**Exhibit 10.9**

**SEVERANCE PROTECTION AGREEMENT**

THIS AGREEMENT made as of December 3, 2004 by andbetween Axsys Technologies, Inc. (the “Company”) and Scott B. Conner (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 resultin significant distraction of the Company’s key management personnel because ofthe uncertainties inherent in such a situation;

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

WHEREAS, in order to induce the Executive to remain inthe employ of the Company and/or one of its Affiliates (the entity or entitiesemploying the Executive, the “Employing Affiliate”), particularly in the eventof a threat or the occurrence of a Change in Control, the Company desires toenter into this Agreement with the Executive to provide the Executive withcertain benefits in the event the Executive’s employment is terminated as aresult of, or in connection with, a Change in Control.

NOW, THEREFORE, inconsideration of the respective agreements of the parties contained herein, itis agreed as follows:

1.     *Term of Agreement*.   This Agreement shallcommence as of the date of this agreement, and shall continue in effect until January 1,2006 (the “Term”); *provided*, *however*, that on January 1, 2006, and on each January 1thereafter, the Term shall automatically be extended for one year unless eitherthe Executive or the Company shall have given written notice to the other atleast ninety days prior thereto that the Term shall not be so extended; *provided, further, however,*that following the occurrence ofa Change in Control, the Term shall not expire prior to the expiration oftwenty-four months after such occurrence.

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

(a)    If the Executive’semployment with the Company or an Employing Affiliate shall be terminated (1) bythe Company for Cause or Disability, (2) by reason of the Executive’sdeath, or (3) by the Executive other than for Good Reason or pursuant to aWindow Period Termination, the Company shall pay to the Executive the AccruedCompensation.

(b)   If theExecutive’s employment with the Company or an Employing Affiliate shall beterminated for any reason other than as specified in Section 2(a), or ifthe Executive terminates his employment with or without Good Reason during theone month period commencing six months following a Change in Control (a “WindowPeriod Termination”), the Executive shall be entitled to the following:

(1)   the Companyshall pay the Executive the Accrued Compensation;

(2)   the Companyshall pay the Executive as severance pay an amount equal to 2.99 times the sumof (a) the highest annual base salary paid to the Executive during the 12-monthperiod immediately prior to the Termination Date and (b) the average ofthe annual cash bonuses paid to the Executive during the 3 calendar years priorto the year in which the Termination Date occurs (prorated for any lesserperiod during which the Executive has been employed or for 

 

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which bonuses have beendetermined, if applicable, and, in the case of each of (a) and (b),determined without reduction for any portion thereof that has been deferred bythe Executive); provided, however, that, if the Executive has been employed forless than a full year as of the Termination Date, the amount of clause (b) hereofshall be equal to the Executive’s target bonus amount for such year, proratedfor the period during which the Executive has been employed; and

(3)   for twelvemonths following the Termination Date (the “Continuation Period”), the Companyshall continue on behalf of the Executive and his dependents and beneficiariesthe life insurance, disability, medical, dental, prescription drug andhospitalization coverages and benefits provided to the Executive immediatelyprior to a Change in Control (the “Benefits Continuation”), or, if greater, thecoverages and benefits provided at any time thereafter; *provided,however*, that within five days following the Termination Date, theExecutive may elect to receive from the Company in cash, in lieu of theBenefits Continuation, the value of the Benefits Continuation. The coveragesand benefits (including deductibles and costs to the Executive) provided inthis Section 2(b)(3) during the Continuation Period shall be no lessfavorable to the Executive and his dependents and beneficiaries than the mostfavorable of such coverages and benefits referred to above. The Company’sobligation hereunder with respect to the foregoing coverages and benefits shallbe reduced to the extent that the Executive obtains any such coverages andbenefits pursuant to a subsequent employer’s benefit plans, in which case theCompany may reduce any of the coverages or benefits it is required to providethe Executive hereunder so long as the aggregate coverages and benefits(including deductibles and costs to the Executive) of the combined benefitplans are no less favorable to the Executive than the coverages and benefitsrequired to be provided hereunder. This Section 2(b)(3) shall not beinterpreted so as to limit any benefits to which the Executive, his dependentsor beneficiaries may be entitled under any of the Company’s employee benefitplans, programs or practices following the Executive’s termination ofemployment, including but not limited to retiree medical and life insurancebenefits.

