<SUBMISSION>
<ACCESSION-NUMBER>0001178913-05-000372
<TYPE>DEF 14A
<PUBLIC-DOCUMENT-COUNT>5
<PERIOD>20050318
<FILING-DATE>20050318
<DATE-OF-FILING-DATE-CHANGE>20050318
<EFFECTIVENESS-DATE>20050318
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>AXSYS TECHNOLOGIES INC
<CIK>0000206030
<ASSIGNED-SIC>3827
<IRS-NUMBER>111962029
<STATE-OF-INCORPORATION>DE
<FISCAL-YEAR-END>1228
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>DEF 14A
<ACT>34
<FILE-NUMBER>000-16182
<FILM-NUMBER>05691063
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>175 CAPITAL BLVD SUITE 103
<CITY>ROCKY HILL
<STATE>CT
<ZIP>06067
<PHONE>2018711500
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>175 CAPITAL BLVD SUITE 103
<CITY>ROCKY HILL
<STATE>CT
<ZIP>06067
</MAIL-ADDRESS>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>VERNITRON CORP
<DATE-CHANGED>19920703
</FORMER-COMPANY>
</FILER>
<DOCUMENT>
<TYPE>DEF 14A
<SEQUENCE>1
<FILENAME>zk51401.htm
<TEXT>

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     <!-- Control Number: 51401                                                            -->
     <!-- Rev Number:     1                                                                -->
     <!-- Client Name:    Axsys Technologies                                               -->
     <!-- Project Name:   DEF 14A                                                          -->
     <!-- Firm Name:      Zadok-Keinan Ltd                                                 -->
     <TITLE>DEF 14A</TITLE>
</HEAD>
<BODY>


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<P align=center><B><FONT face="Times New Roman, Times, serif" size=2><BR>UNITED
STATES<BR></FONT><FONT face="Times New Roman, Times, serif" size=4>SECURITIES AND EXCHANGE COMMISSION<BR></FONT><FONT face="Times New Roman, Times, serif" size=2>Washington, D.C. 20549
</FONT></B></P>
<P align=center><FONT face="Times New Roman, Times, serif" size=4><B>SCHEDULE
14A INFORMATION</B></FONT></P>
<P align=center><B><FONT face="Times New Roman, Times, serif" size=2>Proxy
Statement Pursuant to Section 14(a) of the Securities<BR>Exchange Act of 1934
(Amendment No. )</FONT></B></P>
<P><FONT face="Times New Roman, Times, serif" size=2>Filed by the Registrant
&nbsp;&nbsp; </FONT><FONT face=wingdings size=3>&#254;</FONT></P>
<P><FONT face="Times New Roman, Times, serif" size=2>Filed by a Party other than
the Registrant &nbsp;&nbsp;</FONT><FONT face=wingdings size=3>o</FONT></P>
<P><FONT face="Times New Roman, Times, serif" size=2>Check the appropriate
box:</FONT></P>
<TABLE cellSpacing=2 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD width="3%"><FONT face=wingdings size=3>o</FONT></TD>
    <TD><FONT face="Times New Roman, Times, serif" size=2>Preliminary Proxy
      Statement</FONT></TD></TR>
  <TR vAlign=top>
    <TD><FONT face=wingdings size=3>o</FONT></TD>
    <TD><FONT face="Times New Roman, Times, serif" size=2>Confidential, for
      Use of the Commission Only<BR>(as permitted by Rule 14a-6(e)(2))
  </FONT></TD></TR>
  <TR vAlign=top>
    <TD><FONT face=wingdings size=3>&#254;</FONT></TD>
    <TD><FONT face="Times New Roman, Times, serif" size=2>Definitive Proxy
      Statement</FONT></TD></TR>
  <TR vAlign=top>
    <TD><FONT face=wingdings size=3>o</FONT></TD>
    <TD><FONT face="Times New Roman, Times, serif" size=2>Definitive
      Additional Materials</FONT></TD></TR>
  <TR vAlign=top>
    <TD><FONT face=wingdings size=3>o</FONT></TD>
    <TD><FONT face="Times New Roman, Times, serif" size=2>Soliciting Material
      Pursuant to ss.240.14a-12</FONT></TD></TR> </TABLE>
<P>&nbsp;</P>
<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR>
    <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=5><B>Axsys Technologies</B></FONT></TD></TR>
  <TR>
    <TD>
      <HR noShade SIZE=1>
    </TD></TR>
  <TR>
    <TD VALIGN="top" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(Name of Registrant as Specified In Its Charter)</FONT></TD></TR>
  <TR>
    <TD><BR><BR></TD></TR>
  <TR>
    <TD>
      <HR SIZE=1>
    </TD></TR>
  <TR>
    <TD VALIGN="top" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(Name of Person(s) Filing Proxy Statement, if other than the
      Registrant)</FONT></TD></TR> </TABLE>
<P>&nbsp;</P>
<TABLE cellSpacing=3 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD colSpan=3><FONT face="Times New Roman, Times, serif" size=2>Payment of
      Filing Fee (Check the appropriate box):</FONT></TD></TR>
  <TR vAlign=top>
    <TD width="3%"><FONT face=wingdings size=3>&#254;</FONT></TD>
    <TD colSpan=2><FONT face="Times New Roman, Times, serif" size=2>No fee
      required.</FONT></TD></TR>
  <TR vAlign=top>
    <TD><FONT face=wingdings size=3>o</FONT></TD>
    <TD colSpan=2><FONT face="Times New Roman, Times, serif" size=2>Fee
      computed on table below per Exchange Act Rules 14a-6(i)(1) and
    0-11.</FONT></TD></TR>
  <TR vAlign=top>
    <TD align=right>&nbsp;</TD>
    <TD width="3%"><FONT face="Times New Roman, Times, serif"
    size=2>(1)</FONT></TD>
    <TD><FONT face="Times New Roman, Times, serif" size=2>Title of each class
      of securities to which transaction applies:</FONT></TD></TR>
  <TR vAlign=top>
    <TD align=right>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><BR>
      <HR noShade SIZE=1>
    </TD></TR>
  <TR vAlign=top>
    <TD align=right>&nbsp;</TD>
    <TD><FONT face="Times New Roman, Times, serif" size=2>(2)</FONT></TD>
    <TD><FONT face="Times New Roman, Times, serif" size=2>Aggregate number of
      securities to which transaction applies:</FONT></TD></TR>
  <TR vAlign=top>
    <TD align=right>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><BR>
      <HR noShade SIZE=1>
    </TD></TR>
  <TR vAlign=top>
    <TD align=right>&nbsp;</TD>
    <TD><FONT face="Times New Roman, Times, serif" size=2>(3)</FONT></TD>
    <TD><FONT face="Times New Roman, Times, serif" size=2>Per unit price or
      other underlying value of transaction computed pursuant to Exchange Act
      Rule 0-11 (set forth the amount on which the filing fee is calculated and
      state how it was determined):</FONT></TD></TR>
  <TR vAlign=top>
    <TD align=right>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><BR>
      <HR noShade SIZE=1>
    </TD></TR>
  <TR vAlign=top>
    <TD align=right>&nbsp;</TD>
    <TD><FONT face="Times New Roman, Times, serif" size=2>(4)</FONT></TD>
    <TD><FONT face="Times New Roman, Times, serif" size=2>Proposed maximum
      aggregate value of transaction:</FONT></TD></TR>
  <TR vAlign=top>
    <TD align=right>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><BR>
      <HR noShade SIZE=1>
    </TD></TR>
  <TR vAlign=top>
    <TD align=right>&nbsp;</TD>
    <TD><FONT face="Times New Roman, Times, serif" size=2>(5)</FONT></TD>
    <TD><FONT face="Times New Roman, Times, serif" size=2>Total fee
      paid:</FONT></TD></TR>
  <TR vAlign=top>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><BR>
      <HR noShade SIZE=1>
    </TD></TR>
  <TR vAlign=top>
    <TD><FONT face=wingdings size=3>o</FONT></TD>
    <TD colSpan=2><FONT face="Times New Roman, Times, serif" size=2>Fee paid
      previously with preliminary materials.</FONT></TD></TR>
  <TR vAlign=top>
    <TD><FONT face=wingdings size=3>o</FONT></TD>
    <TD colSpan=2><FONT face="Times New Roman, Times, serif" size=2>Check box
      if any part of the fee is offset as provided by Exchange Act Rule
      0-11(a)(2) and identify the filing for which the offsetting fee was paid
      previously. Identify the previous filing by registration statement number,
      or the Form or Schedule and the date of its filing.</FONT></TD></TR>
  <TR vAlign=top>
    <TD align=right>&nbsp;</TD>
    <TD><FONT face="Times New Roman, Times, serif" size=2>(1)</FONT></TD>
    <TD><FONT face="Times New Roman, Times, serif" size=2>Amount Previously
      Paid:</FONT></TD></TR>
  <TR vAlign=top>
    <TD align=right>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><BR>
      <HR noShade SIZE=1>
    </TD></TR>
  <TR vAlign=top>
    <TD align=right>&nbsp;</TD>
    <TD><FONT face="Times New Roman, Times, serif" size=2>(2)</FONT></TD>
    <TD><FONT face="Times New Roman, Times, serif" size=2>Form, Schedule or
      Registration Statement No.:</FONT></TD></TR>
  <TR vAlign=top>
    <TD align=right>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><BR>
      <HR noShade SIZE=1>
    </TD></TR>
  <TR vAlign=top>
    <TD align=right>&nbsp;</TD>
    <TD><FONT face="Times New Roman, Times, serif" size=2>(3) </FONT></TD>
    <TD><FONT face="Times New Roman, Times, serif" size=2>Filing
    Party:</FONT></TD></TR>
  <TR vAlign=top>
    <TD align=right>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><BR>
      <HR noShade SIZE=1>
    </TD></TR>
  <TR vAlign=top>
    <TD align=right>&nbsp;</TD>
    <TD><FONT face="Times New Roman, Times, serif" size=2>(4)</FONT></TD>
    <TD><FONT face="Times New Roman, Times, serif" size=2>Date
  Filed:</FONT></TD></TR>
  <TR vAlign=top>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><BR>
      <HR noShade SIZE=1>
    </TD></TR> </TABLE>

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<font size=2></font></p>
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<P ALIGN="RIGHT">
<IMG SRC="axsys.jpg">
</p>


<P ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>March 18, 2005</FONT></P>


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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Dear Axsys Technologies
Stockholder: </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
behalf of the Board of Directors and management, I cordially invite you to attend the
Annual Meeting of Stockholders on May 5, 2005, at 10:00 a.m., at the Hartford Marriott
Rocky Hill at Corporate Ridge, 100 Capital Boulevard, Rocky Hill, Connecticut. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
accompanying Notice of Annual Meeting and Proxy Statement describes the proposals to be
considered at the meeting. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Whether
you plan to attend the meeting or not, it is important that your shares are represented.
Therefore, you are urged to complete, sign, date and return the enclosed proxy card, or to
vote via either the Internet or telephone, promptly in accordance with the instructions
set forth on the card. This will ensure your proper representation at the Annual Meeting. </FONT></P>


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<TD WIDTH=40%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=50%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Very truly yours,<BR><BR><BR><BR>
<BR><IMG SRC="sig.jpg"><BR>
Stephen W. Bershad<BR>Chairman of the Board<BR>Chief Executive Officer</FONT></TD>
</TR>
</TABLE>
<BR>
<BR><BR>

<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>AXSYS TECHNOLOGIES, INC. 175 CAPITAL BOULEVARD SUITE 103 ROCKY HILL, CT 06067</FONT></P>

<P align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>860.257.0200   FAX 860.594.5750   web: www.axsys.com</FONT></P>


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<P align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2><IMG SRC="axsys.jpg"></FONT></P>



<TABLE WIDTH="100%" BORDER="0" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="100%"><HR SIZE="1" NOSHADE WIDTH="100%" ALIGN="CENTER"></TD></TR>
<TR VALIGN="TOP">
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="3">NOTICE OF ANNUAL MEETING OF STOCKHOLDERS</FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><HR SIZE="1" NOSHADE WIDTH="100%" ALIGN="CENTER"></TD></TR>
</TABLE>
<BR>



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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>To Be Held <BR>Thursday,
May 5, 2005 </FONT><BR>
<FONT FACE="Times New Roman, Times, Serif" SIZE=2>10:00 A.M. </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Annual Meeting of Stockholders of Axsys Technologies, Inc. (&#147;Axsys&#148; or the
&#147;Company&#148;) will be held on May 5, 2005 at 10:00 a.m., at the Hartford Marriott
Rocky Hill at Corporate Ridge, 100 Capital Boulevard, Rocky Hill, Connecticut, for the
following purposes: </FONT></P>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1. </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>To
elect five directors to the Board of Directors; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2. </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>To
approve an amendment to the Company&#146;s Amended and Restated Long-Term           Stock
Incentive Plan; </FONT></TD>
</TR>
</TABLE>
<BR>



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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3. </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>To
ratify the selection of Ernst &amp; Young LLP as independent accountants of           the
Company for the fiscal year ending December 31, 2005; and </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4. </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>To
transact such other business as may properly come before the meeting or any
          adjournment thereof. </FONT></TD>
</TR>
</TABLE>
<BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Only
stockholders of record of Axsys&#146; Common Stock, par value $.01 per share, at the close
of business on March 7, 2005 are entitled to notice of and to vote at the meeting and any
adjournments thereof. A list of such stockholders will be open for examination by any
stockholder for any purpose germane to the meeting, during ordinary business hours, for
ten days prior to the meeting at the offices of Axsys Technologies, Inc. in Rocky Hill,
Connecticut. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Whether
or not you expect to attend the meeting, it is important that your shares be represented,
regardless of the number of shares you hold. Accordingly, you are encouraged to sign, date
and return the enclosed proxy card in the reply envelope provided, or to vote via either
the Internet or telephone, in accordance with the instructions set forth on the card, as
soon as possible. </FONT></P>



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<TR VALIGN=TOP>
<TD WIDTH=40%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=50%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>By Order of the Board of Directors,<BR><BR>
<BR><IMG SRC="sig2.jpg"><BR>
David A. Almeida<BR>Secretary</FONT></TD>
</TR>
</TABLE>
<BR>


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<font size=2></font></p>
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<P STYLE="page-break-after:always"></P>



<TABLE WIDTH="100%" CELLPADDING="5" CELLSPACING="0" ALIGN="Center" BORDER="1" RULES="Groups">
<TR VALIGN="TOP">
     <TD WIDTH="100%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>-IMPORTANT-</B> </FONT></TD></TR>
<TR VALIGN="TOP">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>STOCKHOLDERS ARE REQUESTED TO COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE
ENCLOSED ENVELOPE WHICH HAS BEEN PROVIDED FOR YOUR CONVENIENCE AND WHICH REQUIRES NO POSTAGE IF MAILED IN THE
UNITED STATES. THE PROMPT RETURN OF PROXY CARDS WILL ENSURE A QUORUM. ANY STOCKHOLDER PRESENT AT THE ANNUAL
MEETING MAY REVOKE HIS OR HER PROXY AND VOTE PERSONALLY ON ALL MATTERS BROUGHT BEFORE THE ANNUAL MEETING.</B> </FONT>
</TD></TR>
<TR VALIGN="TOP">
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>THANK YOU FOR ACTING PROMPTLY.</B> </FONT></TD></TR>
</TABLE>





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<P STYLE="page-break-after:always"></P>


<P ALIGN="RIGHT"> <IMG SRC="axsys.jpg"> </P>

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<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Workstation" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>PROXY STATEMENT </FONT></H1>


<TABLE WIDTH="100%" BORDER="0" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="100%"><HR SIZE="1" NOSHADE WIDTH="100%" ALIGN="CENTER"></TD></TR>
<TR VALIGN="TOP">
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>INFORMATION ABOUT THE
ANNUAL MEETING</B></FONT></TD></TR>
</TABLE>
<BR>



<TABLE WIDTH="100%" BORDER="0" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="100%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><b>Why Am I Receiving
These Proxy Materials?</b></FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">The Board of Directors (the
&#147;Board&#148;) of Axsys Technologies, Inc. (&#147;Axsys&#148; or the
&#147;Company&#148;) is soliciting proxies to be voted at the 2005 Annual Meeting of
Stockholders. This proxy statement includes information about the issues to be voted on at
the meeting.</FONT></TD></TR>
</TABLE>
<BR>


<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>On March 18, 2005, we began mailing
these proxy materials to all stockholders of record at the close of business on March 7,
2005, the record date for the 2005 Annual Meeting. As of the record date, there were
7,066,287 shares of Axsys common stock outstanding. Each share is entitled to one vote on
each matter properly brought before the Annual Meeting. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>As required by Delaware law, a list
of stockholders entitled to vote at the Annual Meeting will be available during the 2005
Annual Meeting, and for ten days prior to the meeting, during ordinary business hours at
Axsys&#146; corporate headquarters located at 175 Capital Boulevard, Suite 103, Rocky
Hill, Connecticut 06067. </FONT></P>


<TABLE WIDTH="100%" BORDER="0" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="100%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><b>How Many Votes Do I
Have?</b></FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">You may vote all shares of Axsys
common stock that you owned at the close of business on March 7, 2005, the record date.
These shares include:</FONT></TD></TR>
</TABLE>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font>   </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Shares
held directly in your name as the &#147;stockholder of record&#148; (subject to any
instruction you may receive from the beneficial owner if you hold shares as a nominee); </FONT></TD>
</TR>
</TABLE>




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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font>   </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Shares
held for you as the beneficial owner through a broker, bank, or other nominee in &#147;street
name&#148;; and </FONT></TD>
</TR>
</TABLE>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font>   </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Shares
credited to your account in the Axsys Technologies, Inc. 401(k) Retirement Plan.</FONT></TD>
</TR>
</TABLE>
<BR>


<TABLE WIDTH="100%" BORDER="0" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="100%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><b>If I Am A Stockholder
Of Record, How Can I Vote My Shares?</b></FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">You can vote by proxy or in person.</FONT></TD></TR>
</TABLE>
<BR>

<TABLE WIDTH="100%" BORDER="0" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="100%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><b>How Do I Vote By Proxy?</b></FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">If you are a stockholder of record,
you may vote your proxy by either:</FONT></TD></TR>
</TABLE>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font>   </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Mail;</FONT></TD>
</TR>
</TABLE>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font>   </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Internet;
or </FONT></TD>
</TR>
</TABLE>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font>   </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Telephone. </FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>If you prefer voting by mail, simply
mark your proxy card, date and sign it, and return it to Mellon Investor Services in the
postage-paid envelope provided. If you vote by mail, the persons named on the card (your
&#147;proxies&#148;) will vote your shares in the manner you indicate. You may specify
whether your shares should be voted for all or some of the nominees for director or
whether you withhold authority to vote for all directors. If you vote by mail, sign your
proxy card, and you do not indicate specific choices, your shares will be voted
&#147;FOR&#148; the election of all five nominees for director. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Instead of submitting proxies by mail
on the enclosed proxy card, stockholders have the option to submit their proxies or voting
instructions electronically through the Internet or by telephone. Please note that there
may be separate arrangements for using the Internet or telephone depending on whether your
shares are registered in the Company&#146;s stock records in your name or in the name of a
brokerage firm or bank. Stockholders should check their proxy card or voting instructions
forwarded by their broker, bank or other holder of record to see which options are
available. </FONT></P>

<p align=center>
<font size=2>1</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px">
<HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<P STYLE="page-break-after:always"></P>


<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Internet and telephone procedures
described below for submitting your proxy are designed to authenticate stockholders&#146;
identities, to allow stockholders to have their shares voted and to confirm that their
instructions have been properly recorded. Stockholders submitting proxies or voting
instructions via the Internet should understand that there may be costs associated with
electronic access, such as usage charges from the Internet access providers and telephone
companies, that would be borne by the stockholder. </FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD ><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Stockholders
of record who wish to vote via the Internet or telephone may submit their proxies:  </FONT></TD>
</TR>
</TABLE>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font>   </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Through
   the    Internet    by   visiting   a   website    established    for   that    purpose
  at      http://www.proxyvoting.com/axys; or</FONT></TD>
</TR>
</TABLE>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font>   </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>By
telephone by calling the toll-free number 1-866-540-5760 and following the recorded
instructions. </FONT></TD>
</TR>
</TABLE>
<BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>If any other matter is presented,
your proxies will vote in accordance with their best judgment. At the time this proxy
statement went to press, we knew of no matters that needed to be acted on at the Annual
Meeting other than those discussed in this proxy statement. </FONT></P>


<TABLE WIDTH="100%" BORDER="0" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="100%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><b>May I Revoke My Proxy?</b></FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">If you give a proxy, you may revoke
it any one of three ways:</FONT></TD></TR>
</TABLE>



