately prior to the execution of the agreement providing
for such merger, consolidation, reorganization or other business combination
constitute at least two-thirds of the members of the board of directors of the
Surviving Corporation, or a corporation beneficially directly or indirectly
owning a majority of the combined voting power of the outstanding voting
securities of the Surviving Corporation, and

 

(c)                                  no Person other than (i) the Company,
(ii) any Subsidiary, (iii) any employee benefit plan (or any trust forming a
part thereof) that, immediately prior to such merger, consolidation,
reorganization or other business combination was maintained by the Company, the
Surviving Corporation, or any Subsidiary, or (iv) any Person who, immediately
prior to such merger, consolidation, reorganization or other business
combination had Beneficial Ownership of fifty percent or more of the then
outstanding Voting Securities or common stock of the Company, has Beneficial
Ownership of fifty percent or more of the combined voting power of the Surviving
Corporation’s then outstanding voting securities or its common stock.

 

(2)                                  A complete liquidation or dissolution of
the Company; or

 

(3)                                  The sale or other disposition of all or
substantially all of the assets of the Company to any Person (other than (i) any
such sale or disposition that results in at least fifty percent of the Company’s
assets being owned by a Subsidiary or Subsidiaries or (ii) a distribution to the
Company’s stockholders of the stock of a Subsidiary or any other assets);

 

provided, however, that no transaction or series of transactions by which
Stephen W. Bershad, or any Person in which Stephen W. Bershad has Beneficial
Ownership, directly or indirectly, of 25 percent of the outstanding ownership
interests or voting power, acquires fifty percent or more of

 

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the then outstanding shares of Common Stock or the combined voting power of the
Company’s then outstanding Voting Securities shall constitute a Change in
Control for purposes of this Agreement (regardless of the form of transaction or
series of transactions by which such acquisition occurs (including, without
limitation, any acquisition described in clause (a) hereof or any merger or
other transaction described in clause (c) hereof)).

 

Notwithstanding the foregoing, a Change in Control shall not be deemed to occur
solely because any Person (the “Subject Person”) acquired Beneficial Ownership
of more than the permitted amount of the then outstanding Common Stock or Voting
Securities as a result of the acquisition of Common Stock or Voting Securities
by the Company which, by reducing the number of shares of Common Stock or Voting
Securities then outstanding, increases the proportional number of shares
Beneficially Owned by the Subject Person, provided that if a Change in Control
would occur (but for the operation of this sentence) as a result of the
acquisition of shares of Common Stock or Voting Securities by the Company, and
after such share acquisition by the Company, the Subject Person becomes the
Beneficial Owner of any additional shares of Common Stock or Voting Securities
which increase the percentage of the then outstanding shares of Common Stock or
Voting Securities Beneficially Owned by the Subject Person, then a Change in
Control shall occur.

 

16.6                           Company.  For purposes of this Agreement, all
references to the Company shall include its Successors and Assigns.

 

16.7                           Disability.  For purposes of this Agreement,
“Disability” shall mean a physical or mental infirmity which impairs the
Executive’s ability to substantially perform his duties with the Company or an
Employing Affiliate for six consecutive months, and within the time period set
forth in a Notice of Termination given to the Executive (which time period shall
not be less than thirty days), the Executive shall not have returned to
full-time performance of his duties; provided, however, that if the Company’s
Long Term Disability Plan, or any successor plan (the “Disability Plan”), is
then in effect, the Executive shall not be deemed disabled for purposes of this
Agreement unless the Executive is also eligible for long-term disability
benefits under the Disability Plan (or similar benefits in the event of a
successor plan).

 

16.8                           Good Reason.

 

(a)                                  For purposes of this Agreement, “Good
Reason” shall mean the occurrence after a Change in Control of any of the
following events or conditions:

 

(1)                                  a material adverse change in the
Executive’s duties or responsibilities (including reporting responsibilities),
except in connection with the termination of his employment for Disability,
Cause, as a result of his death or by the Executive other than for Good Reason;

 

(2)                                  a material reduction in the Executive’s
annual base salary;

 

(3)                                  the relocation of the offices of the
Company or an Employing Affiliate at which the Executive is principally employed
to a location more than 50 miles from the location of such offices immediately
prior to a Change in Control, or any other material change in the geographic
location at which the Executive be based, except to the extent the

 

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Executive was not previously assigned to a principal location and except for
required travel on the business of the Company or an Employing Affiliate to an
extent substantially consistent with the Executive’s business travel obligations
at the time of a Change in Control; or

 

(4)                                  the failure by the Company or an Employing
Affiliate to pay to the Executive any portion of the Executive’s current
compensation, within seven days of the date such compensation is due.