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

(d)   Theseverance pay and benefits provided for in this Section 2 shall be in lieuof any other severance pay to which the Executive may be entitled under anyseverance or employment agreement with the Company or any other plan, agreementor arrangement of the Company or any other Affiliate of the Company. TheExecutive’s entitlement to any compensation or benefits other than as providedherein shall be determined in accordance with the employee benefit plans of theCompany and any of its Affiliates and other applicable agreements, programs andpractices as in effect from time to time.

(e)    If theExecutive’s employment is terminated by the Company or an Employing Affiliatewithout Cause prior to the date of a Change in Control but the Executivereasonably demonstrates that such termination (1) was at the request of athird party who has indicated an intention or taken steps reasonably calculatedto effect a Change in Control (a “Third Party”) and who effectuates a Change inControl or (2) otherwise arose in connection with, or in anticipation of,a Change in Control which has been threatened or proposed and which actuallyoccurs, such termination shall be deemed to have occurred after a Change inControl, it being agreed that any such action taken following shareholderapproval of a transaction which if consummated would constitute a Change inControl, shall be deemed to be in anticipation of a Change in Control providedsuch transaction is actually consummated.

 

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3.     *Effect of Section 280G of the InternalRevenue Code.*

(a)    Notwithstandinganything contained in this Agreement to the contrary, to the extent that thepayments and benefits provided under this Agreement and benefits provided to,or for the benefit of, the Executive under any other Company plan or agreement(such payments or benefits collectively referred to herein as the “Payments”)would be subject to the excise tax (the “Excise Tax”) imposed under Section 280Gof the Internal Revenue Code of 1986, as amended (the “Code”), the Paymentsshall be reduced (but not below zero) if and to the extent necessary so that noPayment to be made or benefit to be provided to the Executive shall be subjectto the Excise Tax (such reduced amount is hereinafter referred to as the “LimitedPayment Amount”). Unless the Executive shall have given prior written noticespecifying a different order to the Company to effectuate the foregoing, theCompany shall reduce or eliminate the Payments by first reducing or eliminatingthe portion of the Payments which are not payable in cash and then by reducing oreliminating cash payments, in each case in reverse order beginning withpayments or benefits which are to be paid the farthest in time from theDetermination (as hereinafter defined). Any notice given by the Executivepursuant to the preceding sentence shall take precedence over the provisions ofany other plan, arrangement or agreement governing the Executive’s rights andentitlements to any benefits or compensation.

(b)   Thedetermination of whether the Payments shall be reduced to the Limited Payment Amountpursuant to this Agreement and the amount of such Limited Payment Amount shallbe made, at the Company’s expense, by an accounting firm selected by theCompany and reasonably acceptable to the Executive which is one of the fivelargest accounting firms in the United States (the “Accounting Firm”). TheAccounting Firm shall provide its determination (the “Determination”), togetherwith detailed supporting calculations and documentation to the Company and theExecutive within ten days of the Termination Date, if applicable, or such othertime as requested by the Company or by the Executive (provided the Executivereasonably believes that any of the Payments may be subject to the Excise Tax)and if the Accounting Firm determines that no Excise Tax is payable by theExecutive with respect to the Payments, it shall furnish the Executive with anopinion reasonably acceptable to the Executive that no Excise Tax will beimposed with respect to any such Payments. The Determination shall be binding,final and conclusive upon the Company and the Executive.

4.     *Notice of Termination*.   Following a Change inControl, any intended termination of the Executive’s employment by the Companyor an Employing Affiliate shall be communicated by a Notice of Termination fromthe Company to the Executive, and any intended termination of the Executive’semployment by the Executive for Good Reason shall be communicated by a Noticeof 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, evidenceand counsel) that the Executive may reasonably incur following a Change inControl as a result of or in connection with (a) the Executive’scontesting, defending or disputing the basis for the termination of theExecutive’s employment, (b) the Executive’s hearing before the Board ofDirectors of the Company as contemplated in Section 16.4 or (c) theExecutive’s seeking to obtain or enforce any right or benefit provided by thisAgreement or by any other plan or arrangement maintained by the Company or oneof its Affiliates under which the Executive is or may be entitled to receivebenefits.