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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font>  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Submit
a valid later-dated proxy;</FONT></TD>
</TR>
</TABLE>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font>  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Notify
Axsys' secretary in writing before the Annual Meeting that you have revoked your proxy; or</FONT></TD>
</TR>
</TABLE>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font>  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Vote
in person at the Annual Meeting.</FONT></TD>
</TR>
</TABLE>
<BR>


<TABLE WIDTH="100%" BORDER="0" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="100%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><b>How Do I Vote In
Person?</b></FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">If you are a stockholder of record,
you may cast your vote in person at the Annual Meeting. If you plan to vote in person,
please see &#147;How Can I Gain Admittance To The Annual Meeting&#148; below.</FONT></TD></TR>
</TABLE>
<BR>

<TABLE WIDTH="100%" BORDER="0" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="100%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><b>If I Hold Shares In
Street Name, How Can I Vote My Shares?</b></FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">You can submit voting instructions to
your broker or nominee. In most instances, you will be able to do this over the telephone
or by mail. Please refer to the voting instruction form included in these materials by
your broker or nominee.</FONT></TD></TR>
</TABLE>
<BR>

<TABLE WIDTH="100%" BORDER="0" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="100%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><b>How Do I Vote My Axsys
Common Stock Held In The Axsys 401(k) Plan?</b></FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">If you are a participant in the Axsys
401(k) Plan (the &#147;Plan&#148;) and hold shares of Axsys common stock within the Plan,
you will receive a proxy card that covers shares credited to your Plan account. This proxy
card serves as a voting instruction for the trustee of the Plan in which you are a
participant. If you do not return this proxy card to the Plan trustee, the trustee will
vote your shares in the same proportion as the shares that are voted by the other
participants in the plan. The trustee will also vote unallocated shares of Axsys common
stock held in the Plan in direct proportion to the voting of allocated shares in the Plan
for which voting instructions have been received unless doing so would be inconsistent
with the trustee&#146;s duties.</FONT></TD></TR>
</TABLE>
<BR>

<TABLE WIDTH="100%" BORDER="0" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="100%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><b>What Constitutes A
Quorum?</b></FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">A majority of the outstanding shares,
present or represented by proxy, constitutes a quorum for the conduct of business at the
Annual Meeting.</FONT></TD></TR>
</TABLE>
<BR>

<p align=center>
<font size=2>2</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px">
<HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<P STYLE="page-break-after:always"></P>



<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>What Vote Is Required To Approve The Election Of Directors,<BR>
An Amendment To The Company&#146;s
Amended And Restated Long-Term Stock Incentive Plan<BR> And The Ratification Of The Selection
Of Ernst &amp; Young?</B> </FONT>
</P>


<TABLE WIDTH="100%" BORDER="0" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="30%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Election of Five Directors
</FONT></TD>
     <TD WIDTH="70%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">The affirmative vote of a majority of the votes cast by stockholders  entitled to vote,
present  in person or by proxy,  at the  Annual  Meeting,  is  required  to elect  each
Director.
</FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><BR>Approve an amendment to <BR>the
Company's Amended <BR>and Restated
Long-Term<BR> Stock Incentive Plan
</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><BR>The affirmative vote of a majority of the votes cast by stockholders  entitled to vote,
present  in person or by proxy,  at the  Annual  Meeting  is  required  to  approve  an
amendment to the Company's Amended and Restated Long-Term Stock Incentive Plan
</FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><BR>Ratify the Selection of <BR>Ernst &amp;
Young LLP
</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><BR>The affirmative vote of a majority of the votes cast by stockholders  entitled to vote,
present  in person or by proxy,  at the  Annual  Meeting,  is  required  to ratify  the
selection of Ernst &amp; Young LLP as the Company's independent  accountants for the fiscal
year ending December 31, 2005.
</FONT></TD></TR>
</TABLE>
<BR>




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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>With respect to the election of
directors, the approval of an amendment to the Company&#146;s Amended and Restated
Long-Term Stock Incentive Plan, the selection of Ernst &amp; Young LLP and any other
ordinary business properly coming before the Annual Meeting, abstentions, if any, will not
be counted for purposes of determining the number of votes cast and will have no effect on
the outcome of the voting. These shares, will however, be counted for purposes of
determining a quorum. Should a broker non-vote exist with respect to any matter, it would
be treated in the same manner as an abstention. Broker non-votes occur when brokers do not
have discretionary voting authority on certain proposals under the rules of the Nasdaq
National Market and the beneficial owner has not instructed the broker how to vote on
these proposals. </FONT></P>


<TABLE WIDTH="100%" BORDER="0" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="100%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><b>Who Bears The Costs Of
Soliciting These Proxies? </b></FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Axsys is paying the cost of
preparing, printing and mailing these proxy materials. Proxies are being solicited
principally by mail; but proxies may also be solicited personally, by telephone or similar
means by directors, officers and regular employees of Axsys without additional
compensation. We will reimburse brokerage firms and others for their expenses in
forwarding proxy solicitation materials to the beneficial owners of common stock.</FONT></TD></TR>
</TABLE><BR>

<TABLE WIDTH="100%" BORDER="0" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="100%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><b>How Can I Gain
Admittance To The Annual Meeting?</b></FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">If you are a stockholder of record or a
participant in the Axsys Technologies, Inc. 401(k) Retirement Plan, you need to bring a
form of personal photo identification with you in order to be admitted to the Annual
Meeting. If you want to attend the Annual Meeting and you do not hold shares in your name
but hold them through a bank, broker or other holder of record, you will need to present a
letter from the holder of record that confirms your ownership of those shares and a form
of personal photo identification in order to be admitted to the Annual Meeting. We reserve
the right to refuse admittance to anyone without proper proof of share ownership and
proper photo identification.</FONT></TD></TR>
</TABLE><BR>

<TABLE WIDTH="100%" BORDER="0" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="100%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><b>Stockholder
Communications With The Board</b></FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Stockholders may submit comments or
complaints regarding accounting, internal controls or auditing matters to the Audit
Committee through our website, www.axsys.com. Upon receipt of a complaint or concern, our
Director of Tax and Internal Audit will determine whether the complaint actually pertains
to accounting matters and will notify the Audit Committee and forward the communication,
when appropriate.</FONT></TD></TR>
</TABLE>
<BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Comments regarding other matters may
be communicated to the Board using the same process. Upon receipt of a communication not
related to accounting, internal controls or auditing matters, the Director of Tax and
Internal Audit will determine whether the communication deals with the functions or
responsibilities of the Board or a committee thereof and, when appropriate, will notify
the Board or committee and forward the communication. </FONT></P>

<p align=center>
<font size=2>3</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px">
<HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<P STYLE="page-break-after:always"></P>


<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Although the Company does not
maintain a policy requiring directors to attend annual meetings of stockholders, they are
invited and encouraged to do so. To facilitate their attendance, a meeting of the Board is
typically scheduled on the same day and near the location of each regularly scheduled
meeting of stockholders. All of our five current directors attended the Company&#146;s
2004 Annual Meeting of Stockholders. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Workstation" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>NOMINATION AND
ELECTION OF DIRECTORS </FONT><BR>
<FONT FACE="Times New Roman, Times, Serif" SIZE=2>(Proposal No. 1) </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Axsys&#146; By-Laws provide for a
Board of Directors of not less than two nor more than twelve directors, as determined from
time to time by resolution of the Board. The current members of the Board, whose terms
expire at the Annual Meeting, are Stephen W. Bershad, Anthony J. Fiorelli, Jr., Eliot M.
Fried, Richard F. Hamm, Jr. and Robert G. Stevens, all of whom are nominees. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>As previously noted, proxies will be
voted, unless authority is withheld, FOR the election as directors of the five nominees to
serve until the next annual meeting of stockholders and until their respective successors
shall have been duly elected and qualified. If any nominee should become unavailable for
election, proxies will be voted, unless authority is withheld, for an alternate or
alternates, if any, designated by the Board. The Board has no reason to believe that any
nominee will become unavailable for election. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The following table lists the name of
each nominee for director, his age at March 7, 2005 and the period during which he has
served as a director. </FONT></P>




<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="500" ALIGN="CENTER">
<TR VALIGN=Bottom>
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Name</FONT><HR WIDTH=40% SIZE=1 COLOR=#808080 NOSHADE></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Age</FONT><HR WIDTH=50% SIZE=1 COLOR=#808080 NOSHADE></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Director<BR>
Since</FONT><HR WIDTH=95% SIZE=1 COLOR=#808080 NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH="55%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Stephen W. Bershad</FONT></TD>
     <TD WIDTH="24%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>63</FONT></TD>
     <TD WIDTH="21%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1986</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Anthony J. Fiorelli, Jr</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>74</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1986</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Eliot M. Fried</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>72</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1994</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Richard F. Hamm, Jr</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>45</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2000</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Robert G. Stevens</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>51</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2003</FONT></TD></TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para (List) Flush Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Mr.
          Bershad has been Chairman of the Board and Chief Executive Officer of Axsys
          since 1986 and was President of Axsys from 1986 to August 1999 and from March
          2002 to the present. Prior thereto, he was a Managing Director of Lehman
          Brothers, Inc. and its predecessor firms, where he held a series of senior
          management positions in merchant banking and mergers and acquisitions. Mr.
          Bershad is a director of EMCOR Group, Inc., an electrical and mechanical
          construction and facilities services company. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Flush Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Mr.
          Fiorelli, Jr. has been a private investor since January 1, 1997. From December
          1985 until June 1997, he was President of Strategic Management Consulting
          Services, Inc., which is a management-consulting firm. Prior to that time, Mr.
          Fiorelli was President and Chief Executive Officer of General Defense
          Corporation, a diversified engineering and manufacturing company. Mr. Fiorelli
          also serves as Chairman of the Board of the United States Merchant Marine
          Academy Alumni Foundation. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>For more than five years prior to his
retirement in February 2000, Mr. Fried was a Managing Director &#150; Corporate Finance at
Lehman Brothers, Inc. Mr. Fried is a director of Blount International, Inc., a
manufacturer of industrial equipment products, and a director of Grant Prideco Inc., an
oil field products company. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Since November of 2004, Mr. Hamm has
been the Senior Vice President, General Counsel and Secretary of Dendreon Corporation, a
biotechnology company. From April 2002 to November 2004, Mr. Hamm was the Vice President
and Deputy General Counsel of Medtronic, Inc. a leading medical technology company. Prior
to Medtronic, Mr. Hamm was the Vice President &#150; Corporate Development and Planning at
Carlson Companies, Inc., a travel, hospitality and marketing company, for three years. For
more than five years prior thereto, he was Senior Vice President &#150; Legal and Business
Development and Vice President and General Counsel at Tropicana Products, Inc., a leading
producer of branded juice products. Mr. Hamm is a director of EMCOR Group, Inc., an
electrical and mechanical construction and facilities services company. </FONT></P>

<p align=center>
<font size=2>4</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px">
<HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<P STYLE="page-break-after:always"></P>


<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Since 2002, Mr. Stevens has been
President of Growth Insight, Inc., a strategic planning practice, which helps corporate
and non-profit clients develop and improve customer-centric business models. Prior to that
time, Mr. Stevens had been the Executive Vice President of Bluefly, Inc., a publicly
traded internet retailer of off-price fashion merchandise, for three years. From 1992
until 1999, Mr. Stevens served as Vice President and Partner of Mercer Management
Consulting, Inc., the management-consulting arm of Marsh &amp; McLennan, Inc. Mr. Stevens
serves as Vice Chairman of the Board of Trustees of the Shambhala Center of New York. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold 1-TNR" FSL="Workstation" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Board of Directors
and Committees </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Board of Directors is responsible
for the management and direction of Axsys and for establishing broad corporate policies.
There are no family relationships among any of the directors and executive officers of
Axsys. The Board of Directors met five times during 2004 and acted three times by
Unanimous Written Consent. The Board of Directors has standing Audit, Compensation and
Nominating and Corporate Governance Committees. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Consistent with the Audit Committee
structure and membership requirements of the Nasdaq National Market, the Audit Committee
is comprised of Messrs. Fiorelli, Fried and Stevens. As provided in its written charter
approved by the Board, the Audit Committee is responsible for assisting the Board in
fulfilling its oversight responsibilities by reviewing the following: Axsys&#146;
financial information that is provided to stockholders and others, the systems of internal
controls, which management and the Board have established, and the audit process. A copy
of the charter can be found on Axsys&#146; website at www.axsys.com. The Audit Committee
met four times in 2004 and acted once by Unanimous Written Consent. The Board has
determined that all members of the Audit Committee are independent directors under the
Nasdaq Stock Market rules and Rule 10A-3 under the Securities Exchange Act of 1934 and
each of them is able to read and understand fundamental financial statements. In addition,
Mr. Fiorelli has past employment as a chief executive officer with financial oversight
responsibilities and as a result is a financial expert as set forth in the rules of the
Nasdaq Stock Market. Mr. Fiorelli also qualifies as the Company&#146;s &#147;audit
committee financial expert&#148; within the meaning of applicable Securities and Exchange
Commission regulations. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Compensation Committee is
currently comprised of Messrs. Fiorelli, Fried and Hamm, all of whom are independent under
the rules of the Nasdaq Stock Market. The Compensation Committee oversees compensation
policies of Axsys. The Compensation Committee met three times in 2004. The Compensation
Committee operates under a charter that was approved by the Board of Directors. A copy of
the charter can be found on Axsys&#146; website at www.axsys.com. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Nominating and Corporate
Governance (&#147;NCG&#148;) Committee is comprised of Messrs. Fried, Hamm and Stevens,
all of whom are independent under the rules of the Nasdaq Stock Market. The NCG Committee
operates under a charter that was approved by the Board of Directors. A copy of the
charter can be found on Axsys&#146; website at www.axsys.com. The NCG Committee selects
candidates for the office of director of Axsys and recommends to the full Board the names
of persons (a) to be presented to the stockholders for election as directors and (b) to
fill vacancies in the Board of Directors that may exist or be created by reason of death,
resignation, removal or otherwise, including by reason of an increase in the number of
directors. The Nominating and Governance Committee met twice and acted once by Unanimous
Written Consent during 2004. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold 1-TNR" FSL="Workstation" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Director Nominations </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>As provided in its charter, the NCG
Committee will consider recommendations of nominations submitted by stockholders. When the
NCG Committee reviews a potential new candidate, the Committee looks specifically at the
candidate&#146;s qualifications in light of the needs of the Board and the Company at that
time given the then current mix of directors. The NCG Committee has not established
specific, minimum qualifications that must be met by a nominee. Instead, the Committee
assesses each candidate individually. The assessment will include a review of the
candidate&#146;s judgment, experience, understanding of the Company&#146;s or other
related industries, and such other factors as the NCG Committee concludes are pertinent in
light of the current needs of the Board. The Board believes that its membership should
reflect a diversity of experience, gender, race, ethnicity and age. The NCG Committee
applies the same criteria to evaluate all candidates, including those recommended by
stockholders. </FONT></P>

<p align=center>
<font size=2>5</font></p>
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<HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<P STYLE="page-break-after:always"></P>


<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Company also strives to have all
directors, other than the Chief Executive Officer, be independent in accordance with the
Nasdaq Stock Market&#146;s definition of independent. In addition, the Committee must also
ensure that the members of the Board, as a group, maintain the requisite qualifications
under the Nasdaq Stock Market&#146;s listing standards for membership on the Audit,
Compensation and Nominating and Corporate Governance Committees. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Stockholders who wish to suggest
candidates to the Nominating and Corporate Governance Committee for consideration as
directors may submit names and biographical data in writing to the Secretary of Axsys at
Axsys Technologies, Inc., 175 Capital Boulevard, Suite 103, Rocky Hill, Connecticut 06067. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>For a stockholder to nominate a
director at an Annual Meeting, notice of the nomination generally must be received by
Axsys not less than 60 nor more than 90 days in advance of the meeting. It is presently
anticipated that next year&#146;s annual meeting will be held on May 4, 2006 and,
accordingly, notice of any stockholder nomination for next year&#146;s meeting submitted
to Axsys on or between February 3, 2006 and March 5, 2006 will be considered filed on a
timely basis. The notice must describe all information relating to the nominee that is
required to be disclosed pursuant to Regulation 14A under the Securities Exchange Act of
1934, including name, age, business and residence address, occupation, shares held and
such person&#146;s written consent to being named in the proxy statement as a nominee and
to serving as a director if elected. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Mr.
          Bershad&#146;s employment agreement provides that he will serve as Chairman of
          the Board during his tenure as Chief Executive Officer and for a period of five
          years thereafter (subject to earlier termination upon certain events), provided
          that he continues to be elected to the Board of Directors by the stockholders. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold 1-TNR" FSL="Workstation" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Director Compensation </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>All directors or committee members,
as applicable, attended all meetings of the Board and of the Committees held during 2004,
except for Mr. Fried who was absent from two Board of Director meetings. The Board of
Directors determines the compensation of non-employee Directors. Non-employee directors of
Axsys receive an annual retainer fee of $18,000 plus meeting fees of $1,000 for each Board
meeting attended and $500 for each committee meeting attended. Directors who are employees
of Axsys or any subsidiary do not receive fees or other compensation for their services as
directors. All directors are reimbursed for travel and other expenses incurred in the
performance of their duties. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Annually, re-elected non-employee
directors are granted an option to purchase the number of shares of Axsys common stock,
which on the date of grant have a Fair Market Value equal to $30,000. On May 11, 2004,
each of Messrs. Fried, Fiorelli, Hamm and Stevens were granted options to purchase 2,507
shares of Common Stock at an exercise price of $11.973 per share with an expiration date
of May 11, 2014. These options vest 100% on the day immediately preceding the first
regularly scheduled annual meeting of stockholders at the Company occurring subsequent to
the date of grant. The Stock Incentive Plan also provides that upon election to the Board,
a new non-employee director will be granted an option to purchase that number of shares of
Common Stock, which on the date of grant have a Fair Market Value (as defined in the Stock
Incentive Plan) equal to $60,000. During 2004, there were no new Directors added to the
Board. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>The
Board of Directors unanimously recommends a vote FOR the election as directors of all of
the nominees.</B> </FONT></P>

<p align=center>
<font size=2>6</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px">
<HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<P STYLE="page-break-after:always"></P>


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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Executive Officers </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The following table lists the name of
each current executive officer of Axsys, his age at March 7, 2005, and his current
position with Axsys. </FONT></P>




<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="600" ALIGN="CENTER">
<TR VALIGN=Bottom>
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Name</FONT><HR WIDTH=60% SIZE=1 COLOR=#808080 NOSHADE></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Age</FONT><HR WIDTH=50% SIZE=1 COLOR=#808080 NOSHADE></TH>
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Position</FONT><HR WIDTH=95% SIZE=1 COLOR=#808080 NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH="20%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Stephen W. Bershad</FONT></TD>
     <TD WIDTH="10%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>63</FONT></TD>
     <TD WIDTH="70%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Chief Executive Officer and President</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>David A. Almeida</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>44</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Vice President, Chief Financial Officer, Secretary and Treasurer</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Scott B. Conner</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>37</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Vice President, Strategic Planning and Corporate Development</FONT></TD></TR>
</TABLE>
<BR>


<!-- MARKER FORMAT-SHEET="Para (List) Flush Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Mr.
          Bershad has been Chairman of the Board and Chief Executive Officer of Axsys
          since 1986 and was President of Axsys from 1986 to August 1999 and from March
          2002 to the present. Prior thereto, he was a Managing Director of Lehman
          Brothers, Inc. and its predecessor firms, where he held a series of senior
          management positions in merchant banking and mergers and acquisitions. Mr.
          Bershad is a director of EMCOR Group, Inc., an electrical and mechanical
          construction and facilities services company. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Flush Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Mr.
          Almeida joined Axsys in November 2001 as Vice President, Chief Financial
          Officer, Secretary and Treasurer with nearly twenty years of finance and
          administrative experience with high-technology companies. Most recently, Mr.
          Almeida was Vice President &#150; Finance with ADC Telecommunications, Inc.,
          Broadband, Access and Transport Group. Mr. Almeida spent eight years with ADC in
          a variety of executive positions managing finance, human resources, information
          technology and customer service organizations through complex financial and
          business issues in a variety of ADC businesses. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Flush Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Mr.
          Conner joined Axsys in July 2004 as Vice President, Strategic Planning and
          Corporate Development. Prior to joining Axsys, Mr. Conner served for four years
          as Vice President of Strategic Marketing and Business Development for Quantum
          Bridge Communications, formerly a privately held developer of Fiber to the Home
          networking equipment. In this position, he developed strategic marketing
          partnerships and headed the negotiations that lead to the sale of Quantum Bridge
          to Motorola. Prior to Quantum Bridge, Mr. Conner was Director of Business
          Development and Strategy for ADC Telecommunications where he was responsible for
          identifying and implementing several acquisitions. Before joining ADC, Mr.
          Conner spent several years at Anderson Consulting. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>All of the executive officers serve
at the pleasure of the Board of Directors. Severance agreements have been entered into
with all of the executive officers. See the discussion under &#147;Agreements with
Directors and Officers&#148;. </FONT></P>