 

(b)                                 Any event or condition described in
Section 16.8(a)(1) through (4) which occurs prior to a Change in Control but
which the Executive reasonably demonstrates (i) was at the request of a Third
Party who effectuates a Change in Control or (ii) otherwise arose in connection
with or in anticipation of a Change in Control which has been threatened or
proposed and which actually occurs, shall constitute Good Reason for purposes of
this Agreement notwithstanding that it occurred prior to a Change in Control, it
being agreed that any such action taken following shareholder approval of a
transaction which if consummated would constitute a Change in Control, shall be
deemed to be in anticipation of a Change in Control provided such transaction is
actually consummated.

 

16.9                           Notice of Termination.  For purposes of this
Agreement, following a Change in Control, “Notice of Termination” shall mean a
written notice of termination of the Executive’s employment, signed by the
Executive if to the Company or by a duly authorized officer of the Company if to
the Executive, which indicates the specific termination provision in this
Agreement, if any, relied upon and which sets forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of the
Executive’s employment under the provision so indicated.  The failure by the
Executive or the Company to set forth in the Notice of Termination any fact or
circumstance which contributes to a showing of Good Reason, Disability or Cause
shall not serve to waive any right of the Executive or the Company,
respectively, hereunder or preclude the Executive or the Company, respectively,
from asserting such fact or circumstance in enforcing the Executive’s or the
Company’s rights hereunder.

 

16.10                     Successors and Assigns.  For purposes of this
Agreement, “Successors and Assigns” shall mean, with respect to the Company, a
corporation or other entity acquiring all or substantially all the assets and
business of the Company, as the case may be, whether by operation of law or
otherwise.

 

16.11                     Termination Date.  For purposes of this Agreement,
“Termination Date” shall mean the date on which the Executive incurs a
“separation from service” from the Company within the meaning of Section 409A of
the Code.  In the case of the Executive’s death, the Termination Date shall be
the date of death.  For all other terminations, the Notice of Termination shall
specify the proposed Termination Date (which, in the case of a termination for
Cause shall not be less than thirty days, and in the case of a termination for
Good Reason shall not be more than sixty days, from the date such Notice of
Termination is given); provided, however, that if within thirty days after any
Notice of Termination is given the party receiving such Notice of Termination in
good faith notifies the other party that a dispute exists concerning the basis
for the termination, the Termination Date shall not occur until the date on
which the dispute is finally determined, either by mutual written agreement of
the parties, or by the final judgment, order or decree of a court of competent
jurisdiction (the time for appeal therefrom

 

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having expired and no appeal having been taken).  Notwithstanding the pendency
of any such dispute, the Company or an Employing Affiliate shall continue to pay
the Executive his base salary and continue the Executive as a participant (at or
above the level provided prior to the date of such dispute) in all compensation,
incentive, bonus, pension, profit sharing, medical, hospitalization,
prescription drug, dental, life insurance and disability benefit plans in which
he was participating when the notice giving rise to the dispute was given, until
the dispute is finally resolved whether or not the dispute is resolved in favor
of the Company, and the Executive shall not be obligated to repay to the Company
or an Employing Affiliate any amounts paid or benefits provided pursuant to this
sentence.  Notwithstanding the foregoing, in no event shall the Termination Date
occur until the Executive experiences a “separation from service” within the
meaning of Section 409A of the Code, and notwithstanding anything contained
herein to the contrary, the date on which such separation from service takes
place shall be the Termination Date.

 

17.                                 Compliance with Section 409A of the Code.

 

(a)                                  Each payment or reimbursement and the
provision of each benefit under this Agreement shall be considered a separate
payment and not one of a series of payments for purposes of Section 409A of the
Code.  To the extent applicable, it is intended that this Agreement comply with
the provisions of Section 409A of the Code so that the income inclusion
provisions of Section 409A(a)(1) do not apply to the Executive.  This Agreement
shall be administered in a manner consistent with this intent.  Reference to
Section 409A of the Code is to Section 409A of the Internal Revenue Code of
1986, as amended, and will also include any regulations, or any other formal
guidance, promulgated with respect to such Section by the U.S. Department of the
Treasury or the Internal Revenue Service.

 

(b)                                 Notwithstanding anything in this Agreement
to the contrary, if the Executive is a “specified employee” (within the meaning
of Section 409A) on the Termination Date, in the case of any payment made or
benefit provided pursuant to this Agreement that is considered to be a “deferral
of compensation” (as such phrase is defined for purposes of Section 409A) and
which is payable upon the Executive’s “separation from service” (within the
meaning of Section 409A of the Code) and which otherwise is payable within six
months of such separation from service, the payment date for such payment or
benefit shall be the date that is the first day of the seventh month after the
date of the Executive’s “separation from service” (determined in accordance with
Section 409A).