6.     *Unauthorized Disclosure*.

(a)    TheExecutive agrees and understands that during the Executive’s employment withthe Company or an Employing Affiliate, the Executive has been and will beexposed to and receive information relating to the affairs of the Companyconsidered by the Company to be confidential and in the nature of trade secrets(including but not limited to procedures, memoranda, notes, records and 

 

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customer lists, whethersuch information has been or is made, developed or compiled by the Executive orotherwise has been or is made available to him) (any and all such information,the “Confidential Information”). The Executive agrees that, during the Term andthereafter, he shall keep such Confidential Information confidential and willnot disclose such Confidential Information, either directly or indirectly, toany third person or entity without the prior written consent of the Company; *provided, however*, that (i) the Executive shall have nosuch obligation to the extent such Confidential Information is or becomespublicly known other than as a result of the Executive’s breach of hisobligations hereunder or is received by the Executive following the TerminationDate and (ii) the Executive may, after giving prior notice to the Companyto the extent practicable under the circumstances, disclose such ConfidentialInformation to the extent required by applicable laws or governmentalregulations or judicial or regulatory process.

(b)   TheExecutive agrees that all Confidential Information is and will remain theproperty of the Company. The Executive further agrees that, during the Term andthereafter, 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 anyportion of the Confidential Information or use any Confidential Information forhis own benefit or profit or allow any person or entity, other than the Companyand its authorized employees, to use or otherwise gain access to anyConfidential Information.

(c)    Allmemoranda, notes, records, customer lists and other documents made or compiledby the Executive or otherwise made available to him concerning the business ofthe Company or its subsidiaries or Affiliates shall be the Company’s propertyand shall be delivered to the Company upon the termination of the Executive’semployment with the Company or an Employing Affiliate or at any other time uponrequest by the Company, and the Executive shall retain no copies of thosedocuments. The Executive shall never at any time have or claim any right, titleor interest in any material, invention or matter of any sort created, preparedor used in connection with the business of the Company or its subsidiaries orAffiliates.

7.     *Non-competition*.

(a)    By and inconsideration of the Company’s entering into this Agreement and the payments tobe made and benefits to be provided by the Company hereunder and further inconsideration of the Executive’s exposure to the proprietary information of theCompany, the Executive agrees that the Executive will not, during the Term, andthereafter during the Non-competition Term (as hereinafter defined), directlyor indirectly, own, manage, operate, join, control, be employed by, orparticipate in the ownership, management, operation or control of, or beconnected in any manner with, including but not limited to holding any positionas a shareholder, director, officer, consultant, independent contractor,employee, partner, or investor in, any Restricted Enterprise (as definedbelow); *provided, however,* that in no eventshall ownership of less than one percent of the outstanding equity securitiesof any issuer whose securities are registered under the Securities Exchange Actof 1934, as amended (the “Exchange Act”), standing alone, be prohibited by thisSection 7. For purposes of this paragraph, the term “Restricted Enterprise”shall mean any person, corporation, partnership or other entity that is engagedin the precision systems or industrial components business or otherwisecompetes, directly or indirectly, with any business or activity conducted orproposed to be conducted by the Company or any of its subsidiaries orAffiliates as of the date of the Executive’s termination of employment. Followingtermination of employment, upon request of the Company, the Executive shallnotify the Company of the Executive’s then current employment status. Forpurposes of this Agreement, the “Non-competition Term” shall mean the periodbeginning on the Termination Date and ending on the first anniversary of suchdate. Any material breach of the terms of this paragraph shall be consideredCause under Section 16.4.

 