<p align=center>
<font size=2>7</font></p>
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<HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<P STYLE="page-break-after:always"></P>


<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Workstation" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>BENEFICIAL STOCK
OWNERSHIP </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following table sets forth certain information as of March 7, 2005 concerning beneficial
ownership of Common Stock of Axsys by (i) each director, (ii) each of the current
executive officers and a former executive officer named in the compensation table below
and (iii) all current executive officers and directors as a group. Included in share
ownership are shares that may be acquired upon the exercise of options that are
exercisable as of March 7, 2005 or become exercisable on or before May 7, 2005. All
persons have sole voting and investment power except as otherwise indicated. </FONT></P>







<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="600" ALIGN="CENTER">
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH colspan=2><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Shares of Common Stock<BR>
Beneficially Owned <SUP>(1)</SUP></FONT><HR WIDTH=98% SIZE=1 COLOR=#808080 NOSHADE></TH>
</TR>
<TR VALIGN=Bottom>
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Name</FONT><HR WIDTH=95% SIZE=1 COLOR=#808080 NOSHADE></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Number</FONT><HR WIDTH=95% SIZE=1 COLOR=#808080 NOSHADE></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Percent</FONT><HR WIDTH=95% SIZE=1 COLOR=#808080 NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH="60%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Stephen W. Bershad (2) (3)</FONT></TD>
     <TD WIDTH="20%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1,930,442&nbsp;</FONT></TD>
     <TD WIDTH="20%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>25.8%</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Kenneth F. Stern (4) (5)</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>106,423&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>*&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>David A. Almeida (3) (6)</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>61,500&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>*&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Anthony J. Fiorelli, Jr. (7)</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>36,293&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>*&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Eliot M. Fried (8)</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>34,965&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>*&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Richard F. Hamm, Jr. (9)</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>20,109&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>*&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Robert G. Stevens (10)</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4,386&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>*&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Scott B. Conner</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>--&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>--&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>All current executive officers and directors as a group <BR>(7 persons) (11)</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2,045,994&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>27.4%</FONT></TD></TR>
</TABLE>



<TABLE WIDTH="100%" BORDER="0" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="100%"> <HR SIZE=1 NOSHADE WIDTH=10% ALIGN=LEFT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><SUP>*</SUP> Less than 1%.</FONT></TD></TR>
</TABLE>
<BR><BR>



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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(1)  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Calculated
in accordance with Rule 13d-3 under the Securities Exchange Act of                1934. </FONT></TD>
</TR>
</TABLE>

<!-- MARKER FORMAT-SHEET="Para Hang Lv 0-TNR" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(2)  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Includes
33,000 shares of Common Stock underlying options that are exercisable                as
of March 7, 2005 or within 60 days after such date. Mr. Bershad owns
               1,003,180 shares of Common Stock directly, 8,116 shares through the Axsys
               Technologies, Inc. 401(k) Retirement Plan and 886,146 shares of Common
Stock                indirectly through SWB Holding Corporation, of which he is the sole
shareholder                and chairman. Mr. Bershad&#146;s address is c/o Axsys, 175
Capital Boulevard,                Suite 103, Rocky Hill, CT 06067. </FONT></TD>
</TR>
</TABLE>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(3)  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Stephen
W. Bershad and David A. Almeida, who are executive officers of Axsys,                are
the sole trustees of the 401(k) Plan and may be deemed to beneficially own
               shares of Common Stock held by the 401(k) Plan. Except to the extent of
their                individual interests therein, each of Messrs. Bershad and Almeida
disclaims                beneficial ownership of such 401(k) Plan shares. </FONT></TD>
</TR>
</TABLE>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(4)  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Represents
69,000 shares of Common Stock underlying options, which are                exercisable as
of March 7, 2005, or within 60 days after such date and 37,423                shares of
common stock owned directly. </FONT></TD>
</TR>
</TABLE>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(5)  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Mr.
Stern was terminated from Axsys in July 2004. </FONT></TD>
</TR>
</TABLE>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(6)  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Represents
61,500 shares of Common Stock underlying options, which are                exercisable as
of March 7, 2005, or within 60 days after such date. </FONT></TD>
</TR>
</TABLE>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(7)  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Includes
34,965 shares of Common Stock underlying options that are exercisable                as
of March 7, 2005, or within 60 days after such date and 1,328 shares of
               common stock owned directly. </FONT></TD>
</TR>
</TABLE>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(8)  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Includes
18,281 shares of Common Stock underlying options that are exercisable                as
of March 7, 2005, or within 60 days after such date and 16,684 shares of
               common stock owned directly. </FONT></TD>
</TR>
</TABLE>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(9)  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Represents
20,109 shares of Common Stock underlying options that are exercisable                as
of March 7, 2005, or within 60 days after such date. </FONT></TD>
</TR>
</TABLE>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(10)  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Represents
4,386 shares of Common Stock underlying options that are exercisable                as of
March 7, 2005, or within 60 days after such date. </FONT></TD>
</TR>
</TABLE>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(11)  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Does
not include shares owned by Mr. Stern who was terminated from Axsys in July
               2004. </FONT></TD>
</TR>
</TABLE>

<p align=center>
<font size=2>8</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px">
<HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<P STYLE="page-break-after:always"></P>


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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>PRINCIPAL STOCKHOLDERS </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Axsys knows of no person who, as of
March 7, 2005, beneficially owned, within the meaning of Rule 13d-3 under the Securities
Exchange Act of 1934, more than five percent of the Common Stock outstanding, except for
Mr. Bershad and except as set forth below. </FONT></P>







<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=600>
<TR VALIGN=Bottom>
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Name and Address of Beneficial Owner</FONT><HR WIDTH=95% SIZE=1 COLOR=#808080 NOSHADE></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Number of Shares</FONT><HR WIDTH=95% SIZE=1 COLOR=#808080 NOSHADE></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Percent of Class</FONT><HR WIDTH=95% SIZE=1 COLOR=#808080 NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=60% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Kern Capital Management, LLC (1)</FONT></TD>
     <TD WIDTH=19% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=21% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>114 West 47<SUP>th</SUP> Street, Suite 1926</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>New York, NY 10036</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>567,450&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>8.0%</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><BR>Albert Fried &amp; Company, LLC (2)</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>60 Broad Street, 39<SUP>th</SUP> Floor</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>New York, NY 10004</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>540,976&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>7.7%</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><BR>Babson Capital Management, LLC (3)</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>One Memorial Drive</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Cambridge, MA 02142</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>418,400&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>5.9%</FONT></TD></TR>
</TABLE>
<BR>

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<HR SIZE=1 NOSHADE WIDTH=10% ALIGN=LEFT>



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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(1) </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>According
to a Schedule 13G filed on February  14, 2005 by Kern Capital  Management,  LLC ("Kern")
and          its  managing  members.  Kern has sole voting and  dispositive  power with
 respect to these shares in          its capacity as an investment  adviser.  Kern's
 managing  members  disclaim  beneficial  ownership of          these shares.</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(2) </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>According
 to a Schedule 13G filed by Albert  Fried &amp; Company,  LLC ("AFC") on February 16, 2005.
 AFC          has sole voting and  dispositive  power with  respect to 470,270 of these
 shares in its capacity as a          broker dealer.  Albert Fried,  Jr. is the managing
member of AFC, and disclaims  beneficial  ownership          over the shares
 beneficially  owned by AFC.  Includes  70,706  shares  with  respect to which  Albert
         Fried, Jr., in his individual capacity, has sole voting and dispositive power.</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(3) </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>According
to a Schedule 13G filed on January 20, 2005 by Babson  Capital  Management,  LLC
 ("Babson")          and its management  members.  Babson, in its capacity as an
investment  adviser,  has sole dispositive          power with  respect to all of these
 shares and has sole voting power with respect to 415,950 of these          shares.
 Babson has no voting power with respect to the other 2,450 shares beneficially owned by
it.</FONT></TD>
</TR>
</TABLE>
<BR>

<p align=center>
<font size=2>9</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px">
<HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<P STYLE="page-break-after:always"></P>




<P align=center><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>EXECUTIVE COMPENSATION</B> </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The following table sets forth
information  concerning  compensation  during the years ended December 31, 2004, 2003 and
2002 for services in all capacities  awarded to, earned by or paid to Axsys' Chief
Executive  Officer, the two other current executive  officers of Axsys and a former
executive officer of Axsys  (collectively,  the "Named Executives"): </FONT></P>

<P align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Summary Compensation Table</B></FONT></P>



<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=600>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=6><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Annual Compensation</FONT><HR WIDTH=95% SIZE=1 COLOR=#808080 NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Long-term<BR>Compensation</FONT><HR WIDTH=95% SIZE=1 COLOR=#808080 NOSHADE></TH>
</TR>
<TR VALIGN=Bottom>
     <TH COLSPAN="3" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Name and Principal Position</FONT><HR WIDTH=95% SIZE=1 COLOR=#808080 NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Year</FONT><HR WIDTH=95% SIZE=1 COLOR=#808080 NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Salary<BR>
($)</FONT><HR WIDTH=95% SIZE=1 COLOR=#808080 NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Bonus<BR>
($) (1)</FONT><HR WIDTH=95% SIZE=1 COLOR=#808080 NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Number of<BR>
Securities<BR>
Underlying Options<BR>
(# of Shares) (2)</FONT><HR WIDTH=95% SIZE=1 COLOR=#808080 NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>All Other<BR>
Compensation<BR>
($) (3)</FONT><HR WIDTH=95% SIZE=1 COLOR=#808080 NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=37% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Stephen W. Bershad</B> </FONT></TD>
     <TD WIDTH=1% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=3% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=5% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2004</FONT></TD>
     <TD WIDTH=1% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=3% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=1% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD WIDTH=8% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>350,106</FONT></TD>
        <TD WIDTH=4% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=1% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD WIDTH=8% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>220,000</FONT></TD>
        <TD WIDTH=4% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=1% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD WIDTH=8% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>30,000</FONT></TD>
        <TD WIDTH=4% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=1% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD WIDTH=8% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>15,490</FONT></TD>
        <TD WIDTH=2% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Chairman of the Board and</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2003</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>335,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>220,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>30,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>14,405</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Chief Executive Officer</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2002</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>325,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>173,566</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>--</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>13,680</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>

<TR>
      <TD> &nbsp;</TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>David A. Almeida</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2004</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>213,231</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>124,992</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>15,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>21,917</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Chief Financial Officer</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2003</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>200,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>126,551</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>15,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>24,995</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Vice President &#150; Finance,</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2002</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>185,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>100,374</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>60,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>29,045</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Secretary and Treasurer</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>

<TR>
      <TD>&nbsp; </TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Scott B. Conner </B>(4) </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2004</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>85,384</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>41,241</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>45,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>30,694</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Vice President &#150; Strategic</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Planning and Corporate</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Development</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>

<TR>
      <TD> &nbsp;</TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD>
      <TD> </TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Kenneth F. Stern</B> (5)</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2004</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>187,525</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>53,614</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>7,500</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>34,402</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Vice President &#150; Strategic</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2003</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>185,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>87,794</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>5,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>23,679</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Planning and Corporate</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2002</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>177,208</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>66,566</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>10,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>21,573</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Development</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
</TABLE>
<BR>


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<HR SIZE=1 NOSHADE WIDTH=15% ALIGN=LEFT>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(1)  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Reflects
payments under the Axsys&#146; Management Incentive Plan. </FONT></TD>
</TR>
</TABLE>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(2)  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Reflects
awards under the Stock Incentive Plan. </FONT></TD>
</TR>
</TABLE>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(3)  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Reflects:
(i) matching contributions under Axsys&#146; 401(k) Plan which in 2004
               totaled $8,200 for Mr. Bershad, $8,200 for Mr. Almeida and $8,200 for Mr.
Stern                (ii) payments under Axsys&#146; executive health insurance plan
which in 2004                totaled $6,762 for Mr. Bershad, $13,189 for Mr. Almeida,
$1,311 for Mr. Conner                and $25,894 for Mr. Stern; (iii) payments of
premiums for term life insurance                maintained on behalf of the Named
Executives which in 2004 totaled $528 for Mr.                Bershad, $528 for Mr.
Almeida, $220 for Mr. Conner and $308 for Mr. Stern; and                (iv)
reimbursement for relocation costs of $29,163 for Mr. Conner. Axsys&#146;               executive
health insurance plan, which covers only officers and certain key
               employees, provides for the reimbursement of deductible and coinsurance
amounts                and certain medical expenses not covered under Axsys&#146; basic
medical plans. </FONT></TD>
</TR>
</TABLE>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(4) </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>   Mr.
Conner joined Axsys in July 2004. His annual base salary in 2004 was           $185,000. </FONT></TD>
</TR>
</TABLE>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(5) </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>    Mr.
Stern was terminated from Axsys in July 2004. </FONT></TD>
</TR>
</TABLE>
<BR>

<p align=center>
<font size=2>10</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px">
<HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<P STYLE="page-break-after:always"></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The following table sets forth
certain information regarding the options granted pursuant to the Stock Incentive Plan
during the year ended December 31, 2004 to the Named Executives. </FONT></P>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Stock Options Granted
in Fiscal 2004 </FONT></H1>


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Number of<BR>
Securities<BR>
Underlying<BR>
Options Granted</FONT><HR WIDTH=95% SIZE=1 COLOR=#808080 NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Percent of Total<BR>
Options Granted to<BR>
Employees<BR>
During the<BR>
Year Ended December<BR>
31, 2004</FONT><HR WIDTH=95% SIZE=1 COLOR=#808080 NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Exercise Price<BR>
($/Share)</FONT><HR WIDTH=95% SIZE=1 COLOR=#808080 NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Expiration<BR>
Date</FONT><HR WIDTH=95% SIZE=1 COLOR=#808080 NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Grant Date<BR>
Present<BR>
Value<BR>
($) (3)</FONT><HR WIDTH=95% SIZE=1 COLOR=#808080 NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=28% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Stephen W. Bershad</FONT></TD>
     <TD WIDTH=1% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=3% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=1% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD WIDTH=9% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>30,000</FONT></TD>
        <TD WIDTH=8% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(1)</FONT></TD>
     <TD WIDTH=1% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD WIDTH=9% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>14.3</FONT></TD>
        <TD WIDTH=2% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>%</FONT></TD>
     <TD WIDTH=1% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD><TD WIDTH=9% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$ 10.99</FONT></TD>
        <TD WIDTH=2% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=1% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD WIDTH=9% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>03/04/09</FONT></TD>
        <TD WIDTH=4% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=1% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD><TD WIDTH=9% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$ 112,408</FONT></TD>
        <TD WIDTH=2% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>David A. Almeida</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>15,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(2)</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>7.1</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>9.99</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>03/04/14</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>59,769</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Scott B. Conner</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>45,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(2)</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>21.4</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>14.22</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>07/19/14</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>255,154</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Kenneth F. Stern (4)</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>7,500</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(2)</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3.6</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>9.99</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>09/11/05</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>29,887</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
</TABLE>




<!-- MARKER FORMAT-SHEET="Footnote Rule-TNR" FSL="Workstation" -->
<HR SIZE=1 NOSHADE WIDTH=15% ALIGN=LEFT>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(1)  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>These
options vest at the rate of 20% per year commencing on the first
               anniversary through the third anniversary and 40% on the fourth
anniversary of                the date of grant. Vesting of these options will be
accelerated in the event of                certain changes in control of Axsys. </FONT></TD>
</TR>
</TABLE>


<!-- MARKER FORMAT-SHEET="Para Hang Lv 0-TNR" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(2)  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>These
options vest at the rate of 20% per year commencing on the first
               anniversary of the date of grant. Vesting of these options will be
accelerated                in the event of certain changes in control of Axsys. </FONT></TD>
</TR>
</TABLE>


<!-- MARKER FORMAT-SHEET="Para Hang Lv 0-TNR" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(3)  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
grant date present value was estimated on the date of grant using the
               Black-Scholes option pricing model with the following assumptions:
expected                volatility of 43.3%; risk-free interest rate of 4.24%; expected
life of 6 years                and no dividend yield. The Black-Scholes option valuation
model was developed                for use in estimating the fair value of traded
options, which have no vesting                restrictions and are fully transferable. In
addition, the Black-Scholes model                requires the input of highly subjective
assumptions including the expected stock                price volatility. Because Axsys&#146; stock-based
awards to employees have                characteristics significantly different from
those of traded options, and                because changes in the subjective input
assumptions can materially affect the                fair value estimate, in management&#146;s
opinion, the existing model does not                necessarily provide a reliable single
measure of the fair value of awards                pursuant to the Stock Incentive Plan. </FONT></TD>
</TR>
</TABLE>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(4)  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Mr.
Stern was terminated from Axsys in July 2004. </FONT></TD>
</TR>
</TABLE>



<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The following table sets forth
certain information regarding certain option exercises by the Named Executives in the year
ended December 31, 2004. The table also shows information regarding unexercised stock
option grants held by Named Executives as of December 31, 2004. </FONT></P>


<P align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Aggregate Option Exercises in Last Fiscal Year and<BR>
Fiscal Year-end Option Values</B>
</FONT></P>










<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=12><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Fiscal Year-End Option Values</FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Shares<BR>Acquired<BR>on Exercise</FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Value<BR>Realized on<BR>Exercise</FONT></TH>
     <TH COLSPAN=6><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Number of Securities Underlying<BR>Unexercised Options at Fiscal<BR>Year End (#)</FONT></TH>
     <TH COLSPAN=6><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Value of Unexercised In-the-Money<BR>Options at Fiscal Year End<BR>($) (1)</FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN="3" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Name</FONT><HR WIDTH=95% SIZE=1 COLOR=#808080 NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>(#)</FONT><HR WIDTH=95% SIZE=1 COLOR=#808080 NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>($)</FONT><HR WIDTH=95% SIZE=1 COLOR=#808080 NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Exercisable</FONT><HR WIDTH=95% SIZE=1 COLOR=#808080 NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Un-exercisable</FONT><HR WIDTH=95% SIZE=1 COLOR=#808080 NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Exercisable</FONT><HR WIDTH=95% SIZE=1 COLOR=#808080 NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Un-exercisable</FONT><HR WIDTH=95% SIZE=1 COLOR=#808080 NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=20% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Stephen W. Bershad</FONT></TD>
     <TD WIDTH=1% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=2% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=1% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD WIDTH=9% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>11,250</FONT></TD>
        <TD WIDTH=3% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=1% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD WIDTH=9% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>78,311</FONT></TD>
        <TD WIDTH=3% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=1% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD WIDTH=9% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>24,000</FONT></TD>
        <TD WIDTH=3% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=1% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD WIDTH=9% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>60,000</FONT></TD>
        <TD WIDTH=3% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=1% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD WIDTH=9% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>174,903</FONT></TD>
        <TD WIDTH=3% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=1% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD WIDTH=9% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>509,874</FONT></TD>
        <TD WIDTH=2% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>David A. Almeida</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>--</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>--</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>40,500</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>87,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>477,734</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1,011,219</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Scott B. Conner</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>--</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>--</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>--</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>45,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>--</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>148,050</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Kenneth F. Stern (2)</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>34,500</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>300,827</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>69,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>--</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>144,597</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>--</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
</TABLE>
<BR>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(1)  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Includes
only those options whose exercise prices are lower than $17.51 per                share,
the closing price for the Common Stock on the Nasdaq National Market on
               December 31, 2004. The value is based on the difference between the
closing                price on December 31, 2004 and the exercise price of the option. </FONT></TD>
</TR>
</TABLE>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(2)  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Mr.
Stern was terminated from Axsys in July 2004. </FONT></TD>
</TR>
</TABLE>
<BR>

<p align=center>
<font size=2>11</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px">
<HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<P STYLE="page-break-after:always"></P>