 

18.                                 Prior Agreement.  This Agreement supersedes,
as of the date first above written, the Amended and Restated Severance
Protection Agreement, dated as of June 9, 2005 (the “Prior Agreement”) between
the Company and the Executive and the Executive agrees that he has no further
rights under the Prior Agreement.

 

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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its
duly authorized officers and the Executive has executed this Agreement as of the
day and year first above written.

 

 

 

AXSYS TECHNOLOGIES, INC.

 

 

 

 

 

/s/ Stephen W. Bershad

 

 

Stephen W. Bershad

 

 

By:

 

 

Its:

 

 

 

 

 

 

 

 

EXECUTIVE

 

 

 

 

 

/s/ David A. Almeida

 

 

David A. Almeida

 

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Annex A

 

Excise Tax Gross-Up Procedural Provisions

 

(1)                                  Subject to the provisions of Paragraph 5,
all determinations required to be made under Section 3 and this Annex A,
including whether an Excise Tax is payable by the Executive and the amount of
such Excise Tax and whether a Gross-Up Payment is required to be paid by the
Company to the Executive and the amount of such Gross-Up Payment, if any, will
be made by a nationally recognized accounting or law firm (the “National Firm”)
selected by the Executive in the Executive’s sole discretion.  The Executive
will direct the National Firm to submit its determination and detailed
supporting calculations to both the Company and the Executive within 30 calendar
days after the date of termination of the Executive’s employment, if applicable,
and any such other time or times as may be requested by the Company or the
Executive.  If the National Firm determines that any Excise Tax is payable by
the Executive, the Company will pay the required Gross-Up Payment to the
Executive after receipt of such determination and calculations with respect to
any Payment to the Executive as provided in Paragraph 7.  If the National Firm
determines that no Excise Tax is payable by the Executive with respect to any
material benefit or amount (or portion thereof), it will, if requested by the
Executive, at the same time as it makes such determination, furnish the Company
and the Executive with an opinion that the Executive has substantial authority
not to report any Excise Tax on the Executive’s federal, state or local income
or other tax return with respect to such benefit or amount.  As a result of the
uncertainty in the application of Section 4999 of the Code and the possibility
of similar uncertainty regarding applicable state or local tax law at the time
of any determination by the National Firm hereunder, it is possible that
Gross-Up Payments that will not have been made by the Company should have been
made (an “Underpayment”), consistent with the calculations required to be made
hereunder.  In the event that the Company exhausts or fails to pursue its
remedies pursuant to Paragraph 5 and the Executive thereafter is required to
make a payment of any Excise Tax, the Executive will direct the National Firm to
determine the amount of the Underpayment that has occurred and to submit its
determination and detailed supporting calculations to both the Company and the
Executive as promptly as possible.  Any such Underpayment will be promptly paid
by the Company to, or for the benefit of, the Executive after receipt of such
determination and calculations as provided in Paragraph 7.

 

(2)                                  The Company and the Executive will each
provide the National Firm access to and copies of any books, records and
documents in the possession of the Company or the Executive, as the case may be,
reasonably requested by the National Firm, and otherwise cooperate with the
National Firm in connection with the preparation and issuance of the
determinations and calculations contemplated by Paragraph 1.  Any determination
by the National Firm as to the amount of the Gross-Up Payment will be binding
upon the Company and the Executive.

 

(3)                                  The federal, state and local income or
other tax returns filed by the Executive will be prepared and filed on a
consistent basis with the determination of the National Firm with respect to the
Excise Tax payable by the Executive.  The Executive will report and make proper
payment of the amount of any Excise Tax, and at the request of the Company,

 

Short-Term Deferral

 

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provide to the Company true and correct copies (with any amendments) of the
Executive’s federal income tax return as filed with the Internal Revenue Service
and corresponding state and local tax returns, if relevant, as filed with the
applicable taxing authority, and such other documents reasonably requested by
the Company, evidencing such payment.  If prior to the filing of the Executive’s
federal income tax return, or corresponding state or local tax return, if
relevant, the National Firm determines that the amount of the Gross-Up Payment
should be reduced, the Executive will within five business days pay to the
Company the amount of such reduction.

 

(4)                                  The fees and expenses of the National Firm
for its services in connection with the determinations and calculations
contemplated by Paragraph 1 will be borne by the Company.  If such fees and
expenses are initially paid by the Executive, the Company will reimburse the
Executive the full amount of such fees and expenses after receipt from the
Executive of a statement therefor and reasonable evidence of the Executive’s
payment thereof, as provided in Paragraph 7.