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(b)   TheExecutive agrees that any breach of the terms of this Section 7 wouldresult in irreparable injury and damage to the Company and/or its subsidiariesor Affiliates for which the Company and/or its subsidiaries or Affiliates wouldhave no adequate remedy at law; the Executive therefore also agrees that in theevent of said breach or any threat of breach, the Company and/or itssubsidiaries or Affiliates, as applicable, shall be entitled to an immediateinjunction and restraining order to prevent such breach and/or threatenedbreach and/or continued breach by the Executive and/or any and all personsand/or entities acting for and/or with the Executive, without having to provedamages, in addition to any other remedies to which the Company and/or itssubsidiaries or Affiliates may be entitled at law or in equity. The terms ofthis paragraph shall not prevent the Company and/or its subsidiaries orAffiliates from pursuing any other available remedies for any breach orthreatened breach hereof, including but not limited to the recovery of damagesfrom the Executive. The Executive and the Company further agree that theprovisions of the covenants contained in this Section 7 are reasonable andnecessary to protect the businesses of the Company and its subsidiaries orAffiliates because of the Executive’s access to Confidential Information andhis material participation in the operation of such businesses. Should a courtor arbitrator determine, however, that any provision of the covenants containedin this Section 7 is not reasonable or valid, either in period of time,geographical area, or otherwise, the parties hereto agree that such covenantsshould be interpreted and enforced to the maximum extent which such court orarbitrator deems reasonable or valid.

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

8.     *Notice*.   For the purposes of this Agreement, noticesand all other communications provided for in this Agreement (including anyNotice of Termination) shall be in writing, shall be signed by the Executive ifto the Company or by a duly authorized officer of the Company if to theExecutive, and shall be deemed to have been duly given when personallydelivered 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 ofthe Board with a copy to the Secretary of the Company. All notices andcommunications shall be deemed to have been received on the date of deliverythereof or on the third business day after the mailing thereof (whichever isearlier), except that notice of change of address shall be effective only uponreceipt.

9.     *Non-Exclusivity of Rights*.   Nothing in thisAgreement shall prevent or limit the Executive’s continuing or futureparticipation in any benefit, bonus, incentive or other plan or programprovided by the Company or any other Affiliate of the Company for which theExecutive may qualify, nor shall anything herein limit or reduce such rights asthe Executive may have under any other agreements with the Company or any otherAffiliate of the Company. Amounts which are vested benefits or which theExecutive is otherwise entitled to receive under any plan or program of theCompany or any other Affiliate of the Company shall be payable in accordancewith such plan or program, except as explicitly modified by this Agreement.

10.   (a)   *Full Settlement*.   The Company’s obligation to make thepayments provided for in this Agreement and otherwise to perform itsobligations hereunder shall not be affected by any circumstances, including butnot 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 tomitigate the amount of any payment provided for in this Agreement by seekingother employment or otherwise and no such payment shall be offset or reduced bythe amount of any compensation or benefits provided to the Executive in anysubsequent employment except as provided in Section 2(b)(3).

 

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11.   *Miscellaneous*.   No provision of this Agreement may bemodified, waived or discharged unless such waiver, modification or discharge isagreed to in writing and signed by the Executive and the Company. No waiver byany party hereto at any time of any breach by any other party hereto of, orcompliance with, any condition or provision of this Agreement to be performedby such other party shall be deemed a waiver of similar or dissimilarprovisions or conditions at the same or at any prior or subsequent time. Noagreements or representations, oral or otherwise, express or implied, withrespect to the subject matter hereof have been made by any party which are notexpressly set forth in this Agreement.

12.   *Successors; Binding Agreement*.

(a)    ThisAgreement shall be binding upon and shall inure to the benefit of the Companyand its Successors and Assigns. The Company shall require its Successors andAssigns to expressly assume and agree to perform this Agreement in the samemanner and to the same extent that the Company would be required to perform itif no such succession or assignment had taken place.

(b)   Neitherthis Agreement nor any right or interest hereunder shall be assignable ortransferable by the Executive, his beneficiaries or legal representatives,except by will or by the laws of descent and distribution. This Agreement shallinure to the benefit of and be enforceable by the Executive’s legal personalrepresentative.

13.   *Governing Law*.   This Agreement shall be governedby and construed and enforced in accordance with the laws of the State ofDelaware without giving effect to the conflict of laws principles thereof. Anyaction brought by any party to this Agreement shall be brought and maintainedin a court of competent jurisdiction in the State of Delaware.

14.   *Severability*.   The provisions of this Agreement shallbe deemed severable and the invalidity or unenforceability of any provisionshall not affect the validity or enforceability of the other provisions hereof.

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

16.   *Definitions*.