<!-- MARKER FORMAT-SHEET="Head Major Center Bold 1-TNR" FSL="Workstation" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Terminated Pension Plan </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Axsys had a defined benefit pension
plan, which was terminated on July 31, 1989. Axsys liquidated this plan on July 29, 2004.
As calculated by independent actuaries, Mr. Bershad received a cash payout of $266,542. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold 1-TNR" FSL="Workstation" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Agreements with
Directors and Officers </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Axsys has entered into
indemnification agreements with our directors and executive officers in order to induce
them to continue to serve as directors and officers of Axsys, indemnifying them for any
and all liabilities incurred by them arising out of their service as directors or
officers, other than liabilities arising out of conduct which has been determined in a
final adjudication to constitute bad faith or a knowing violation of law or receipt by
that person of an improper personal benefit. The rights to indemnification under the
agreements are in addition to any rights to indemnification contained in Axsys&#146;
Certificate of Incorporation or By-Laws, which provide for indemnification under certain
circumstances. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Axsys has entered into severance
protection agreements with certain officers and key employees of Axsys, including Stephen
W. Bershad, David A. Almeida and Scott B. Conner, which provide for certain benefits,
among other things, if their employment is terminated within two years following a Change
in Control (as defined in the agreements) of Axsys. The purpose of the severance
protection agreement is to foster the continued employment of officers and employees by
allowing them to focus attention on their assigned responsibilities without distraction in
the event of a possible change in control of Axsys. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>If a Change in Control occurs and the
executive&#146;s employment is terminated by Axsys other than for cause, death or
disability or by the executive for good reason within two years thereafter, the executive
will be entitled to receive a maximum lump sum cash payment equal to, in the case of
Messrs. Bershad, Almeida and Conner, 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
employment termination date and (b) the average of the annual cash bonuses paid to the
executive during the three calendar years prior to the year in which the employment
termination date occurs and, at the executive&#146;s election, one year of continuation of
health care benefits or its cash equivalent. The severance protection agreements of each
of Messrs. Bershad, Almeida and Conner also provide that the executive will be entitled to
the foregoing severance benefits in the event he terminates his employment, with or
without good reason, at any time during the one-month period commencing six months
following a Change in Control. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Each of the severance protection
agreements had an original term of up to two years from the date of its execution and
automatically renews for successive one-year periods, unless either party gives advance
notice of non-renewal. Notwithstanding the foregoing, if there is a Change in Control, the
agreements will not terminate prior to the expiration of twenty-four months after the date
of the Change in Control. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Under their severance protection
agreements, Mr. Almeida and Mr. Conner would receive up to six month&#146;s base
compensation and certain other benefits from Axsys in the event of termination by Axsys
other than for cause. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Kenneth F. Stern, a former officer of
Axsys, was terminated in July 2004. Pursuant to his severance protection agreement, Mr.
Stern will receive his bi-weekly base salary and continuing health benefits ending on the
earlier of (i) the first anniversary of the Termination Date July 13, 2005 or (ii) his
commencement of full-time employment with a subsequent employer. Mr. Stern&#146;s
outstanding options were modified to accelerate his unvested options and extend the time
to exercise all options until ninety days after the end of his severance. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In October 2000, Axsys entered into
an employment agreement with Stephen W. Bershad. The agreement provided that during the
initial period of the agreement, Mr. Bershad would serve as Chairman and CEO of Axsys. The
initial period of the agreement, which originally expired on October 12, 2001, was
extended until October 12, 2002 in October 2001, October 12, 2003 in October 2002, October
12, 2004 in 2003 and then subsequently extended to October 12, 2005 in October 2004. Upon
expiration of this initial period and for five years thereafter, the agreement provides
that Mr. Bershad will serve as Chairman of the Board. If Mr. Bershad is not elected to the
Board, he is entitled to terminate his employment for good reason, the consequences of
which are explained below. </FONT></P>

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<font size=2>12</font></p>
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<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Under the agreement, Mr. Bershad will
receive an annual salary of $350,000, subject to increase at the discretion of the Board,
the responsibility for which was delegated by the Board to the Compensation Committee, and
will have the opportunity to earn an annual incentive bonus based on performance goals
determined by the Board at the beginning of each fiscal year. He is also eligible to
receive awards under the Stock Incentive Plan. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>If Mr. Bershad&#146;s employment is
terminated by Axsys other than for cause or by Mr. Bershad for good reason, Mr. Bershad
will be entitled to the following: (1) within ten (10) days of the employment termination
date, all accrued and unpaid base salary, accrued and unpaid bonus and vacation pay as of
the employment termination date, a pro rata portion of the highest annual bonus paid or
payable to him in respect of any of the three full fiscal years of Axsys immediately
preceding the employment termination date, all benefits accrued and unpaid under any
benefit plans, programs or arrangements in which he has been a participant as of his
termination and any reimbursable expenses incurred by him on behalf of Axsys during the
period ending on the employment termination date; (2) within thirty (30) days following
the employment termination date, a lump sum payment equal to the greater of (x) two (2)
times the sum of (i) his base salary plus (ii) the highest annual bonus paid or payable to
him for any of Axsys&#146; three full fiscal years immediately preceding his termination
and (y) the amount of the base salary and bonus which would have been paid to him during
the employment term had it not been terminated, assuming that the highest annual bonus
paid or payable to him for any of Axsys&#146; three full fiscal years immediately
preceding his termination would have been paid to him for each full fiscal year during the
employment term; and (3) during the greater of (x) the twenty-four (24) month period
following the employment termination date and (y) the balance of the employment term,
medical, dental, hospitalization, prescription drug, and life insurance coverage and
benefits provided to him immediately prior to termination. In addition, all stock options
held by him will become fully vested and will remain outstanding for their entire term and
all restrictions on all shares of restricted stock or other equity based awards held by
him will lapse and will become fully vested. Mr. Bershad would also be entitled to a
gross-up for any federal excise tax incurred by him in connection with a change in control
of Axsys. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>If the employment term is terminated
by reason of Mr. Bershad&#146;s death or disability, by Axsys for cause, by Mr. Bershad
without good reason, by mutual agreement of the parties, or by expiration of the
employment term, Axsys&#146; sole obligation under the employment agreement will be to pay
Mr. Bershad or his estate, as the case may be, within thirty (30) days following the
employment termination date, all accrued and unpaid base salary, accrued and unpaid bonus
and vacation pay as of the employment termination date, a pro rata portion of his annual
bonus opportunity for the year of termination, all benefits accrued and unpaid under any
benefit plans, programs or arrangements in which he has been a participant as of his
termination and any reimbursable expenses incurred by him on behalf of Axsys during the
period ending on the employment termination date. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In the event that at any time Mr.
Bershad is entitled to receive payments and/or benefits under both his employment
agreement and his severance protection agreement, he will receive the payments and/or
benefits only under the severance protection agreement. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Mr.
          Bershad is subject to a non-competition covenant for two years following
          termination. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold 1-TNR" FSL="Workstation" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Code of Ethics for
Senior Financial Officers </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Company has adopted a Code of
Ethics for Senior Financial Officers, a copy of which can be found on Axsys&#146; website
at www.axsys.com and was attached as an exhibit to Axsys&#146; Annual Report on Form 10-K
for the fiscal year ended December 31, 2003. The Code of Ethics applies to all Senior
Financial Officers of the Company, including the Chief Executive Officer, the Chief
Financial Officer, the Treasurer and any other person performing similar functions. </FONT></P>

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<font size=2>13</font></p>
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<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Workstation" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>COMPENSATION COMMITTEE
REPORT ON <BR>EXECUTIVE COMPENSATION </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Compensation Committee of the
Board of Directors (the &#147;Committee&#148;), composed of Messrs. Fiorelli, Fried and
Hamm, who are not and have never been employees of Axsys, has furnished the following
report on executive compensation. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Committee operates under a
charter approved by the Board in March 2003, which was attached as Exhibit A to our Proxy
Statement for our 2003 Annual Stockholder Meeting and is posted on our website. Under the
supervision of the Committee, Axsys has developed and implemented compensation practices,
which seek to enhance the profitability of Axsys, and thus stockholder value, by aligning
closely the financial interests of the senior managers with those of its stockholders. In
furtherance of these goals, Axsys relies to a large degree on annual bonus and longer-term
stock incentive compensation to attract and retain executive officers and other key
employees and to motivate them to perform to the full extent of their abilities. Both
types of incentive compensation are not guaranteed and are variable and closely tied to
corporate, business unit and individual performance in a manner designed to encourage a
sharp and continuing focus on building profitability and stockholder value. The annual
bonus and stock incentive compensation is more closely tied to Axsys&#146; success in
achieving significant financial and other performance-oriented goals. The Committee
considers the total compensation (earned or potentially available) of each of the
executive officers and the other senior managers in establishing each element of
compensation. Individuals, who are eligible for the annual bonus and stock incentive
compensation, must be employed by Axsys at the time bonus compensation is awarded. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In evaluating the performance and
setting the incentive compensation of the Chief Executive Officer, the Committee took note
of Axsys&#146; success in exceeding its budgeted net income before taxes, improvements in
backlog, continued cost control initiatives and Mr. Bershad&#146;s increased operational
duties. As such, the Committee granted an award of $220,000 to the Chief Executive Officer
under the Management Incentive Plan for the fiscal year ended December 31, 2004. The
Committee also increased Mr. Bershad&#146;s annual base compensation to $365,000 effective
January 1, 2005. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In its review of other senior
management incentive compensation for 2004, the Committee took into account
management&#146;s performance against budgeted financial goals, which was weighted between
75% and 100% of the bonus award with any remainder based on the achievement of specific
management objectives. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Committee extended the initial
term of the October 2000 employment agreement with Mr. Bershad until October 2005. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>During each fiscal year, the
Committee considers the desirability of recommending that the Board of Directors grant
senior management, including executive officers, awards under the Stock Incentive Plan,
which provides the flexibility to grant longer-term incentives in a variety of forms,
including performance units, stock options, stock appreciation rights and restricted
stock. At December 31, 2004, options covering 811,106 shares of Common Stock had been
awarded under the Stock Incentive Plan. In 2004, the Committee approved the grant of
additional awards under the Stock Incentive Plan to Mr. Bershad in the amount of 30,000
options, to Mr. Almeida in the amount of 15,000 options and to Mr. Conner in the amount of
45,000 options. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Committee believes that the
compensation practices the Committee has implemented and administered have contributed to
focusing the senior management of Axsys on achieving significant improvements in long-term
financial performance. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Section 162(m) of the Code generally
disallows a deduction to any publicly held corporation for compensation paid in excess of
$1 million in a taxable year to its chief executive officer or any of the four other most
highly compensated executive officers employed by such corporation on the last day of its
taxable year. The Committee considers the impact of Section 162(m) on the compensation of
its executive officers. Axsys structured and intends to administer the stock option, stock
appreciation right and performance unit portions of the Stock Incentive Plan with the
intention that the deduction limitation will not apply to the executive officers&#146;
compensation payable under this plan. The Committee intends to monitor the impact of
Section 162(m) and consider structuring executive compensation arrangements so that the
deduction limitation will continue not to apply. </FONT></P>

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<TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=40%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=50%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><BR><BR>
<BR>BY: Compensation Committee:<BR>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
Eliot M. Fried - Chairman<BR>Anthony J. Fiorelli, Jr.<BR>Richard F. Hamm, Jr.</FONT></TD>
</TR>
</TABLE>
<BR>


<p align=center>
<font size=2>14</font></p>
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<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Workstation" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>COMPENSATION COMMITTEE
INTERLOCKS AND INSIDER PARTICIPATION </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Compensation Committee is
composed of Messrs. Fiorelli, Fried and Hamm. There are no Committee interlocks between
Axsys and any other entities involving Axsys&#146; executive officers and directors who
serve as executive officers of such entities. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Workstation" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>REPORT OF THE AUDIT
COMMITTEE </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Audit Committee of the Board of
Directors (the &#147;Audit Committee&#148;) has furnished the following report: </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Audit Committee is composed of
Messrs. Fiorelli, Fried and Stevens, who are all independent and financially literate. In
addition, Mr. Fiorelli has past employment as a chief executive officer with financial
oversight responsibilities and as a result is a financial expert as set forth in the rules
of the Nasdaq Stock Market. The Audit Committee operates under a charter approved by the
Board and revised in May of 2003, which was attached as Exhibit A to our Proxy Statement
for our 2004 Annual Stockholder Meeting and is posted on our website., www.axsys.com. As
more fully described in its charter, the Audit Committee is responsible for assisting the
Board in fulfilling its oversight responsibilities by reviewing Axsys&#146; financial
information that is provided to stockholders and others, the systems of internal controls,
which management and the Board have established, and the audit process. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Audit Committee met with Ernst
&amp; Young LLP (&#147;E&amp;Y&#148;), Axsys&#146; independent accountants, and management
to assure that all were carrying out their respective responsibilities. The Audit
Committee reviewed the performance and fees of the independent accountants prior to
recommending their appointment. It also met with them to discuss the scope and results of
their audit work, including the adequacy of internal controls and the quality of financial
performance. The Audit Committee discussed with the independent public accountants their
judgments regarding the quality and acceptability of Axsys&#146; accounting principles,
the clarity of its disclosures and the degree of aggressiveness or conservatism of its
accounting principles and underlying estimates. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Audit Committee has reviewed and
discussed the audited financial statements for the fiscal year ended December 31, 2004
with Axsys&#146; management and E&amp;Y. The Audit Committee has also discussed with
E&amp;Y the matters required to be discussed by Statement on Auditing Standards No. 61,
&#147;Communication with Audit Committees&#148;. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Audit Committee has also received
and reviewed the written disclosures and the letter from E&amp;Y required by Independence
Standard No. 1, &#147;Independence Discussion with Audit Committees&#148;, and has
discussed with the accountants the auditors&#146; independence. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Based on the reviews and discussions
referred to above, the Audit Committee recommended to the Board of Directors that the
financial statements referred to above be included in Axsys&#146; Annual Report on Form
10-K for the fiscal year ended December 31, 2004. </FONT></P>

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<TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=40%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=50%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><BR><BR>
<BR>BY: Audit Committee:<BR>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
Anthony J. Fiorelli, Jr. - Chairman<BR>Eliot M. Fried<BR>Robert G. Stevens</FONT></TD>
</TR>
</TABLE>
<BR>

<p align=center>
<font size=2>15</font></p>
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<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Workstation" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>PROPOSAL REGARDING
AMENDED AND RESTATED <BR>LONG-TERM STOCK INCENTIVE PLAN <BR>(Proposal No. 2) </FONT></H1>


<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Company&#146;s stockholders are
being asked to approve an amendment to the Company&#146;s Amended and Restated Long-Term
Stock Incentive Plan (the &#147;Stock Incentive Plan&#148;). The Stock Incentive Plan
incorporates an amendment to increase the number of shares available under, and make
certain changes in, the existing plan (the &#147;Amendments&#148;). The Board of Directors
of the Company adopted the Stock Incentive Plan with the Amendments, subject to
stockholder approval, on March 10, 2005. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Stock Incentive Plan was
originally adopted in August 1991. It provides for granting Stock Options, Restricted
Stock, Performance Units, Stock Appreciation Rights (&#147;SARs&#148;) or a combination of
any of the foregoing to officers and other key employees of the Company or its
subsidiaries. Non-employee directors may be granted Stock Options under the Stock
Incentive Plan. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The purposes of the Stock Incentive
Plan are to provide additional incentive to those directors, officers and other employees
of the Company whose substantial contributions are essential to the continued growth and
success of the Company&#146;s business in order to strengthen their commitment to the
Company, to motivate such persons to faithfully and diligently perform their
responsibilities and to attract and retain competent and dedicated individuals whose
efforts will result in the long-term growth and profitability of the Company.
Additionally, the purpose of the Stock Incentive Plan is to secure for the Company and its
stockholders the benefits of the incentive inherent in increased common stock ownership by
the members of the Board who are not employees of the Company. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The principle change to the Stock
Incentive Plan is the addition of 350,000 shares. At the same time, the Amendments
described below and certain other technical and clarifying changes are being made. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold-TNR" FSL="Workstation" -->
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Summary of the Amendments </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>A summary of the proposed Amendments
is set forth below, followed by a description of the terms of the Stock Incentive Plan.
The full text of the Stock Incentive Plan is annexed to this proxy statement as Exhibit A,
and the summary is qualified in its entirety by reference to Exhibit A. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>Stock Subject to the Stock
Incentive Plan</I>. The Amendments increase the number of shares of the Company&#146;s
Common Stock (&#147;Common Stock&#148;) with respect to which Stock Options
(&#147;Options&#148;) and other awards authorized under the Stock Incentive Plan
(&#147;Awards&#148;) may be awarded under the Stock Incentive Plan by 350,000 shares. The
Stock Incentive Plan currently authorizes the issuance of 1,200,000 shares of Common Stock
and, if the stockholders approve the proposed 350,000 share increase, the aggregate number
of shares of Common Stock that may be issued, delivered or made subject to Awards or
Options under the Stock Incentive Plan, will be 1,550,000 shares of Common Stock plus
shares relating to Options that expire, are cancelled or otherwise terminate and shares
relating to Awards that are forfeited or used to pay the exercise price of an Option. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Amendments provide that the
aggregate number of shares that may be issued or transferred by the Company upon the
exercise of Incentive Stock Options will not exceed 1,550,000 shares. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Amendments provide that shares
delivered to satisfy the withholding obligation with respect to an Option or Award will
become available again for grants of Options or Awards under the Stock Incentive Plan. The
Amendments further provide that upon the payment in cash of the benefit provided by any
award granted under the Stock Incentive Plan, any shares that were covered by that Option
or Award will again be available for issuance under the Stock Incentive Plan. </FONT></P>

<p align=center>
<font size=2>16</font></p>
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<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>Terms and Conditions of Options
and SARs</I>. The Amendments specifically provide that the purchase price for Options will
not be less than the fair market value on the date of grant. The Amendments also provide
that Options and SARs will be exercisable no more than 10 years from the date of grant and
that any grant of Options or SARs may specify performance objectives that must be achieved
as a condition to the exercise of such Options or SARs. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>Termination of Employment and
Termination of Directorship</I>. The Amendments clarify that if an optionee&#146;s
employment or directorship, as the case may be, terminates due to disability or by the
Company for any reason other than for cause, and the optionee dies prior to the
permissible period of exercise for any outstanding Option then held by the optionee, the
Option (to the extent exercisable at the time of the optionee&#146;s termination of
employment or directorship) shall be exercisable for a period of one year following the
optionee&#146;s death, and shall thereafter terminate. The Amendments also specifically
provide that in no event will the Option be exercisable beyond the term of the Option. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>Director Option Grants</I>. The
existing Stock Incentive Plan provides that, upon becoming a director, a non-employee
director will receive an Option for shares having a fair market value of $60,000 on the
date of grant and becoming exercisable with respect to 20% of the shares subject to the
Option on each of the first five anniversaries of the date of grant if the optionee
continues to serve as a director as of such date. The existing Stock Incentive Plan also
provides that each non-employee director will be granted an Option for shares having a
fair market value equal to $30,000 on the date of grant and becoming fully exercisable on
the day immediately preceding the first regularly scheduled annual meeting of stockholders
of the Company occurring subsequent to the date of grant if the optionee continues to
serve as a director as of such date. The Amendments provide that the Committee may alter
the dollar amounts and vesting schedules as set forth above. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>Change in Control</I>. The
Amendments provide that except as otherwise determined by the Committee at the time of
grant of an Option or Award, upon a Change in Control (as defined in the Stock Incentive
Plan), all outstanding Options and SARs shall become vested and exercisable; all
restrictions on Restricted Stock shall lapse, all performance goals shall be deemed
achieved at target levels and all other terms and conditions met; and all Performance
Units shall be delivered as promptly as practicable. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>Updates to Address Recent
Developments</I>. The Amendments delete the section in the Stock Incentive Plan related to
a change in control that is also intended to be treated as a &#147;pooling of
interests&#148; under generally accepted accounting principles. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The American Jobs Creation Act of
2004, enacted on October&nbsp;22, 2004, revised the federal income tax law applicable to
certain types of awards that may be granted under the Stock Incentive Plan. The Amendments
address this recent development by providing that, to the extent applicable, it is
intended that the Stock Incentive Plan and any grants made under the Stock Incentive Plan
comply with the provisions of Section 409A of the Internal Revenue Code of 1986, as
amended (the &#147;Code&#148;). </FONT></P>

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<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Summary of the Stock
Incentive Plan </FONT></H1>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><I>Duration of the Plan</I>. The Stock Incentive Plan expires on August 31, 2009. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>Plan Administration</I>. The Stock
Incentive Plan is generally administered by the Compensation Committee (the
&#147;Committee&#148;), a committee of the Board consisting of two or more directors. The
Stock Incentive Plan states that the Committee must consist of &#147;non-employee
directors&#148; within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934
(the &#147;Exchange Act&#148;) and &#147;outside directors&#148; to the extent necessary
for grants and awards to qualify for favorable tax treatment under Section 162(m) of the
Code. The Board has separately authorized Mr. Bershad to grant Options in respect of up to
50,000 shares annually under the Stock Incentive Plan to newly hired employees or recently
promoted employees of the Company who are not executive officers. The Committee or Mr.
Bershad, to the extent authorized, will select those officers and other key employees of
the Company and its subsidiaries who are to receive Awards or Options; construe and
interpret the Plan and the Options and Awards granted thereunder; establish rules and
guidelines relating to the Stock Incentive Plan; establish and modify terms and conditions
of Awards and Options; and take other actions as may be necessary for proper
administration of the Stock Incentive Plan. </FONT></P>