 

(5)                                  The Executive will notify the Company in
writing of any claim by the Internal Revenue Service or any other taxing
authority that, if successful, would require the payment by the Company of a
Gross-Up Payment.  Such notification will be given as promptly as practicable
but no later than 10 business days after the Executive actually receives notice
of such claim and the Executive will further apprise the Company of the nature
of such claim and the date on which such claim is requested to be paid (in each
case, to the extent known by the Executive).  The Executive will not pay such
claim prior to the expiration of the 30-calendar-day period following the date
on which the Executive gives such notice to the Company or, if earlier, the date
that any payment of amount with respect to such claim is due. If the Company
notifies the Executive in writing prior to the expiration of such period that it
desires to contest such claim, the Executive will:

 

(a)                                  provide the Company with any written
records or documents in Executive’s possession relating to such claim reasonably
requested by the Company;

 

(b)                                 take such action in connection with
contesting such claim as the Company reasonably requests in writing from time to
time, including without limitation accepting legal representation with respect
to such claim by an attorney competent in respect of the subject matter and
reasonably selected by the Company;

 

(c)                                  cooperate with the Company in good faith in
order effectively to contest such claim; and

 

(d)                                 permit the Company to participate in any
proceedings relating to such claim; provided, however, that the Company will
bear and pay directly all costs and expenses (including interest and penalties)
incurred in connection with such contest and will indemnify and hold harmless
the Executive, on an after-tax basis, for and against any Excise Tax or income
or other tax, including interest and penalties with respect thereto, imposed as
a result of such representation and payment of costs and expenses.  Without
limiting the foregoing provisions of this

 

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Paragraph 5, the Company will control all proceedings taken in connection with
the contest of any claim contemplated by this Paragraph 5 and, at its sole
option, may pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such claim
(provided, however, that the Executive may participate therein at the
Executive’s own cost and expense) and may, at its option, either direct the
Executive to pay the tax claimed and sue for a refund or contest the claim in
any permissible manner, and the Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company determines;
provided, however, that if the Company directs the Executive to pay the tax
claimed and sue for a refund, the Company will advance the amount of such
payment to the Executive on an interest-free basis and will indemnify and hold
the Executive harmless, on an after-tax basis, from any Excise Tax or income or
other tax, including interest or penalties with respect thereto, imposed with
respect to such advance; and provided further, however, that any extension of
the statute of limitations relating to payment of taxes for the taxable year of
the Executive with respect to which the contested amount is claimed to be due is
limited solely to such contested amount.  Furthermore, the Company’s control of
any such contested claim will be limited to issues with respect to which a
Gross-Up Payment would be payable hereunder and the Executive will be entitled
to settle or contest, as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority.

 

(6)                                  If, after the receipt by the Executive of
an amount advanced by the Company pursuant to Paragraph 5, the Executive
receives any refund with respect to such claim, the Executive will (subject to
the Company’s complying with the requirements of Paragraph 5) promptly pay to
the Company the amount of such refund (together with any interest paid or
credited thereon after any taxes applicable thereto).  If, after the receipt by
the Executive of an amount advanced by the Company pursuant to Paragraph 5, a
determination is made that the Executive is not entitled to any refund with
respect to such claim and the Company does not notify the Executive in writing
of its intent to contest such denial or refund prior to the expiration of 30
calendar days after such determination, then such advance will be forgiven and
will not be required to be repaid and the amount of any such advance will
offset, to the extent thereof, the amount of Gross-Up Payment required to be
paid by the Company to the Executive pursuant to Section 3 and this Annex A.

 

(7)                                  Notwithstanding any other provision of this
Annex A to the contrary, but subject to Section 17, all taxes and expenses
described in Section 3 and this Annex A shall be paid or reimbursed within 5
business days after the Executive submits evidence of incurrence of such taxes
and/or expenses, provided that in all events such reimbursement shall be made on
or before the last day of the year following (a) the year in which the
applicable taxes are remitted or expenses are incurred or, (b) in the case of
reimbursement of expenses incurred due to a tax audit or litigation in which
there is no remittance of taxes, the year in which the audit is completed or
there is a final and nonappealable settlement or other resolution of the
litigation, in accordance with Treasury Regulation §1.409A-3(i)(1)(v).  The
Executive shall be required to submit all requests for reimbursements no

 

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later than 30 days prior to the last day for reimbursement described in the
prior sentence.  Any expense reimbursed by the Company in one taxable year in no
event will affect the amount of expenses required to be reimbursed by the
Company in any other taxable year.

 

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