16.1.    *Accrued Compensation*.   Forpurposes of this Agreement, “Accrued Compensation” shall mean all amounts ofcompensation for services rendered to the Company or an Employing Affiliatethat have been earned or accrued through the Termination Date but that have notbeen paid as of the Termination Date, including (a) base salary, (b) reimbursementfor reasonable and necessary business expenses incurred by the Executive onbehalf of the Company or an Employing Affiliate during the period ending on theTermination Date and (c) vacation pay; *provided, however,*thatAccrued Compensation shall not include any amounts described in clause (a) thathave been deferred pursuant to any salary reduction or deferred compensationelections made by the Executive.

16.2.    *Affiliate*.   Forpurposes of this Agreement, “Affiliate,” means, with respect to any Person, anyentity, directly or indirectly, controlled by, controlling or under commoncontrol with such Person.

16.3.    [Intentionally Omitted.]

16.4.    *Cause*.   Forpurposes of this Agreement, a termination of employment is for “Cause” if theExecutive

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

(b)   intentionally and continually failedsubstantially to perform his reasonably assigned duties with the Company or anEmploying Affiliate (other than a failure resulting from the 

 

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Executive’sincapacity due to physical or mental illness or from the assignment to theExecutive of duties that would constitute Good Reason) which failure continuedfor a period of at least thirty days after a written notice of demand forsubstantial performance, signed by a duly authorized officer of the Company,has been delivered to the Executive specifying the manner in which theExecutive has failed substantially to perform such duties; or

(c)    intentionally engaged in illegal conduct orwillful misconduct, which is demonstrably and materially injurious to theCompany or an Employing Affiliate.

For purposes ofthis Agreement, no act, or failure to act, on the Executive’s part shall beconsidered “intentional” unless the Executive has acted, or failed to act, witha lack of good faith and with a lack of reasonable belief that the Executive’saction or failure to act was in the best interest of the Company or anEmploying Affiliate. Any act, or failure to act, based upon authority givenpursuant to a resolution duly adopted by the Board or upon the instructions ofthe Company’s Chairman of the Board, Chief Executive Officer or a seniorofficer of the Company or based upon the advice of counsel for the Companyshall be conclusively presumed to be done, or omitted to be done, by theExecutive in good faith and in the best interests of the Company or anEmploying Affiliate. The termination of employment of the Executive shall notbe deemed to be for Cause pursuant to subparagraph (b) or (c) aboveunless and until there shall have been delivered to the Executive a copy of aresolution duly adopted by the affirmative vote of not less than three-fourthsof the entire membership of the Board at a meeting of the Board called and heldfor such purpose (after reasonable notice is provided to the Executive and theExecutive is given an opportunity, together with counsel, to be heard beforethe Board) finding that, in the good faith opinion of the Board, the Executiveis guilty of the conduct described in subparagraph (b) or (c) above,and specifying the particulars thereof in detail. Notwithstanding anythingcontained in this Agreement to the contrary, no failure to perform by theExecutive after a Notice of Termination is given to the Company by theExecutive 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 theCompany) of any common stock of the Company (“Common Stock”) or other votingsecurities of the Company entitled to vote generally for the election ofdirectors (the “Voting Securities”) by any “Person” (as the term “person” isused for purposes of Section 13(d) or 14(d) of the ExchangeAct), immediately after which such Person has “Beneficial Ownership” (withinthe meaning of Rule 13d-3 promulgated under the Exchange Act) offifty percent or more of the then outstanding shares of Common Stock or thecombined voting power of the Company’s then outstanding Voting Securities; *provided, however,* in determining whether a Change inControl has occurred, Common Stock or Voting Securities which are acquired in aNon-Control Acquisition (as hereinafter defined) shall not constitute anacquisition which would cause a Change in Control. A “Non-Control Acquisition”shall mean an acquisition by (i) an employee benefit plan (or a trustforming a part thereof) maintained by (A) the Company or (B) anycorporation or other Person of which a majority of its voting power or itsvoting equity securities or equity interest is owned, directly or indirectly,by the Company (a “Subsidiary”), (ii) the Company or its Subsidiaries, (iii) anyPerson in connection with a Non-Control Transaction (as hereinafter defined) or(iv) an Affiliate;

(b)   The individuals who, as of the date of thisagreement, are members of the Board (the “Incumbent Board”), cease for anyreason to constitute at least a majority of the members of the Board; *provided, however,*that if the election, or nomination forelection by the Company’s shareholders, of any new director was approved by avote 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 beconsidered a member of 