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<font size=2>17</font></p>
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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>Shares Available for Issuance</I>.
The number of shares of Common Stock that may be issued, delivered or made subject to
Awards or Options under the Stock Incentive Plan is 1,550,000 shares. As of March 7, 2005,
Options for 798,131shares of Common Stock were outstanding under the Stock Incentive Plan.
The closing price per share of the Common Stock on March 7, 2005 was $21.29. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Whenever any Option expires,
terminates or is cancelled for any reason without having been exercised, whenever the
shares of Common Stock subject to an Award or Option are resold to the Company or
forfeited, whenever any shares of Common Stock are delivered to pay the exercise price of
an Option or to satisfy the withholding obligation with respect to an Option or Award, or
whenever the Company pays the benefit provided by any award granted under the Stock
Incentive Plan in cash, those shares will then become available for grants of Options or
Awards under the Stock Incentive Plan. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In order to comply with Section
162(m) of the Code, the Stock Incentive plan imposes limits on the number of shares with
respect to which Options or Awards may be granted to any Eligible Participant in any
calendar year. The Stock Incentive Plan provides that an Eligible Participant may not be
granted Awards or Options in the aggregate in respect of more that 90,000 shares per
calendar year. Further, the aggregate number of shares that may be issued or transferred
by the Company upon the exercise of Incentive Stock Options will not exceed 1,550,000. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>Plan Participants</I>. The
Committee or Mr. Bershad, to the extent authorized, may select any director, officer or
other employee to receive Awards or Options under the Stock Incentive Plan. Currently
there are approximately 74 individuals eligible to participate in the Stock Incentive
Plan. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>Awards Available under the
Plan</I>. Grants under the Stock Incentive Plan may take the form of Options to purchase
shares of Common Stock, SARs, Restricted Stock and Performance Units (collectively,
&#147;Stock Incentives&#148;). The Committee or Mr. Bershad, to the extent authorized,
will determine the provisions of Stock Incentive awards, including whether the awards may
be exercised all at once or in installments and at what prices they may be exercised. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>Terms of Exercise</I>. Each Option
or SAR will be exercisable, in whole or in part, prior to its cancellation or termination,
by written notice to the Company. With respect to the exercise of any Option, the Stock
Incentive Plan requires that notice be accompanied by payment in full of the purchase
price in cash, or if acceptable to the Committee, in shares of Common Stock or a
combination of the two. To the extent permitted by law, the Company will be able to make
loans to those participants as the Committee, in its discretion, may determine in
connection with the exercise of Options in an amount up to the exercise price of the
option plus any applicable withholding taxes. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>Stock Options</I>. Stock Options
meeting the requirements of Section 422 of the Code (&#147;Incentive Stock Options&#148;)
and those that do not so qualify (&#147;Non-Qualified Options&#148;) are both available
for grant under the Stock Incentive Plan. The term of each Option, which will not be more
than 10 years, and the purchase price of the Option, which will not be less than the fair
market value at the time of grant, will be determined by the Committee or Mr. Bershad, to
the extent authorized, at the time of grant. Each Option will be exercisable in such
installments and at such times as may be designated by the Committee and any grant of
Options may specify performance objectives that must be achieved as a condition to the
exercise of the Option. The purchase price for shares of Common Stock purchased pursuant
to the exercise of an Option may be paid in cash, by check or, at the discretion of the
Committee and on the terms and conditions as the Committee approves, by transferring
shares of Common Stock to the Company. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Options are not transferable except
by will or by the laws of descent and distribution and may be exercised during the life of
the optionee only by the optionee or his guardian or legal representative. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In the event of termination of
employment due to death or disability, the Stock Incentive Plan permits the exercise of
Options, to the extent then exercisable, for up to one year following termination of
employment. In the event of termination of employment for cause, any and all Options will
be immediately canceled. In the event of termination of employment by the Company for any
other reason, Options, to the extent then exercisable, will be exercisable for a period of
90 days. If the optionee voluntarily terminates his employment, the Option, to the extent
then exercisable, will be exercisable for a period of 10 days following termination. If
the optionee&#146;s employment terminates due to disability or by the Company for any
reason other than for cause, and the optionee dies prior to the expiration of the period
in which the Option may be exercised, the Option (to the extent exercisable at the time of
the optionee&#146;s termination of employment) will be exercisable for a period of one
year following the optionee&#146;s death, and shall thereafter terminate. In no event will
the Option be exercisable beyond the term of the Option. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>Stock Appreciation Rights</I>.
SARs may be granted by themselves or in conjunction with all or a portion of the shares
covered by an Option under the Stock Incentive Plan. A SAR granted in conjunction with an
Option will entitle the holder to receive the excess of the fair market value of a share
of Common Stock at the date of exercise over the exercise price for each surrendered
Option. That type of SAR is exercisable only at such times and to the extent that the
related Options are exercisable and will be transferable only to the extent that the
related Options are transferable. Upon exercise of such a SAR, the related Options will be
canceled as to the number of shares of Common Stock on which the SAR was exercised. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Stock Incentive Plan also permits
the Committee to grant SARs unrelated to Options. In those cases, the Committee will
determine the terms and conditions of SARs, including vesting (which may include the
achievement of performance objectives) and duration, at the time of grant. Upon the
exercise of such a SAR, the holder will receive the excess of the fair market value of a
share of Common Stock at the date of exercise over the fair market value of a share of
Common Stock on the date of the grant of the SAR. Such SARs will not be exercisable more
than 10 years from the date of grant. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Payment of SARs will be made, at the
discretion of the Committee, either solely in shares of Common Stock, solely in cash, by
delivery of a note or other security, or in a combination of any of the foregoing. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>Restricted Stock</I>. The
Committee may grant Restricted Stock, which entitles the holder to receive shares of
Common Stock, subject to risk of forfeiture based upon certain conditions determined by
the Committee. The Stock Incentive Plan provides that, subject to the restrictions of the
Award Agreement, the holder of Restricted Stock is entitled to all rights of a stockholder
with respect to the Restricted Stock, including the rights to vote and receive dividends.
However, dividends and distributions will be held in escrow where they will accumulate
interest until all restrictions are satisfied, lapsed or waived. Until the restrictions
have lapsed, the shares may not be sold, transferred or otherwise disposed of. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Restrictions will lapse at the times
and on the terms, conditions and satisfaction of performance objectives as the Committee
determines. Upon the termination of employment of the grantee, all shares with respect to
which restrictions have not lapsed must be resold by the grantee to the Company at the
same price paid by the grantee or, if no price was paid for the shares, will be forfeited
and automatically transferred back to the Company. However, in the event of termination of
employment due to death or disability, the Committee may determine that the restrictions
will immediately lapse. Upon the lapse of restrictions, the Committee will deliver a stock
certificate to the grantee, free of all restrictions. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>Performance Units</I>. The
Committee may grant Performance Units under the Stock Incentive Plan payable in shares of
Common Stock, the fair market value of the shares in cash, or a combination of the two
upon the attainment of certain performance objectives. The Committee will determine the
performance objectives as well as other terms at the time of grant. The Stock Incentive
Plan provides an exclusive list of permissible performance objectives, which may be
applicable to Options and all other Awards: net earnings or net worth, return on equity or
assets, earnings per share of Common Stock, share price of Common Stock, pre-tax profits,
gross revenues, EBITDA (earnings before interest, taxes, depreciation and amortization),
dividends, market share or market penetration, or any combination of the foregoing.
Performance objectives may be determined before or after accounting changes, special
charges, foreign currency effects, acquisitions, divestitures or other extraordinary
events. Performance objectives may be absolute or may be relative to the performance of
other companies. The Committee may specify a minimum acceptable level of achievement and
will set forth a formula for determining the awards that will be earned if performance is
at or above the minimum level, but falls short of full achievement of the specified
performance objectives. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>With respect to any Performance Unit
intended to qualify under Section 162(m) of the Code, the Stock Incentive Plan requires
the Committee to certify that the appropriate performance objectives were satisfied prior
to the vesting, payment, settlement or lapsing of restrictions. In the event of
termination of employment, any nonvested Performance Units will be forfeited unless
otherwise determined by the Committee. Amounts payable with respect to Performance Units
may not be transferable by a grantee other than by will or by the laws of descent and
distribution. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>Non-Employee Director Options</I>.
Upon election to the Company&#146;s Board, a Non-Employee Director will be granted an
Option to purchase that number of shares of the Company&#146;s Common Stock, which has on
the date of grant a fair market value equal to $60,000 (or such other amount as the
Committee determines). The Options will have an exercise price per share equal to the fair
market value on the date of the grant, will have a term of 10 years and, unless otherwise
determined by the Committee, will vest as to 20% of the shares covered by the Option on
the first, second, third, fourth and fifth anniversaries of the date of the grant. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Each Non-Employee Director is also
granted an Option annually to purchase that number of shares of the Company&#146;s Common
Stock, which has on the date of grant a fair market value equal to $30,000 (or such other
amount as the Committee determines). The options will have an exercise price per share
equal to the fair market value on the date of the grant, will have a term of 10 years and,
unless otherwise determined by the Committee, will vest as to 100% of the shares covered
by the Option on the day immediately preceding the first regularly scheduled annual
meeting of stockholders of the Company occurring subsequent to the date of grant. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The purchase price for shares of
Common Stock purchased pursuant to the exercise of an Option may be paid in cash, by check
or, at the discretion of the Committee and on the terms and conditions as the Committee
approves, by transferring shares of Common Stock to the Company. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Options are not transferable except
by will or by the laws of descent and distribution and may be exercised during the life of
the optionee only by the optionee or his guardian or legal representative. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In the event of termination of
directorship due to death or disability, the Stock Incentive Plan permits the exercise of
Options, to the extent then exercisable, for up to one year following termination of
directorship. In the event of termination of directorship for cause, any and all Options
will be immediately canceled. In the event of termination of directorship by the Company
for any other reason, Options, to the extent then exercisable, will be exercisable for a
period of 90 days. If the directorship is terminated by the Company for any reason other
than for cause, and the optionee dies prior to the expiration of the period in which the
Option may be exercised, the Option (to the extent exercisable at the time of the
optionee&#146;s termination of directorship) will be exercisable for a period of one year
following the optionee&#146;s death, and shall thereafter terminate. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>Adjustments</I>.
          In the event of a reclassification, re-capitalization, merger, consolidation,
          reorganization, issuance of warrants or rights, stock dividend, stock split or
          reverse stock split, combination or exchange of shares, repurchase of shares,
          change in corporate structure or otherwise, the Committee may make adjustments
          to the maximum number and class of shares of stock with respect to which Stock
          Incentives may be granted, the number and class of shares or units as to which
          Stock Incentives have been granted and the purchase price therefor. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>Effect of Certain
Transactions</I>. In the event of a merger or consolidation or the sale of all or
substantially all of the Company&#146;s assets, the Company may provide for the assumption
of Stock Incentives, the substitution of new options or awards for Stock Incentives or for
the surrender of outstanding Stock Incentives with the payment of cash in consideration
therefor. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Stock Incentive Plan provides
that, except as otherwise determined by the Committee at the time of grant of an Option or
Award, upon a Change in Control, all outstanding Options and SARs shall become vested and
exercisable; all restrictions on Restricted Stock shall lapse, all performance goals shall
be deemed achieved at target levels and all other terms and conditions met; and all
Performance Units shall be delivered as promptly as practicable. The Committee may, in its
sole discretion, provide (in the applicable option agreement, award agreement or
otherwise) for payments in consideration for the exercise of, surrender or repurchase of
an Option or Award upon a change in control. </FONT></P>

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<font size=2>20</font></p>
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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>Amendment of the Plan</I>. The
Board may amend the Stock Incentive Plan at any time, except that any amendment that must
be approved by the stockholders of the Company to comply with applicable law or rules of
the NASDAQ National Market System will not be effective unless such approval has been
obtained. Further, rights and obligations under any Stock Incentive granted before an
amendment will not be altered or impaired by the amendment without the consent of the
optionee or grantee. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>Withholding of Taxes</I>. The
Company has the right to deduct from any cash distribution an amount equal to the federal,
state and local income taxes and other amounts required to be withheld with respect to a
Stock Incentive and has the right to require an optionee or grantee, prior to the delivery
of shares upon exercise of an Option or Award, to pay to the Company the amount of any
federal, state and local income taxes and other amounts required to be withheld. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>Interpretation</I>.
          The Stock Incentive Plan includes certain rules of interpretation and
          administration. Under these rules, the Board will be authorized to amend the
          Stock Incentive Plan and modify Option or Award Agreements to ensure compliance
          with the reporting requirements of the Exchange Act and with Exchange Act Rule
          16b-3. In addition, the Stock Incentive Plan provides that (except in certain
          instances regarding payments made upon a change in control), unless otherwise
          stated in the applicable Option or Award Agreement, each Option, SAR and
          Performance Unit granted to an executive officer of the Company is intended to
          qualify as &#147;performance-based compensation&#148; within the meaning of
          Section 162(m) of the Code, and that the Committee is prohibited from exercising
          any discretion which would jeopardize that treatment. Finally, these rules will
          permit the Board or the Committee selectively to apply provisions designed to
          satisfy the requirements of Section 162(m) of the Code only to those individuals
          whose compensation is subject to that section. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>Compliance with Section 409A of
the Internal Revenue Code</I>. The American Jobs Creation Act of 2004, enacted on
October&nbsp;22, 2004, revised the federal income tax law applicable to certain types of
awards that may be granted under the Stock Incentive Plan. To the extent applicable, it is
intended that the Stock Incentive Plan and any grants made thereunder comply with the
provisions of Section 409A of the Code. The Stock Incentive Plan and any grants made
thereunder will be administrated in a manner consistent with this intent, and any
provision that would cause the Stock Incentive Plan or any grant made thereunder to fail
to satisfy Section 409A will have no force and effect until amended to comply with Section
409A (which amendment may be retroactive to the extent permitted by Section 409A and may
be made by the Company without the consent of participants). </FONT></P>

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<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Certain Federal Income
Tax Consequences </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The following is a brief summary of
the principal federal income tax consequences of Awards under the Stock Incentive Plan
based upon current federal income tax laws. The Stock Incentive Plan is not qualified
under Section 401(a) of the Code. The summary is not intended to be comprehensive and,
among other things, does not describe state, local or foreign tax consequences. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>Stock Options</I>. Generally, an
optionee will not recognize taxable income at the time of grant of a Non-Qualified Option.
Upon exercise of the Option, the difference between the fair market value of the shares on
the date of exercise and the exercise price will be taxable as ordinary income to the
optionee. If that amount is included in income or the Company satisfies applicable
reporting requirements, the Company will receive a commensurate tax deduction at the time
of exercise, subject to the deduction limitation under Section 162(m) of the Code (which
is discussed below). </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>An optionee will generally not
recognize taxable income at the time of grant or exercise of an Incentive Stock Option,
and the Company will not be entitled to a tax deduction with respect to that grant or
exercise. However, upon exercise, the difference between the fair market value of the
shares and the exercise price is an item of tax preference subject to the possible
application of the alternative minimum tax. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Generally, if an optionee holds
shares acquired upon the exercise of an Incentive Stock Option for at least one year after
the date of exercise and for at least two years after the date of grant upon disposition
of the shares by the optionee, the difference, if any, between the sales price of the
shares and the exercise price will be treated as long-term capital gain or loss to the
optionee. Upon a sale or other disposition of shares acquired upon the exercise of an
Incentive Stock Option within one year after the transfer of the shares to the optionee or
within two years after the date of grant (a &#147;disqualifying disposition&#148;) the
excess of (a) the lesser of (i) the fair market value of the shares at the time of
exercise of the Option and (ii) the amount realized on the disqualifying disposition of
the shares over (b) the exercise price of the shares, should constitute ordinary income to
the optionee and the Company should be entitled to a deduction in the amount of that
income, subject to the deduction limitation under Section 162(m) of the Code. The excess,
if any, of the amount realized on a disqualifying sale over the fair market value of the
shares at the time of the exercise generally will constitute short-term or long-term
capital gain, depending on whether the shares have been held for at least twelve months
after the date of exercise. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>If an Option is exercised through the
use of shares previously owned by the optionee, the exercise generally will not be
considered a taxable disposition of the previously-owned shares and thus no gain or loss
will be recognized with respect to the shares upon exercise. However, if an Incentive
Stock Option is exercised through the use of previously-owned shares that were acquired
upon the exercise of an Incentive Stock Option, and the holding period requirement for
those shares is not satisfied at the time they are used to exercise the Option, that use
will constitute a disqualifying disposition of the previously-owned shares resulting in
the recognition of ordinary income in the amount described above with respect to
disqualifying dispositions. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>Stock Appreciation Rights</I>. No
income will be realized by a grantee in connection with the grant of a SAR. The grantee
must include in ordinary income the amount of cash received and the fair market value on
the exercise date of any shares received upon the exercise of a SAR. If the Company
satisfies applicable reporting requirements, the Company will be entitled to a deduction,
subject to the deduction limitation under Section 162(m) of the Code, equal to the amount
included in the grantee&#146;s income by reason of the exercise of a SAR. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>Restricted Stock</I>. A grant of
Restricted Stock generally does not constitute a taxable event for a grantee or the
Company. However, the grantee will be subject to tax, at ordinary income rates, when any
restrictions on ownership of the Restricted Stock lapse. If the Company satisfies
applicable reporting requirements, the Company will be entitled to a commensurate
deduction at that time, subject to the deduction limitation under Section 162(m) of the
Code. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>A grantee may elect to recognize
taxable ordinary income at the time Restricted Stock is awarded in an amount equal to the
fair market value of the shares at the time of grant, determined without regard to any
forfeiture restrictions. If such an election is made and if the Company satisfies
applicable reporting requirements, the Company will be entitled to a deduction at that
time in the same amount, subject to the deduction limitation under Section 162(m) of the
Code. Future appreciation of the shares will be taxed at the capital gains rate when the
shares are sold. However, if, after making such election, the shares are forfeited, the
grantee will be unable to claim a deduction. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>Performance Units</I>. Generally,
a grantee will not recognize any taxable income and the Company will not be entitled to a
deduction upon the award of Performance Units. At the time the grantee receives a payment
in respect of Performance Units, the fair market value of any shares or the amount of any
cash received in payment for such Performance Units generally is taxable to the grantee as
ordinary income and, if the Company satisfies applicable reporting requirements, the
Company will be entitled to a tax deduction, subject to the deduction limitation under
Section 162(m) of the Code. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>Non-Employee Director Awards</I>.
Non-Employee Director options will receive the same federal income tax treatment as other
Non-Qualified Options. </FONT></P>

<p align=center>
<font size=2>22</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px">
<HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<P STYLE="page-break-after:always"></P>


<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>Deductibility of Executive
Compensation</I>. Section 162(m) of the Code generally disallows a federal income tax
deduction to any publicly held company for compensation paid in excess of $1 million in
any taxable year to the chief executive officer or any of the other four most highly
compensated executive officers employed by the company on the last day of the taxable
year. Exceptions are made for, among other things, qualified &#147;performance-based
compensation.&#148; Qualified performance-based compensation means compensation paid
solely on account of the attainment of objective performance goals, provided that (i)
performance goals are established by a compensation committee consisting solely of two or
more outside directors, (ii) the material terms of the performance-based compensation are
disclosed to and approved by shareholders in a separate shareholder vote prior to payment
and (iii) prior to payment, the compensation committee certifies that the performance
goals were attained and other material terms were satisfied. The Stock Incentive Plan is
designed to conform with the performance-based compensation exception to Section 162(m) of
the Code. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>Section 280G of the Code</I>.
Under certain circumstances, the accelerated vesting or exercise of Options or SARs or the
accelerated lapse of restrictions with respect to other Awards in connection with a change
of control of the Company might be deemed an &#147;excess parachute payment&#148; for
purposes of the golden parachute tax provisions of Section 280G of the Code. To the extent
it is so considered, the grantee may be subject to a 20% excise tax and the Company may be
denied a tax deduction. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold-TNR" FSL="Workstation" -->
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Registration with the SEC </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Axsys intends to file a Registration
Statement on Form S-8 relating to the issuance of the additional common shares authorized
under the Stock Incentive Plan with the Securities and Exchange Commission pursuant to the
Securities Act of 1933, as amended, as soon as is practicable after approval of the Stock
Incentive Plan by Axsys&#146; stockholders. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold-TNR" FSL="Workstation" -->
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>New Plan Benefits </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>It is not possible to determine
specific amounts and types of awards that may be awarded under the Stock Incentive Plan
because the grant of awards under the Stock Incentive Plan is discretionary. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>The
Board unanimously recommends a vote FOR the amendment to the Stock Incentive Plan.</B> </FONT></P>

<p align=center>
<font size=2>23</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px">
<HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<P STYLE="page-break-after:always"></P>


<!-- MARKER FORMAT-SHEET="Head Major Center Bold 1-TNR" FSL="Workstation" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Long-Term Stock
Incentive Plan Table </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The following table gives information
about shares of common stock that can be issued under the Company&#146;s existing
Long-Term Stock Incentive Plan as of December 31, 2004 </FONT></P>












