Exhibit 10.16
AMENDED AND RESTATED
SEVERANCE PROTECTION AGREEMENT
THIS AGREEMENT is made as of the
22 nd day of December, 2008, by and between
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 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 December 3, 2004, 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
(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 pr