 

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the Incumbent Boardif such individual initially assumed office as a result of either an actual orthreatened “Election Contest” (as described in Rule 14a-11promulgated under the Exchange Act) or other actual or threatened solicitationof proxies or consents by or on behalf of a Person other than the Board (a “ProxyContest”) including by reason of any agreement intended to avoid or settle anyElection Contest or Proxy Contest; or

(c)    The consummation of:

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

(A)  the shareholders of the Company, immediatelybefore such merger, consolidation, reorganization or other business combinationown directly or indirectly immediately following such merger, consolidation,reorganization or other business combination, at least fifty percent of thecombined voting power of the outstanding voting securities of the corporationresulting from such merger or consolidation, reorganization or other businesscombination (the “Surviving Corporation”) in substantially the same proportionas their ownership of the Voting Securities immediately before such merger,consolidation, reorganization, or other business combination,

(B)  the individuals who were members of theIncumbent Board immediately prior to the execution of the agreement providingfor such merger, consolidation, reorganization or other business combinationconstitute at least two-thirds of the members of the board of directors of theSurviving Corporation, or a corporation beneficially directly or indirectlyowning a majority of the combined voting power of the outstanding votingsecurities of the Surviving Corporation, and

(C)  no Person other than (i) the Company, (ii) anySubsidiary, (iii) any employee benefit plan (or any trust forming a partthereof) that, immediately prior to such merger, consolidation, reorganizationor other business combination was maintained by the Company, the SurvivingCorporation, or any Subsidiary, or (iv) any Person who, immediately priorto such merger, consolidation, reorganization or other business combination hadBeneficial Ownership of fifty percent or more of the then outstanding VotingSecurities or common stock of the Company, has Beneficial Ownership of fiftypercent or more of the combined voting power of the Surviving Corporation’sthen outstanding voting securities or its common stock.

(2)   A complete liquidation or dissolution of theCompany; or

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

*provided, however,*thatno transaction or series of transactions by which Stephen W. Bershad, or anyPerson in which Stephen W. Bershad has Beneficial Ownership, directly orindirectly, of 25 percent of the outstanding ownership interests or votingpower, acquires fifty percent or more of the then outstanding shares of CommonStock or the combined voting power of the Company’s then outstanding Voting 

 

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Securities shallconstitute a Change in Control for purposes of this Agreement (regardless ofthe form of transaction or series of transactions by which such acquisitionoccurs (including, without limitation, any acquisition described in clause (a) hereofor any merger or other transaction described in clause (c) hereof)).

Notwithstanding theforegoing, a Change in Control shall not be deemed to occur solely because anyPerson (the “Subject Person”) acquired Beneficial Ownership of more than thepermitted amount of the then outstanding Common Stock or Voting Securities as aresult of the acquisition of Common Stock or Voting Securities by the Companywhich, by reducing the number of shares of Common Stock or Voting Securitiesthen outstanding, increases the proportional number of shares BeneficiallyOwned 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 ofshares of Common Stock or Voting Securities by the Company, and after suchshare acquisition by the Company, the Subject Person becomes the BeneficialOwner of any additional shares of Common Stock or Voting Securities whichincrease the percentage of the then outstanding shares of Common Stock orVoting Securities Beneficially Owned by the Subject Person, then a Change inControl shall occur.

16.6.    *Company*.   Forpurposes of this Agreement, all references to the Company shall include itsSuccessors and Assigns.

16.7.    *Disability*.   Forpurposes of this Agreement, “Disability” shall mean a physical or mentalinfirmity which impairs the Executive’s ability to substantially perform hisduties 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 theExecutive (which time period shall not be less than thirty days), theExecutive shall not have returned to full-time performance of his duties; *provided, however,* that if the Company’s Long TermDisability Plan, or any successor plan (the “Disability Plan”), is then ineffect, the Executive shall not be deemed disabled for purposes of thisAgreement unless the Executive is also eligible for long-term disabilitybenefits under the Disability Plan (or similar benefits in the event of asuccessor 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 followingevents or conditions:

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

(2)   a reduction in the Executive’s annual basesalary;

(3)   the relocation of the offices of the Companyor an Employing Affiliate at which the Executive is principally employed to alocation more than 25 miles from the location of such offices immediatelyprior to a Change in Control, or the requirement that the Executive be basedanywhere other than at such offices, except to the extent the Executive was notpreviously assigned to a principal location and except for required travel onthe business of the Company or an Employing Affiliate to an extentsubstantially consistent with the Executive’s business travel obligations atthe time of a Change in Control; or

(4)   the failure by the Company or an EmployingAffiliate to pay to the Executive any portion of the Executive’s currentcompensation or to pay to the Executive any portion of an installment ofdeferred compensation under any deferred compensation program of the 

 

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Company or an Employing Affiliate in which the Executive participated,within seven days of the date such compensation is due.