<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR VALIGN=Bottom>
     <TH COLSPAN="3" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Plan category</FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Number of shares of common<BR>
stock to be issued upon<BR>
exercise of outstanding<BR>
options, warrants and rights</FONT><HR WIDTH=95% SIZE=1 COLOR=#808080 NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Weighted-average exercise<BR>
price of outstanding price<BR>
of options, warrants and<BR>
rights</FONT><HR WIDTH=95% SIZE=1 COLOR=#808080 NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Number of shares of<BR>
common stock remaining <BR>
available for further<BR>
issuance under equity<BR>
compensation plans<BR>
(excluding securities<BR>
reflected in column (a))</FONT><HR WIDTH=95% SIZE=1 COLOR=#808080 NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>(a)</FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>(b)</FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>(c)</FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH="35%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Equity compensation plans</FONT></TD>
     <TD WIDTH="1%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH="4%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD WIDTH="15%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
        <TD WIDTH="5%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD WIDTH="15%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
        <TD WIDTH="5%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD WIDTH="15%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
        <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>approved by stockholders</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>811,106</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$ 9.36</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>212,760</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><BR>Equity compensation plans</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>not approved by stockholders</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>--</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>--</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>--</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Total</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>811,106</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$ 9.36</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>212,760</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD></TR>
</TABLE>
<BR>


<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Workstation" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>INDEPENDENT PUBLIC
ACCOUNTANTS </FONT><BR>
<FONT FACE="Times New Roman, Times, Serif" SIZE=2>(Proposal No. 3) </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Subject to stockholder ratification,
the Board of Directors, upon the recommendation of its Audit Committee, has selected Ernst
&amp; Young LLP (&#147;E&amp;Y&#148;) as independent accountants to audit the consolidated
books and accounts of the Company for the period beginning January 1, 2005, and ending
December 31, 2005. A representative of E&amp;Y will be present at the meeting and will
have the opportunity to make a statement and to respond to appropriate questions. E&amp;Y
has been the independent accountant for the Company since 2002. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The reports by E&amp;Y on Axsys&#146;
consolidated financial statements for the past three years did not contain an adverse
opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty,
audit scope or accounting principles. E&amp;Y&#146;s report on Axsys&#146; consolidated
financial statements for 2004 was issued on an unqualified basis in conjunction with the
publication of Axsys&#146; 2004 Annual Report to Stockholders and the filing of
Axsys&#146; Annual Report on Form&nbsp;10-K. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>During the Company&#146;s three most
recent fiscal years, there were no disagreements with E&amp;Y on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or procedures
which, if not resolved to E&amp;Y&#146;s satisfaction, would have caused them to make
reference to the subject matter in connection with their report on Axsys&#146;
consolidated financial statements for such years; and there were no reportable events, as
listed in Item&nbsp;304(a)(1)(v) of Regulation&nbsp;S-K. </FONT></P>

<p align=center>
<font size=2>24</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px">
<HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<P STYLE="page-break-after:always"></P>


<!-- MARKER FORMAT-SHEET="Head Major Center Bold 1-TNR" FSL="Workstation" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Fees Paid to
Independent Accountants </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Aggregate fees for professional
services rendered to Axsys by E&amp;Y as of or for the fiscal years ended December 31,
2004 and 2003 are set forth below. The aggregate fees included in the Audit category are
fees billed for the fiscal years for the audit of Axsys&#146; annual financial statements
and review of financial statements, statutory and regulatory filings. The aggregate fees
included in each of the other categories are for fees billed in the fiscal years. </FONT></P>


<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="400" ALIGN="CENTER">
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>2004</FONT><HR WIDTH=95% SIZE=1 COLOR=#808080 NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>2003</FONT><HR WIDTH=95% SIZE=1 COLOR=#808080 NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH="44%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Audit Fees</FONT></TD>
     <TD WIDTH="1%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH="6%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD WIDTH="19%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2> 205,000</FONT></TD>
        <TD WIDTH="7%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD WIDTH="19%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2> 180,000</FONT></TD>
        <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Audit-Related Fees</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>11,000</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>11,500</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Tax Fees</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>--</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2,400</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>All Other Fees</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>180,579</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>31,416</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Total</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2> 396,579</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2> 225,316</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD></TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>Audit Fees</I>: Fees for audit
services totaled $205,000 in 2004, including fees associated with the 2004 annual audit
and reviews of Axsys&#146; 2004 quarterly reports on Form 10-Q. Fees for audit services in
2003 included fees associated with the 2003 annual audit and reviews of Axsys&#146; 2003
quarterly reports on Form 10-Q. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>Audit-Related Fees</I>: Fees for
audit-related services related to the audit of the Axsys&#146; 401(k) plan totaled $11,000
in 2004 and $11,500 in 2003. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>Tax Fees</I>: There were no tax
related services or other non-audit related services during 2004. In 2003, E&amp;Y
provided payroll tax related services. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>All Other Fees: </I>In 2004, fees
related to a three-year audit by E&amp;Y of Telic Optics, Inc. in conjunction with the
acquisition by Axsys totaled $160,000. In addition, fees related to the filing of Form
S-8s and general assistance on accounting issues totaled $20,579 in 2004. In 2003<I>,
</I>E&amp;Y assisted the Company with a government contract audit performed by the Defense
Contract Audit Agency. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold 1-TNR" FSL="Workstation" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Policy on Audit
Committee Pre-Approval of Audit and <BR>Permissible Non-Audit Services of Independent
Accountant </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Audit Committee pre-approves all
audit and non-audit services provided by the independent accountants prior to the
engagement of the independent accountants with respect to such services. None of the
services described above was approved by the Audit Committee under the <I>de minimus</I>
exception provided by Rule 2-01(c)(7)(i)(C) under Regulation S-X. </FONT></P>

<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>The Board of Directors unanimously recommends a vote FOR the ratification of Ernst &amp; Young
LLP as <BR>the independent accountants of the Company for the indicated period.</B>
</FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Workstation" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>STOCK PRICE
PERFORMANCE GRAPH </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The following graph shows the value
of a $100 investment in Axsys Common Stock from December 31, 1999 through December 31,
2004, as of the dates indicated, compared with the value of a similar investment in the
Nasdaq Stock Market Index, the Nasdaq Non-Financial Stock Index and the S&amp;P Technology
Sector Index at such times. The Nasdaq Stock Market Index is a broad market index
comprising all domestic shares traded on the Nasdaq National Market and the Nasdaq
Small-Cap Market. The Nasdaq Non-Financial Stock Index is an index comprising all
non-financial common shares traded on the Nasdaq National Market and the Nasdaq Small-Cap
Market. The S&amp;P Technology Sector Index is an index comprising common shares of
companies in the aerospace/defense, communications equipment, electronics and office
equipment and supplies industries. The Nasdaq Stock Market Index, the Nasdaq Non-Financial
Stock Index and the S&amp;P Technology Sector Index are calculated on a total return basis
to include the reinvestment of dividends. </FONT></P>

<p align=center>
<font size=2>25</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px">
<HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<P STYLE="page-break-after:always"></P>


<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Workstation" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>COMPARISON OF 5 YEAR
CUMULATIVE TOTAL RETURN* <BR>AMONG AXSYS TECHNOLOGIES, INC., THE NASDAQ STOCK MARKET
(U.S.) INDEX, </FONT><BR>
<FONT FACE="Times New Roman, Times, Serif" SIZE=2>THE NASDAQ
NON-FINANCIAL INDEX AND THE <BR> S &amp; P INFORMATION TECHNOLOGY SECTOR INDEX </FONT></H1>


<P align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2><IMG SRC="graf.jpg"></FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$100 invested on 12/31/99 in stock or index-including reinvestment of dividends. Fiscal year
ending December 31. <BR>
Copyright &copy; 2002, Standard &amp; Poor&#146;s, a division of The
McGraw-Hill Companies, Inc. All rights reserved. www.researchdatagroup.com/S&amp;P.htm
</FONT></P>

<!-- MARKER FORMAT-SHEET="Footnote Rule-TNR" FSL="Workstation" -->


<TABLE CELLPADDING=1 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR VALIGN=Bottom>
     <TH COLSPAN=21><HR SIZE=1 NOSHADE WIDTH=100% ALIGN=LEFT></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>12/31/99</FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>12/31/00</FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>12/31/01</FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>12/31/02</FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>12/31/03</FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>12/31/04</FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=21><HR SIZE=1 NOSHADE WIDTH=100% ALIGN=LEFT></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=43% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Axsys Technologies, Inc. Common Stock</FONT></TD>
     <TD WIDTH=1% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=2% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=1% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD WIDTH=3% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2> 100</FONT></TD>
        <TD WIDTH=3% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=1% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD WIDTH=6% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2> 205.66</FONT></TD>
        <TD WIDTH=3% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=1% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD WIDTH=6% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>  75.47</FONT></TD>
        <TD WIDTH=2% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=1% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD WIDTH=6% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>  58.87</FONT></TD>
        <TD WIDTH=2% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=1% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD WIDTH=6% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2> 105.74</FONT></TD>
        <TD WIDTH=3% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=1% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$</FONT></TD><TD WIDTH=6% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2> 199.02</FONT></TD>
        <TD WIDTH=2% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=21><HR SIZE=1 NOSHADE WIDTH=100% ALIGN=LEFT></TH></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Nasdaq Stock Market Index (U.S.)</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>100</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>60.30</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>45.49</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>26.40</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>38.36</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>40.51</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=21><HR SIZE=1 NOSHADE WIDTH=100% ALIGN=LEFT></TH></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Nasdaq Non-Financial Index</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>100</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>64.07</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>49.84</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>33.60</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>51.21</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>55.16</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=21><HR SIZE=1 NOSHADE WIDTH=100% ALIGN=LEFT></TH></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>S&amp;P Information Technology Sector Index</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>100</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>59.10</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>43.81</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>27.42</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>40.37</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>41.40</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>

<TR VALIGN=Bottom>
     <TH COLSPAN=21><HR SIZE=1 NOSHADE WIDTH=100% ALIGN=LEFT></TH></TR>
<TR VALIGN=Bottom>
     <TD COLSPAN=21><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Copyright(C)2002,
Standard &amp; Poor's, a division of The McGraw-Hill Companies, Inc. All rights reserved.
www.researchdatagroup.com/S&amp;P.htm </FONT></TD></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=21><HR SIZE=1 NOSHADE WIDTH=100% ALIGN=LEFT></TH></TR>
</TABLE>







<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Workstation" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>SECTION 16(A)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Section 16(a) of the Securities
Exchange Act of 1934 requires Axsys&#146; directors, executive officers and any persons
who beneficially own more than 10% of a registered class of Axsys&#146; equity securities
to file with the SEC and the Nasdaq National Market initial reports of ownership and
reports of changes in ownership of Common Stock and other equity securities of Axsys.
Officers, directors and stockholders owning more than 10% are required by SEC regulation
to furnish Axsys with copies of all Section 16(a) forms they file. To Axsys&#146;
knowledge, based solely on the information furnished to Axsys, all applicable Section
16(a) filing requirements were complied with during the year ended December 31, 2004. </FONT></P>


<p align=center>
<font size=2>26</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px">
<HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<P STYLE="page-break-after:always"></P>


<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Workstation" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>STOCKHOLDER PROPOSALS
FOR 2006 ANNUAL MEETING </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Stockholders who intend to present
proposals at the next annual meeting of stockholders, and who wish to have such proposals
included in the proxy statement and form of proxy for such meeting, pursuant to the
mechanism provided by the SEC rules, must submit such proposals in writing to the
Secretary of Axsys Technologies, Inc., 175 Capital Boulevard, Suite 103, Rocky Hill,
Connecticut 06067, and such notice must be received no later than November 25, 2005. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Stockholders who do not wish to use
the mechanism provided by the SEC rules in proposing a matter for action at the next
annual meeting must notify Axsys in writing of the proposal and the information required
by the provisions of Axsys&#146; By-Laws dealing with stockholder proposals. The notice
must be submitted in writing to Axsys generally not less than 60 days nor more than 90
days in advance of an annual meeting. It is presently anticipated that next year&#146;s
annual meeting will be held on May 4, 2006 and, accordingly, any stockholder proposal for
next year&#146;s meeting submitted to Axsys on or between February 3, 2006 and March 5,
2006 will be considered filed on a timely basis. With respect to any proposals that are
not filed timely, proxies solicited by Axsys for the 2006 Annual Meeting may confer
discretionary authority to vote on any of those proposals. A copy of Axsys&#146; By-Laws
that describes the advance-notice procedures can be obtained from the Secretary of Axsys. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Axsys knows of no other matter to be
brought before the meeting. If any other matter requiring a vote of the shares should come
before the meeting, it is the intention of the persons named in the proxy to vote with
respect to any matter in accordance with their best judgment. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Workstation" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ANNUAL REPORT ON FORM
10-K </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>A copy of Axsys&#146; Annual Report
on Form 10-K for the fiscal year ended December 31, 2004, as filed with the SEC, will be
provided to stockholders without charge upon receipt of a written request to: Investor
Relations, Axsys Technologies, Inc., 175 Capital Boulevard, Suite 103, Rocky Hill,
Connecticut 06067. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold-TNR" FSL="Workstation" -->
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>March 18, 2005 </FONT></H1>

<p align=center>
<font size=2>27</font></p>
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<HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<P STYLE="page-break-after:always"></P>







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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(THIS PAGE
INTENTIONALLY LEFT BLANK) </FONT></P>


<p align=center>
<font size=2></font></p>
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<!-- MARKER FORMAT-SHEET="Head Right-TNR" FSL="Workstation" -->
<P ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>EXHIBIT A</B> </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Workstation" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>AMENDED AND RESTATED
LONG-TERM STOCK INCENTIVE PLAN <BR>(AS PROPOSED TO BE AMENDED) </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1.  PURPOSE.
The Purposes of the Plan are to provide additional incentive to those
          directors, officers and other employees of the Company and its Subsidiaries
          whose substantial contributions are essential to the continued growth and
          success of the Company&#146;s business in order to strengthen their commitment
          to the Company and its Subsidiaries, to motivate such officers and employees to
          faithfully and diligently perform their assigned responsibilities and to
attract           and retain competent and dedicated individuals whose efforts will
result in the           long-term growth and profitability of the Company. The purpose of
the Plan is           also to secure for the Company and its stockholders the benefits of
the           incentive inherent in increased common stock ownership by the members of
the           Board who are not employees of the Company or any of its subsidiaries. To
          accomplish such purposes, the Plan provides that the Company may grant
Incentive           Stock Options, Nonqualified Stock Options, Restricted Stock Awards,
Performance           Units or Stock Appreciation Rights.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2.    DEFINITIONS.
For purposes of this Plan:  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(a)     &#147;Award&#148; means
a grant of Restricted Stock, Performance Units or Stock           Appreciation Rights, or
any or all of them.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(b)      &#147;Award
Agreement&#148; means the written agreement between the Company and           a Grantee
evidencing the grant of an Award and setting forth the terms and           conditions
thereof.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(c)          &#147;Board&#148; means
the Board of Directors of the Company.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(d)      &#147;Cause&#148; means
the willful failure by an Optionee or Grantee to perform           his duties with the
Company or with the Subsidiary or the willful engaging in           conduct, which is
injurious to the Company or any Subsidiary, monetarily or           otherwise.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(e)   &#147;Change
in Capitalization&#148; means any increase, reduction, change or           exchange of
Shares for a different number or kind of shares or other securities           of the
Company by reason of a reclassification, re-capitalization, merger,
          consolidation, reorganization, issuance of warrants or rights, stock dividend,
          stock split or reverse stock split, combination or exchange of shares,
          repurchase of shares, change in corporate structure or otherwise.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(f)        &#147;Code&#148; means
the Internal Revenue Code of 1986, as amended.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(g)      &#147;Committee&#148; means
a committee, consisting of at least two directors of           the Company, which is
appointed by the Board to administer the Plan and to           perform the functions set
forth herein; provided, however, that if the Committee           consists of less than
the entire Board, each member shall be a           &#147;non-employee director&#148; within
the meaning of Exchange Act Rule 16b-3;           provided, further, however, that to the
extent necessary for any Option or Award           intended to qualify as performance
&#150; based compensation under Section           162(m) of the Code to so qualify, each
member of the Committee shall be an           &#147;outside director&#148; within the
meaning of Section 162(m) of the Code           and the regulations promulgated
thereunder. Notwithstanding the preceding           sentence, the Board may, in its
discretion, establish another committee and           delegate to this committee any or
all of the authority and responsibility of the           Committee with respect to grants
of Options or Awards to Eligible Participants           who are not executive officers of
the Company on the date such Options or Awards           are granted. Such other
committee may consist of one or more directors. To the           extent that the Board
has delegated the authority and responsibility of the           Committee to such other
committee, all references to the Committee in the Plan           shall be to such other
committee.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(h)     &#147;Company&#148; means
Axsys Technologies, Inc., a Delaware corporation.  </FONT></P>

<p align=center>
<font size=2>Page A-1</font></p>
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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(i)       &#147;Disability&#148; means
the condition which results when an individual has           become permanently and
totally disabled within the meaning of Section 22(e)(3)           of the Code.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(j)     &#147;Eligible
Participant&#148; means any director, officer or employee of the           Company or a
Subsidiary designated by the Committee as eligible to receive           Options or Awards
subject to the conditions set forth herein.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(k)      &#147;Exchange
Act&#148; means the Securities Exchange Act of 1934, as amended.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(l)        &#147;Fair
Market Value&#148; means the fair market value of the Shares as           determined by
the Committee in its sole discretion; provided, however, that (A)           if the Shares
are listed on a national securities exchange, including without           limitation the
Nasdaq National Market or The Nasdaq SmallCap Market of the           Nasdaq Stock Market
(&#147;Nasdaq&#148;), Fair Market Value on any date shall be           the closing sales
price for the Shares (or the closing bid, if no sales were           reported) on such
date as such price is officially reported on Nasdaq or as such           price is quoted
in the composite tape of transactions on such exchange; or (B)           if the Shares
are admitted to quotation on Nasdaq but selling prices are not           reported, Fair
Market Value on any date shall be the average of the high bid and           low asked
prices on the date of determination, or on the last day on which there           are
quoted prices prior to the date of determination.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(m)        &#147;Grantee&#148; means
a person to whom an Award has been granted under the           Plan.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(n)       &#147;Incentive
Stock Option&#148; means an Option that is intended to satisfy           the requirements
of Section 422 of the Code and is designated an Incentive Stock           Option at the
time of grant.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(o)         &#147;Non-Employee
Director&#148; means any director of the Company who is not           an employee of the
Company or any of its Subsidiaries.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(p)       &#147;Nonqualified
Stock Option&#148; means an Option, which is designated at           the time of grant as
not constituting an Incentive Stock Option.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(q)      &#147;Option&#148; means
an Incentive Stock Option, a Nonqualified Stock Option,           or either or both of
them.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(r)         &#147;Option
Agreement&#148; means the written agreement between the Company and           an Optionee
evidencing the grant of an Option and setting forth the terms and           conditions
thereof.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(s)        &#147;Optionee&#148; means
a person to whom an Option has been granted under the           Plan.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(t)         &#147;Parent&#148; means
any corporation that, with respect to the Company, is           described in section
424(e) of the Code.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(u)       &#147;Performance
Unit&#148; means a performance unit granted under Section 9 of           the Plan  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(v)          &#147;Plan&#148; means
the Amended and Restated Long-Term Stock Incentive Plan           as set forth in this
instrument and as it may be further amended from time to           time.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(w)   &#147;Restricted
Stock&#148; means Shares issued or transferred to an Eligible           Participant which
are subject to restrictions as provided in Section 8 hereof.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(x)        &#147;Shares&#148; means
the common stock, par value $.01 per share, of the           Company (including any new,
additional or different stock or securities           resulting from a Change in
Capitalization).  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(y)          &#147;Stock
Appreciation Right&#148; means a right to receive all or some           portion of the
increase in the value of shares of Common Stock as provided in           Section 7
hereof.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(z)         &#147;Subsidiary&#148; means
any corporation that, with respect to the Company,           is described in Section
424(f) of the Code.  </FONT></P>