(b)   Any event or condition described in Section 16.8(a)(1) through (4) whichoccurs prior to a Change in Control but which the Executive reasonablydemonstrates (i) was at the request of a Third Party who effectuates aChange in Control or (ii) otherwise arose in connection with or inanticipation of a Change in Control which has been threatened or proposed andwhich actually occurs, shall constitute Good Reason for purposes of thisAgreement notwithstanding that it occurred prior to a Change in Control, itbeing agreed that any such action taken following shareholder approval of atransaction which if consummated would constitute a Change in Control, shall bedeemed to be in anticipation of a Change in Control provided such transactionis actually consummated.

16.9.    *Notice of Termination*.   Forpurposes of this Agreement, following a Change in Control, “Notice ofTermination” shall mean a written notice of termination of the Executive’semployment, signed by the Executive if to the Company or by a duly authorizedofficer of the Company if to the Executive, which indicates the specifictermination provision in this Agreement, if any, relied upon and which setsforth in reasonable detail the facts and circumstances claimed to provide abasis for termination of the Executive’s employment under the provision soindicated. The failure by the Executive or the Company to set forth in theNotice of Termination any fact or circumstance which contributes to a showingof Good Reason, Disability or Cause shall not serve to waive any right of theExecutive or the Company, respectively, hereunder or preclude the Executive orthe Company, respectively, from asserting such fact or circumstance inenforcing the Executive’s or the Company’s rights hereunder.

16.10.  *Successors and Assigns*.   Forpurposes of this Agreement, “Successors and Assigns” shall mean, with respectto the Company, a corporation or other entity acquiring all or substantiallyall the assets and business of the Company, as the case may be, whether byoperation of law or otherwise.

16.11.  *Termination Date*.   Forpurposes of this Agreement, “Termination Date” shall mean (a) in the caseof the Executive’s death, his date of death, (b) if the Executive’semployment is terminated for Disability, thirty days after Notice ofTermination is given (provided that the Executive shall not have returned tothe performance of his duties on a full-time basis during such thirty dayperiod) and (c) if the Executive’s employment is terminated for any otherreason, the date specified in the Notice of Termination (which, in the case ofa termination for Cause shall not be less than thirty days, and in thecase 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 ofTermination is given the party receiving such Notice of Termination in goodfaith notifies the other party that a dispute exists concerning the basis forthe termination, the Termination Date shall be the date on which the dispute isfinally determined, either by mutual written agreement of the parties, or bythe final judgment, order or decree of a court of competent jurisdiction (thetime for appeal therefrom having expired and no appeal having been taken). Notwithstandingthe pendency of any such dispute, the Company or an Employing Affiliate shallcontinue to pay the Executive his base salary and continue the Executive as aparticipant (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 disabilitybenefit plans in which he was participating when the notice giving rise to thedispute was given, until the dispute is finally resolved whether or not thedispute is resolved in favor of the Company, and the Executive shall not beobligated to repay to the Company or an Employing Affiliate any amounts paid orbenefits provided pursuant to this sentence.

 

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INWITNESS WHEREOF, the Company has caused this Agreement to be executed by itsduly authorized officers and the Executive has executed this Agreement as ofthe day and year first above written.
|   | AXSYS TECHNOLOGIES, INC. |
|--------|--------------------------|
|   | /s/ STEPHEN W. BERSHAD   |
|   | By:                      | Stephen W. Bershad |
|   | Its:                     | *Chief Executive Officer* |
|   | EXECUTIVE                |
|   | /s/ SCOTT B. CONNER      |
|   | Scott B. Conner          |
|   | 17 Orchard Road          |
|   | West Hartford, CT 06117  |

 

 

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