<p align=center>
<font size=2>Page A-2</font></p>
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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(aa)       &#147;Successor
Corporation&#148; means a corporation, or a Parent or Subsidiary           thereof, which
issues or assumes a stock option in a transaction to which           Section 424(a) of
the Code applies.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3.          ADMINISTRATION.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(a)          The
Plan shall be administered by the Committee, which shall hold meetings at           such
times as may be necessary for the proper administration of the Plan. The
          Committee shall keep minutes of its meetings. A majority of the Committee shall
          constitute a quorum and a majority of a quorum may authorize any action. No
          member of the Committee shall be personally liable for any action,
determination           or interpretation made in good faith with respect to the Plan,
the Options or           the Awards, and all members of the Committee shall be fully
indemnified and held           harmless by the Company with respect to any such action,
determination or           interpretation.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(b)          Subject
to the express terms and conditions set forth herein, the Committee           shall have
the power from time to time:  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(1)           to
determine those Eligible Participants to whom Options shall be granted under
          the Plan and the number of Shares subject to Incentive Stock Options and/or
          Nonqualified Options to be granted to each Eligible Participant and to
prescribe           the terms and conditions (which need not be identical) of each
Option, including           the purchase price per share of each Option;  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(2)        to
select those Eligible Participants to whom Awards shall be granted under the
          Plan and to determine the number of Performance Units, shares of Restricted
          Stock and/or Stock Appreciation Rights to be granted pursuant to each Award,
the           terms and conditions of each Award, including the restrictions or
performance           criteria relating to such units, shares or rights, the purchase
price per share,           if any, of Restricted Stock, the maximum value, if any, of the
amount payable           pursuant to each Performance Unit and whether Stock Appreciation
Rights will be           granted alone or in conjunction with an Option;  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(3)         to
construe and interpret the Plan and the Options and Awards granted thereunder
          and to establish, amend and revoke rules and regulations for the administration
          of the Plan, including, but not limited to, correcting any defect or supplying
          any omission, or reconciling any inconsistency in the Plan or in any Agreement,
          in the manner and to the extent it shall deem necessary or advisable to make
the           Plan fully effective, and all decisions and determinations by the Committee
in           the exercise of this power shall be final and binding upon the Company or a
          Subsidiary, the Optionees and the Grantees, as the case may be;  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(4)          to
determine the duration and purposes for leaves of absence which may be           granted
to an Optionee or Grantee without constituting a termination of           employment or
service for purposes of the Plan; and  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(5)          generally,
to exercise such powers and to perform such acts as are deemed           necessary or
advisable to promote the best interest of the Company with respect           to the Plan.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4.        STOCK
SUBJECT TO PLAN.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(a)        The
maximum number of Shares that may be issued or transferred pursuant to           Options
and Awards under this Plan is 1,550,000 (or the number and kind of           shares of
stock or other securities which are substituted for those Shares or to           which
those Shares are adjusted upon a Change in Capitalization) and the Company
          shall reserve for the purposes of the Plan, out of its authorized but unissued
          Shares or out of Shares held in the Company&#146;s treasury, or partly out of
          each, such number of Shares as shall be determined by the Board. The aggregated
          number of shares actually issued or transferred by the Company upon the
exercise           of Incentive Stock Options will not exceed 1,550,000.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(b)          Whenever
any outstanding Option or portion thereof expires, is cancelled or is           otherwise
terminated (other than by exercise of the Option or any related Stock
          Appreciation Right), the shares of Common Stock allocable to the unexercised
          portion of such Option may again be the subject of Options and Awards
hereunder.  </FONT></P>

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<font size=2>Page A-3</font></p>
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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(c)       Whenever
any Shares subject to an Award or Option are resold to the Company, or           are
forfeited for any reason pursuant to the terms of the Plan, or any Shares           are
delivered to pay the exercise price of an Option or to satisfy the           withholding
obligation with respect to an Option or Award, any such Shares may           again be the
subject of Options and Awards hereunder. Upon payment in cash of           the benefit
provided by any award granted under the Plan, any shares that were           covered by
that Option Award will again be available for issue or transfer           hereunder.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(d)          An
eligible participant may not be granted Options and Awards in the aggregate           in
respect of more than 90,000 Shares per calendar year.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>5.         ELIGIBILITY.
Subject to the provisions of the Plan, the Committee shall have           full and final
authority to select those Eligible Participants who will receive           Options and/or
Awards; provided, however, that no Eligible Participant shall           receive any
Incentive Stock Option unless he is an employee of the Company or a           Subsidiary
at the time the Incentive Stock Option is granted.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>6.          STOCK
OPTIONS. The Committee may grant Options in accordance with the Plan, the           terms
and conditions of which shall be set forth in an Option Agreement. Each           Option
and Option Agreement shall be subject to the following conditions:  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(a)          PURCHASE
PRICE. The purchase price, which shall not be less than the fair market           value
on the date of grant of the Option, or the manner in which the purchase           price
is to be determined for Shares under each Option shall be set forth in the
          Option Agreement.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(b)    DURATION.
Options granted hereunder shall be for such term as the Committee           shall
determine. The Committee may, subsequent to the granting of any Option,           extend
the term thereof. Notwithstanding the foregoing, no option will be           exercisable
more than 10 years from the date of the Option.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(c)       NON-TRANSFERABILITY.
No Option granted hereunder shall be transferable by the           Optionee to whom
granted otherwise than by will or the laws of descent and           distribution, and an
Option may be exercised during the life time of such           Optionee only by the
Optionee or his guardian or legal representative. The terms           of such Option
shall be binding upon the beneficiaries, executors,           administrators, heirs and
successors of the Optionee.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(d)        VESTING.
Subject to Section 12(b) hereof, each Option shall be exercisable in           such
installments (which need not be equal) and at such times as may be           designated
by the Committee and set forth in the Option Agreement. Any grant of           Options
may specify performance objectives that must be achieved as a condition           to the
exercise of such Option. To the extent not exercised, installments shall
          accumulate and be exercisable, in whole or in part, at any time after becoming
          exercisable, but not later than the date the Option expires. The Committee may
          accelerate the exercisability of any Option or portion thereof at any time.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(e)          METHOD
OF EXERCISE. The exercise of an Option shall be made only by a written           notice
delivered in person or by mail to the Secretary of the Company at the           Company&#146;s
principal executive office, specifying the number of Shares to be           purchased and
accompanied by payment therefor and otherwise in accordance with           the Option
Agreement pursuant to which the Option was granted. The purchase           price for any
Shares purchased pursuant to the exercise of an Option shall be           paid in full
upon such exercise in cash, by check, or at the discretion of the           Committee and
upon such terms and conditions as the Committee shall approve, by           transferring
Shares to the Company. Any Shares transferred to the Company as           payment of the
purchase price under an Option shall be valued at their Fair           Market Value on
the day preceding the date of exercise of such Option. If           requested by the
Committee, the Optionee shall deliver the Option Agreement           evidencing the
Option and the Option Agreement evidencing any related Stock           Appreciation Right
to the Secretary of the Company who shall endorse thereon a           notation of such
exercise and return such agreement(s), to the Optionee. No less           than 100 Shares
may be purchased at any time upon the exercise of an Option           unless the number
of Shares so purchased constitutes the total number of Shares           then purchasable
under the Option.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(f)       RIGHTS
OF OPTIONEES. No Optionee shall be deemed for any purpose to be the owner           of
any Shares subject to any Option unless and until (i) the Option shall have
          been exercised pursuant to the terms thereof, (ii) the Company shall have
issued           and delivered the shares to the Optionee, and (iii) the Optionee&#146;s
name           shall have been entered as a stockholder of record on the books of the
Company.           Thereupon, the Optionee shall have full voting, dividend and other
ownership           rights with respect to such Shares.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(g)       TERMINATION
OF EMPLOYMENT. In the event that an Optionee ceases to be employed           by the
Company or any Subsidiary, any outstanding Options held by such Optionee           shall,
unless the Option Agreement evidencing such Option provides otherwise,
          terminate on the earliest of the following:  </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(1)
          If the Optionee&#146;s termination of employment is due to his death or
          Disability, the Option (to the extent exercisable at the time of the
          Optionee&#146;s termination of employment) shall be exercisable for a period of
          one (1) year following such termination of employment, and shall thereafter
          terminate; </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(2)
          If the Optionee&#146;s termination of employment is by the Company or a
          Subsidiary for Cause, the Option shall terminate on the date of the
          Optionee&#146;s termination of employment; </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(3)
          (a) If the Optionee&#146;s termination of employment is by the Company or any
          Subsidiary for any other reason (including an Optionee&#146;s ceasing to be
          employed by a Subsidiary as a result of the sale of such Subsidiary or an
          interest in such Subsidiary), the Option (to the extent exercisable at the time
          of the Optionee&#146;s termination of employment) shall be exercisable for a
          period of ninety (90) days following such termination of employment, and shall
          thereafter terminate; and (b) If the Optionee&#146;s termination of employment
          is by the Optionee (other than as set forth in paragraph (1) above) the Option
          (to the extent exercisable at the time of the Optionee&#146;s termination of
          employment) shall be exercisable for a period of ten (10) days following such
          termination of employment and shall thereafter terminate; and (c) If the
          Optionee&#146;s employment terminates due to Disability (as described in
          paragraph (1) above) or under circumstances described in paragraph (3)(a) above,
          and the Optionee dies prior to the permissible period of exercise for any
          outstanding Option then held by the Optionee, the Option (to the extent
          exercisable at the time of the Optionee&#146;s termination of employment) shall
          be exercisable for a period of one (1) year following the Optionee&#146;s death,
          and shall thereafter terminate. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(4)
          Notwithstanding the foregoing, in no event will the Option be exercisable beyond
          the term of the Option. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Notwithstanding the foregoing, the
Committee may provide, either at the time an Option is granted or thereafter, that the
Option may be exercised after the periods provided for in this Section 6(g), but in no
event beyond the term of the Option. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(h)        Subject
to the terms of the Plan, the Committee may modify outstanding Options           or
accept the surrender of outstanding Options (to the extent not exercised) and
          grant new Options in substitution therefor. Notwithstanding the foregoing, no
          modification of an Option shall alter or impair any rights or obligations under
          the Option without the Optionee&#146;s consent.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>7.        STOCK
APPRECIATION RIGHTS. The Committee may, in its discretion, either alone or           in
connection with the grant of an Option, grant Stock Appreciation Rights in
          accordance with the Plan, the terms and conditions of which shall be set forth
          in an Award Agreement. If granted in connection with an Option, a Stock
          Appreciation Right shall cover the same Shares covered by the Option (or such
          lesser number of Shares as the Committee may determine) and shall, except as
          provided in this Section 7, be subject to the same terms and conditions as the
          related Option.  </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(a)
          TIME OF GRANT. A Stock Appreciation Right may be granted: </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(1)
          at any time if unrelated to an Option; or </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(2)
          if related to an Option, either at the time of grant, or at any time thereafter
          during the term of the Option. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(b)
          STOCK APPRECIATION RIGHTS RELATED TO AN OPTION. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(i)
          PAYMENT. A Stock Appreciation Right granted in connection with an Option shall
          entitle the holder thereof, upon exercise of the Stock Appreciation Right or any
          portion thereof, to receive payment of an amount computed pursuant to Section
          7(b)(iii). </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(ii)
          EXERCISE. A Stock Appreciation Right granted in connection with an Option shall
          be exercisable at such time or times and only to the extent that the related
          Option is exercisable, and will not be transferable except to the extent the
          related Option may be transferable. A Stock Appreciation Right granted in
          connection with an Incentive Stock Option shall be exercisable only if the Fair
          Market Value of a Share on the date of exercise exceeds the purchase price
          specified in the related Incentive Stock Option. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(iii)
          AMOUNT PAYABLE. Except as otherwise provided in an Award Agreement (as
          contemplated by Section 12, upon the exercise of a Stock Appreciation Right
          related to an Option, the Grantee shall be entitled to receive an amount
          determined by multiplying (A) the excess of the Fair Market Value of a Share on
          the date of exercise of such Stock Appreciation Right over the per Share
          purchase price under the related Option, by (b) the number of Shares as to which
          such Stock Appreciation Right is being exercised. Notwithstanding the foregoing,
          the Committee may limit in any manner the amount payable with respect to any
          Stock Appreciation Right by including such a limit in the Award Agreement
          evidencing the Stock Appreciation Right at the time it is granted. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(iv)
          TREATMENT OF RELATED OPTIONS AND STOCK APPRECIATION RIGHTS UPON EXERCISE. Upon
          the exercise of a Stock Appreciation Right granted in connection with an Option,
          the Option shall be canceled to the extent of the number of Shares as to which
          the Stock Appreciation Right is exercised, and upon the exercise of an Option
          granted in connection with a Stock Appreciation Right or the surrender of such
          Option as may be provided for in any Option Agreement, the Stock Appreciation
          Right shall be cancelled to the extent of the number of Shares as to which the
          Option is exercised or surrendered. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(v)
          CUMULATIVE EXERCISE OF STOCK APPRECIATION RIGHT AND OPTION. The Committee may
          provide, either at the time a Stock Appreciation Right is granted in connection
          with a Nonqualified Stock Option or thereafter during the term of the Stock
          Appreciation Right, that, upon exercise of such Option or the surrender of the
          Option as may be provided for in any Option Agreement, the Stock Appreciation
          Right shall automatically be deemed to be exercised to the extent of the number
          of Shares as to which the Option is exercised or surrendered. In such event, the
          Grantee shall be entitled to receive the amount described in Section 7(b)(iii)
          or, if otherwise provided for in the Award Agreement, as set forth therein, in
          addition to the Shares acquired or cash received pursuant to the exercise or
          surrender of the Option. The inclusion in an Award Agreement evidencing a Stock
          Appreciation Right of a provision described in this Section 7(b)(v) may be in
          addition to and not in lieu of the right to exercise the Stock Appreciation
          Right as otherwise provided herein and in the Award Agreement. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(c)
          STOCK APPRECIATION RIGHTS UNRELATED TO AN OPTION. The Committee may grant to
          Eligible Participants Stock Appreciation Rights unrelated to Options. Stock
          Appreciation Rights unrelated to Options shall contain such terms and conditions
          as to exercisability, vesting (including the achievement of the performance
          objectives) and duration as the Committee shall determine. Except as otherwise
          provided in an Award Agreement (as contemplated by Section 12, the amount
          payable upon exercise of such Stock Appreciation Rights shall be determined in
          accordance with Section 7(b)(iii), except that &#147;Fair Market Value of a
          Share on the date of the grant of the Stock Appreciation Right&#148; shall be
          substituted for &#147;purchase price under the related Option.&#148; No Stock
          Appreciation Right unrelated to an Option will be exercised more than 10 years
          from the date of a grant of such Stock Appreciation Right. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(d)
          METHOD OF EXERCISE. Stock Appreciation Rights shall be exercised by a Grantee
          only by a written notice delivered in person or by mail to the Secretary of the
          Company at the Company&#146;s principal executive office, specifying the number
          of Shares with respect to which the Stock Appreciation Right is being exercised.
          If requested by the Committee, the Grantee shall deliver the Award Agreement
          evidencing the Stock Appreciation Right being exercised and the Option Agreement
          evidencing any related Option to the Secretary of the Company who shall endorse
          thereon a notation of such exercise and return such agreement(s) to the Grantee. </FONT></P>

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<font size=2>Page A-6</font></p>
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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(e)
          FORM OF PAYMENT. Payment of the amount determined under Sections 7(b)(iii) or
          7(c), shall be made, at the sole discretion of the Committee, either (i) solely
          in whole shares of Common Stock in a number determined at their Fair Market
          Value on the date of exercise of the Stock Appreciation Right, (ii) solely in
          cash, (iii) by delivery of a note or other security, or (iv) in a combination of
          any of the foregoing. If the Committee decides to make full payment in Shares,
          and the amount payable results in a fractional Share, payment for the fractional
          Share will be made in cash. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>8.
          RESTRICTED STOCK. The Committee may grant Awards of Restricted Stock which shall
          be evidenced by an Award Agreement between the Company and the Grantee. Each
          Award Agreement shall contain such restrictions, terms and conditions as the
          Committee may require and (without limiting the generality of the foregoing)
          such Award Agreements may require that an appropriate legend be placed on Share
          certificates. Awards of Restricted Stock shall be subject to the following terms
          and provisions: </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(a)          RIGHTS
OF GRANTEE.  </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(i)
          Shares of Restricted Stock granted pursuant to an Award hereunder shall be
          issued in the name of the Grantee as soon as reasonably practicable after the
          Award is granted and the purchase price, if any, is paid by the Grantee,
          provided that the Grantee has executed an Award Agreement evidencing the Award,
          an escrow agreement, appropriate stock powers and any other documents which the
          Committee, in its absolute discretion, may require as a condition to the
          issuance of such Shares. If a Grantee shall fail to execute the Award Agreement
          evidencing a Restricted Stock Award, an escrow agreement or appropriate blank
          stock powers or shall fail to pay the purchase price, if any, for the Restricted
          Stock, the Award shall be null and void. Shares issued in connection with a
          Restricted Stock award shall be deposited together with the stock powers with an
          escrow agent designated by the Committee. Except as restricted by the terms of
          the Award Agreement, upon delivery of the Shares to the escrow agent, the
          Grantee shall have all of the rights of a stockholder with respect to such
          Shares, including the right to vote the Shares and to receive all dividends or
          other distributions paid or made with respect to the Shares. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(ii)
          If a Grantee receives any dividends or other distributions with respect to any
          Shares which were awarded to him as Restricted Stock prior to the lapsing of
          restrictions imposed upon such Shares, such dividends and distributions shall be
          held by the escrow agent subject to the restrictions and obligations (including
          forfeiture provisions) provided by this Plan. Any such dividends and
          distributions shall be held by the escrow agent for the account of the Grantee
          prior to the earlier of (i) the lapsing of restrictions imposed upon such Shares
          and (ii) the forfeiture of such Shares; and, upon the lapsing of such
          restrictions, there shall be credited to the Grantee interest at a rate to be
          determined by the Committee on any cash dividend paid thereon for the period
          held by the escrow agent pursuant hereto. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(b)
          NON-TRANSFERABILITY. Until any restrictions upon the Shares of Restricted Stock
          awarded to a Grantee shall have lapsed in the manner set forth in Section 8(c),
          such Shares shall not be sold, transferred or otherwise disposed of and shall
          not be pledged or otherwise hypothecated, nor shall they be delivered to the
          Grantee. Upon the termination of employment of the Grantee, all of such Shares
          with respect to which restrictions have not lapsed shall be resold by the
          Grantee to the Company at the same price, if any, paid by the Grantee for such
          Shares or shall be forfeited and automatically transferred to and reacquired by
          the Company at no cost to the Company if no purchase price had been paid for
          such Shares. The Committee may also impose such other restrictions and
          conditions on the Shares as it deems appropriate. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(c)
          LAPSE OF RESTRICTIONS. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(i)
          Restrictions upon Shares of Restricted Stock awarded hereunder shall lapse at
          such time or times and on such terms, conditions and satisfaction of performance
          objectives (as described in Section 9(a)) as the Committee may determine;
          provided, however, that the restrictions upon such Shares shall lapse only if
          the Grantee on the date of such lapse is then and has continuously been an
          employee of the Company or a Subsidiary from the date the Award was granted. </FONT></P>

<p align=center>
<font size=2>Page A-7</font></p>
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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(ii)
          In the event of termination of employment as a result of the death or Disability
          of a Grantee, the Committee, in its absolute discretion, may determine that the
          restrictions upon some or all Shares of Restricted Stock awarded to the Grantee
          shall thereupon immediately lapse. The Committee may also decide at any time, in
          its absolute discretion and on such terms and conditions as it deems
          appropriate, to remove or modify the restrictions upon Shares of Restricted
          Stock awarded hereunder. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(d)
          DELIVERY OF SHARES. Upon the lapse of the restrictions on Shares of Restricted
          Stock awarded hereunder, the Committee shall cause a stock certificate to be
          delivered to the Grantee with respect to such Shares, free of all restrictions. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>9.
          PERFORMANCE UNITS. The Committee may grant Performance Units, the terms and
          conditions of which shall be set forth in an Award Agreement between the Company
          and the Grantee. Each Performance Unit shall represent the right to receive a
          Share, or a cash payment equal to the Fair Market Value thereof, contingent upon
          the Company&#146;s attainment of specified performance objectives within a
          specified award period. Each Award Agreement shall specify the number of the
          Performance Units to which it relates, the performance objectives which must be
          satisfied in order for the Performance Units to vest, and the award period
          within which such objectives must be satisfied. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(a)
          PERFORMANCE OBJECTIVES. Performance objectives relating to any Option or Award
          may be expressed in terms of (a) net earnings or net worth, (b) return on equity
          or assets, (c) earnings per Share, (d) Share price, (e) pre-tax profits, (f)
          gross revenues, (g) EBITDA, (h) dividends, (i) market share or market
          penetration or (j) any combination of the foregoing, and may be determined
          before or after accounting changes, special charges, foreign currency effects,
          acquisitions, divestitures or other extraordinary events. Performance objectives
          may be absolute or relative to the performance of other companies. Each grant
          may specify in respect of such performance objectives, a minimum acceptable
          level of achievement and will set forth the formula for determining the number
          of Options or Awards that will be earned if performance is at or above the
          minimum level but falls short of full achievement of the specified performance
          objectives. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(b)
          VESTING AND FORFEITURE. A Grantee shall become vested with respect to the
          Performance Units to the extent that the performance objectives set forth in the
          Award Agreement are satisfied within the award period. Subject to the terms of
          any Award Agreement (as contemplated by Section 12 hereof), if the specified
          performance objectives are not satisfied within the award period, the
          Grantee&#146;s rights with respect to the Performance Units shall be forfeited. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(c)
          PAYMENT OF AWARDS. Subject to the terms of any Award Agreement (as contemplated
          by Section 12), payments to Grantees in respect of vested Performance Units
          shall be made within 2 weeks after the availability of audited financial
          statements for the award period to which such Award relates but in no event
          later than 2 &frac12; months after the end of the period; provided, however,
          that prior to the vesting, payment, settlement or lapsing of any restrictions
          with respect to any Performance Unit intended to qualify as performance-based
          compensation under Section 162(m) of the Code, the Committee shall certify in
          writing that the applicable performance objectives have been satisfied. Such
          payments may be made entirely in Shares, entirely in cash, or in a combination
          of Shares and cash, in each case as the Committee shall determine. Except as
          provided in the terms of any Award Agreement (as contemplated by Section 12), if
          payment is made in the form of cash, the amount payable in respect of any Share
          shall be equal to the Fair Market Value of such Share on the last day of the
          award period. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(d)
          TERMINATION OF EMPLOYMENT. In the event that a Grantee ceases to be employed by
          the Company or a Subsidiary prior to the expiration of an award period for any
          reason, any nonvested Performance Units previously awarded to said Eligible
          Participant shall be forfeited unless the Committee in its discretion determines
          that some part or all of said Performance Units shall continue in effect under
          the Plan to the extent the applicable performance objectives are satisfied
          within the award period. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(e)
          NON-TRANSFERABILITY. No amounts payable under this Plan in respect of
          Performance Units shall be transferable by the Grantee otherwise than by will or
          by the laws of descent and distribution provided that the Grantee may designate
          a beneficiary to receive such amounts in the event of the Grantee&#146;s death. </FONT></P>

<p align=center>
<font size=2>Page A-8</font></p>
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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>10.
          LOANS. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(a)
          To the extent permitted by law and at the discretion of the Committee, the
          Company or any Subsidiary may make loans to a Grantee or Optionee in connection
          with the purchase of Shares pursuant to an Award or in connection with the
          exercise of an Option, subject to the following terms and conditions and such
          other terms and conditions not inconsistent with the Plan including the rate of
          interest, if any, as the Committee shall impose from time to time. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(b)
          No loan made under the Plan shall exceed the sum of (i) the aggregate purchase
          price payable pursuant to the Option or Award with respect to which the loan is
          made plus (ii) the amount of the reasonably estimated income taxes payable by
          the Optionee or Grantee with respect to the Option or Award. In no event may any
          such loan exceed the Fair Market Value, at the date of exercise, of any such
          Shares. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(c)
          No loan shall have an initial term exceeding ten (10) years; provided, that
          loans under the Plan shall be renewable at the discretion of the Committee; and
          provided, further, that the indebtedness under each loan shall become due and
          payable, as the case may be, on a date no later than (i) one (1) year after
          termination of the Optionee&#146;s or Grantee&#146;s employment due to death,
          retirement or Disability, or (ii) the date of termination of the Optionee&#146;s
          or Grantee&#146;s employment for any reason other than death, retirement or
          Disability. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(d)
          Loans under the Plan may be satisfied by an Optionee or Grantee, as determined
          by the Committee, in cash or, with the consent of the Committee, in whole or in
          part by the transfer to the Company of Shares whose Fair Market Value on the
          date of such payment is equal to the cash amount due and payable under such
          loans. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(e)
          A loan shall be secured by a pledge of Shares with a Fair Market Value of not
          less than the principal amount of the loan. After partial repayment of a loan,
          pledged Shares no longer required as security may, at the discretion of the
          Committee, be released to the Optionee or Grantee. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(f)
          Every loan shall meet all applicable laws, regulations and rules of the Federal
          Reserve Board and any other governmental agency having jurisdiction. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>11.
          ADJUSTMENT UPON CHANGES IN CAPITALIZATION. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(a)
          In the event of a Change in Capitalization, the Committee shall conclusively
          determine the appropriate adjustments, if any, to the maximum number and class
          of shares of stock with respect to which Options or Awards may be granted under
          the Plan, the number and class of shares or units as to which Options or Awards
          may be granted under the Plan, the number and class of shares or units as to
          which Options or Awards have been granted under the Plan, and the purchase price
          therefor, if applicable. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(b)
          Any such adjustment in the Shares or other securities subject to outstanding
          Incentive Stock Options (including any adjustments in the purchase price) shall
          be made in such manner as not to constitute a modification as defined by Section
          424(h)(3) of the Code and only to the extent otherwise permitted by Section 422
          and 424 of the Code. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(c)
          If, by reason of a Change in Capitalization, a Grantee of an Award shall be
          entitled to new, additional or different shares of stock, securities or
          Performance Units (other than rights or warrants to purchase securities), such
          new additional or different shares shall thereupon be subject to all of the
          conditions, restrictions and performance criteria which were applicable to the
          Shares or units pursuant to the Award prior to such Change in Capitalization. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>12.
          EFFECT OF CERTAIN TRANSACTIONS. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(a)
          In the event of (i) a merger or consolidation or (ii) the sale or disposition of
          all or substantially all of the Company&#146;s assets, the Company shall have
          the authority to make provision in connection with such transaction (x) for the
          assumption of Options or Awards theretofore granted under the Plan, or the
          substitution for such Options or Awards of new options or awards of the
          Successor Corporation, with appropriate adjustment as to the number and kind of
          shares and the purchase price for shares thereunder, or (y) for the surrender of
          outstanding Options and Awards and the payments of cash in consideration
          therefor at their fair market value. </FONT></P>

<p align=center>
<font size=2>Page A-9</font></p>
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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(b)        Except
as otherwise determined by the Committee at the time of grant of an           Option or
Award, upon a Change in Control (as defined below), all outstanding           Options and
Stock Appreciation Rights shall become vested and exercisable; all           restrictions
on Restricted Stock shall lapse, all performance goals shall be           deemed achieved
at target levels and all other terms and conditions are met; and           all
Performance Units shall be delivered. The Committee may, in its sole
          discretion, provide or agree to provide for payments in consideration for the
          exercise of, surrender or repurchase of an Option or Award (at such times and
in           such amounts determined by the Committee in its sole discretion, which
amounts,           in the case of a change of control, may be based upon the highest
price per           share paid in the transaction even if greater than the Fair Market
Value at the           time of exercise, surrender or repurchase). Any such determination
by the           Committee may be set forth in the applicable Option Agreement, Award
Agreement           or otherwise. With respect to Options and Awards intended to qualify
as           performance based compensation under Section 162(m) of the Code, the
Committee           shall set forth in the applicable Option Agreement or Award Agreement
any terms           as to acceleration of the exercisability or vesting of the Option or
Award           (including, but not limited to, acceleration upon the occurrence of a
change of           control (as defined in the applicable Option Agreement or Award
Agreement)).  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>A &#147;Change in Control&#148; shall
mean the occurrence of any of the following: </FONT></P>



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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          An acquisition (other than directly from the Company) of any Shares or other
          voting securities of the Company entitled to vote generally for the election of
          directors (the &#147;Voting Securities&#148;) by any &#147;Person&#148; (as the
          term &#147;person&#148; is used for purposes of Section 13(d) or 14(d) of the
          Exchange Act), immediately after which such Person has &#147;Beneficial
          Ownership&#148; (within the meaning of Rule 13d-3 promulgated under the Exchange
          Act) of fifty percent or more of the then outstanding Shares or the combined
          voting power of the Company&#146;s then outstanding Voting Securities; provided,
          however, in determining whether a Change in Control has occurred, Shares 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 &#147;Non-Control Acquisition&#148; 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 &#147;Subsidiary&#148;),
          (ii) the Company or its Subsidiaries, (iii) any Person in connection with a
          Non-Control Transaction (as hereinafter defined) or (iv) an Affiliate; </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(ii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          The individuals who, as of the date of this agreement, are members of the Board
          (the &#147;Incumbent Board&#148;), 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&#146;s stockholders, 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 &#147;Election
          Contest&#148; (as described in Rule 14a-11 promulgated under the Exchange Act)
          or other actual or threatened solicitation of proxies or consents by or on
          behalf of a Person other than the Board (a &#147;Proxy Contest&#148;) including
          by reason of any agreement intended to avoid or settle any Election Contest or
          Proxy Contest; or </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(iii) &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          The consummation of: </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(A)
          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
          &#147;Non-Control Transaction.&#148; A &#147;Non-Control Transaction&#148; 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: </FONT></P>

<p align=center>
<font size=2>Page A-10</font></p>
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<P STYLE="page-break-after:always"></P>


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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(1)
          the stockholders 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 &#147;Surviving
          Corporation&#148;) in substantially the same proportion as their ownership of
          the Voting Securities immediately before such merger, consolidation,
          reorganization, or other business combination, </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(2)
          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 </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(3)
          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&#146;s then outstanding voting securities or its
          common stock. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(B)
          A complete liquidation or dissolution of the Company; or </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(C)
          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&#146;s assets being owned by a
          Subsidiary or Subsidiaries or (ii) a distribution to the Company&#146;s
          stockholders of the stock of a Subsidiary or any other assets); </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>provided, however</U>, 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 the
then outstanding Shares or the combined voting power of the Company&#146;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)). </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Notwithstanding the foregoing, a
Change in Control shall not be deemed to occur solely because any Person (the
&#147;Subject Person&#148;) acquired Beneficial Ownership of more than the permitted
amount of the then outstanding Shares or Voting Securities as a result of the acquisition
of Shares or Voting Securities by the Company which, by reducing the number of Shares 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 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 or Voting Securities
which increase the percentage of the then outstanding Shares or Voting Securities
Beneficially Owned by the Subject Person, then a Change in Control shall occur. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>13.
          RELEASE OF FINANCIAL INFORMATION. A copy of the Company&#146;s annual report to
          stockholders shall be delivered to each Optionee and Grantee at the time such
          report is distributed to the Company&#146;s stockholders. Upon request, the
          Company shall furnish to each Optionee and Grantee a copy of its most recent
          annual report and each quarterly report and current report filed under the
          Exchange Act, since the end of the Company&#146;s prior fiscal year. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>14.
          TERMINATION AND AMENDMENT OF THE PLAN. The Plan shall terminate on August 31,
          2009 and no Option or Award may be granted thereafter. The Board may sooner
          terminate or amend the Plan at any time, and from time to time and in any manner
          <U>provided, however</U>, that any amendment which must be approved by the
          stockholders of the Company in order to comply with applicable law or the rules
          of the NASDAQ National Market System or, if the Common Shares are not traded
          under the NASDAQ National Market System, the principal national securities
          exchange upon which the Common Shares are traded or quoted, will not be
          effective unless and until such approval has been obtained. Except as provided
          in Sections 11 and 12 hereof, rights and obligations under any Option or Award
          granted before any amendment of the Plan shall not be altered or impaired by
          such amendment, except with the consent of the Optionee or Grantee, as the case
          may be. </FONT></P>

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<font size=2>Page A-11</font></p>
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<P STYLE="page-break-after:always"></P>


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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>15.
          LIMITATION OF LIABILITY. As illustrative of the limitations of liability of the
          Company, but not intended to be exhaustive thereof, nothing in the Plan shall be
          construed to: </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(a)
          give any person any right to be granted an Option or Award other than at the
          sole discretion of the Committee; </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(b)
          give any person any rights whatsoever with respect to Shares except as
          specifically provided in the Plan; </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(c)
          limit in any way the right of the Company or a Subsidiary to terminate the
          employment of any person at any time; or </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(d)
          be evidence of any agreement or understanding, expressed or implied, that the
          Company or any Subsidiary will employ any person in any particular position at
          any particular rate of compensation or for any particular period of time. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>16.
          REGULATIONS AND OTHER APPROVALS; GOVERNING LAW. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(a)
          This Plan and the rights of all persons claiming any interest hereunder shall be
          construed and determined in accordance with the laws of the State of Delaware
          without giving effect to the choice of law principles thereof, except to the
          extent that such law is preempted by federal law. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(b)
          The obligation of the Company to sell or deliver Shares with respect to Options
          and Awards granted under the Plan shall be subject to all applicable laws, rules
          and regulations, including all applicable federal and state securities laws, and
          the obtaining of all such approvals by governmental agencies as may be deemed
          necessary or appropriate by the Committee. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(c)
          Except as otherwise provided in Section 15, the Board may make such changes as
          may be necessary or appropriate to comply with the rules and regulations of any
          government authority, or to obtain for Eligible Participants granted Incentive
          Stock Options the tax benefits under the applicable provisions of the Code and
          regulations promulgated thereunder. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(d)
          Each Option and Award is subject to the requirement that, if at any time the
          Committee determines, in its absolute discretion, that the listing, registration
          or qualification of Shares issuable pursuant to the Plan is required by any
          securities exchange or under any state or federal law, or the consent or
          approval of any governmental regulatory body is necessary or desirable as a
          condition of, or in connection with, the grant of an Option or the issuance of
          Shares, no Options shall be granted or payment made or Shares issued, in whole
          or in part, unless listing, registration, qualification, consent or approval has
          been effected or obtained free of any conditions as acceptable to the Committee. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(e)
          In the event that the disposition of Shares acquired pursuant to the Plan is not
          covered by a then current registration statement under the Securities Act of
          1933, as amended, and is not otherwise exempt from such registration, such
          Shares shall be restricted against transfer to the extent required by the
          Securities Act of 1933, as amended, or regulations thereunder, and the Committee
          may require any individual receiving Shares pursuant to the Plan, as a condition
          precedent to receipt of such Shares (including upon exercise of an Option), to
          represent to the Company in writing that the Shares acquired by such individual
          are acquired for investment only and not with a view to distribution. </FONT></P>

<p align=center>
<font size=2>Page A-12</font></p>
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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>17.
          MISCELLANEOUS. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(a)
          MULTIPLE AGREEMENTS. The terms of each Option or Award may differ from other
          Options or Awards granted under the Plan at the same time, or at some other
          time. The Committee may also grant more than one Option or Award to a given
          Eligible Participant during the term of the Plan, either in addition to, or in
          substitution for, one or more Options or Awards previously granted to that
          Eligible Participant. The grant of multiple Options and/or Awards may be
          evidenced by a single Agreement or multiple Agreements, as determined by the
          Committee. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(b)
          WITHHOLDING OF TAXES. The Company shall have the right to deduct from any
          distribution of cash to any Optionee or Grantee an amount equal to the federal,
          state and local income taxes and other amounts required by law to be withheld
          with respect to any Option or Award. Notwithstanding anything to the contrary
          contained herein, if any Optionee or Grantee is entitled to receive Shares upon
          exercise of an Option or pursuant to an Award, the Company shall have the right
          to require such Optionee or Grantee, prior to the delivery of such Shares, to
          pay to the Company the amount of any federal, state or local income taxes and
          other amounts which the Company is required by law to withhold. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(c)
          DESIGNATION OF BENEFICIARY. Each Optionee and Grantee may, with the consent of
          the Committee, designate a person or persons to receive in the event of his/her
          death, any Option or Award or any amount payable pursuant thereto, to which
          he/she would then be entitled. Such designation will be made upon forms supplied
          by and delivered to the Company and may be revoked by the Optionee or Grantee in
          writing. If an Optionee or Grantee fails effectively to designate a beneficiary,
          then his/her estate will be deemed to be the beneficiary. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>18. INTERPRETATION.  </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(a)
          RULE 16B-3. The Plan is intended to comply with Exchange Act Rule 16b-3 and the
          Committee shall interpret and administer the provisions of the Plan or any
          Option Agreement or Award Agreement in a manner consistent therewith. Any
          provisions inconsistent with such Rule shall be inoperative and shall not affect
          the validity of the Plan. The Board is authorized to amend the Plan and to make
          any such modifications to Option Agreements or Award Agreements to comply with
          Exchange Act Rule 16b-3, as it may be amended from time to time, and to make any
          other such amendments or modifications deemed necessary or appropriate to better
          accomplish the purposes of the Plan in light of any amendments made to Exchange
          Act Rule 16b-3. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(b)
          SECTION 162(M) OF THE CODE. Unless otherwise expressly stated in the relevant
          Option Agreement or Award Agreement, each Option, Stock Appreciation Right and
          Performance Unit granted under the Plan to an executive officer of the Company
          is intended to be performance-based compensation within the meaning of Section
          162(m)(4)(c) of the Code (except that, upon a change of control (as defined in
          the applicable Option Agreement or Award Agreement), payment of an Option or
          Award to an Eligible Participant who remains a &#147;covered employee&#148; with
          respect to such payment within the meaning of Section 162(m)(3) of the Code may
          not qualify as performance-based compensation). The Committee shall not be
          entitled to exercise any discretion otherwise authorized hereunder with respect
          to such Options and Awards if the ability to exercise such discretion or the
          exercise of such discretion itself would cause the compensation attributable to
          such Options and Awards to fail to qualify as performance-based compensation.
          Notwithstanding anything to the contrary in the Plan, the provisions of the Plan
          may at any time be bifurcated by the Board or the Committee in any manner so
          that certain provisions of the Plan or any Option or Award intended (or required
          in order) to satisfy the applicable requirements of Section 162(m) of the Code
          are only applicable to persons whose compensation is subject to Section 162(m). </FONT></P>




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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>19.
          EFFECTIVE DATE. The effective date of the Plan shall be the date of its adoption
          by the Board, subject only to the approval by the affirmative vote of a majority
          of the votes eligible to be cast at a meeting of stockholders of the Company to
          be held within twelve (12) months of such adoption. </FONT></P>

<p align=center>
<font size=2>Page A-13</font></p>
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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>20.
          OPTION GRANTS TO NON-EMPLOYEE DIRECTORS. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(a)
          INITIAL GRANT. A Non-Employee Director who becomes a director for the first time
          after the effective date hereof shall, upon election or appointment, be granted
          a Non-Qualified Option in respect of a number of Shares (rounded to the nearest
          whole number) which Shares have a Fair Market Value on the date of grant equal
          to $60,000 or such other amounts as determined by the Committee. Each such
          Option shall have an exercise price per share equal to the Fair Market Value of
          a Share on the date of grant and ,unless otherwise determined by the Committee,
          shall become fully vested and exercisable with respect to 20% of the Shares
          subject thereto on each of the first five anniversaries of the date of grant,
          provided that the Optionee continues to serve as a director as of such date. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(b)
          ANNUAL GRANT. On the first business day following each regularly scheduled
          annual meeting of the stockholders of the Company, each Non-Employee Director
          shall be granted a Non-Qualified Option in respect of a number of Shares
          (rounded to the nearest whole number) which Shares have a Fair Market Value on
          the date of grant equal to $30,000 or such other amount as determined by the
          Committee. Each such Option shall have an exercise price per share equal to the
          Fair Market Value of a Share on the date of grant and, unless otherwise
          determined by the Committee, shall become fully vested and exercisable with
          respect to 100% of the Shares subject thereto on the day immediately preceding
          the first regularly scheduled annual meeting of stockholders of the Company
          occurring subsequent to the date of grant, provided that the Optionee continues
          to serve as a director on such day. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(c)
          DURATION. Options granted pursuant to this Section 22 shall have a term of ten
          years, subject to earlier termination. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(d)
          NON-TRANSFERABILITY. No Option granted pursuant to this Section 22 shall be
          transferable by the Optionee to whom granted otherwise than by will or the laws
          of descent and distribution, and an Option may be exercised during the lifetime
          of such Optionee only by the Optionee or his guardian or legal representative.
          The terms of such Option shall be binding upon the beneficiaries, executors,
          administrators, heirs and successors of the Optionee. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(e)
          METHOD OF EXERCISE. The exercise of an Option shall be made only by a written
          notice delivered in person or by mail to the Secretary of the Company at the
          Company&#146;s principal executive office, specifying the number of Shares to be
          purchased and accompanied by payment therefor. The purchase price for any Shares
          purchased pursuant to the exercise of an Option shall be paid in full upon such
          exercise in cash, by check, or at the discretion of the Committee and upon such
          terms and conditions as the Committee shall approve, by transferring Shares to
          the Company. Any Shares transferred to the Company as payment of the purchase
          price under an Option shall be valued at their Fair Market Value on the day
          preceding the date of exercise of such Option. If requested by the Committee,
          the Optionee shall deliver the Option Agreement evidencing the Option to the
          Secretary of the Company who shall endorse thereon a notation of such exercise
          and return such agreement(s) to the Optionee. No less than 100 Shares may be
          purchased at any time upon the exercise of an Option unless the number of Shares
          so purchased constitutes the total number of Shares then purchasable under the
          Option. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(f)
          RIGHTS OF OPTIONEES. No Optionee shall be deemed for any purpose to be the owner
          of any Shares subject to any Option unless and until (i) the Option shall have
          been exercised pursuant to the terms thereof, (ii) the Company shall have issued
          and delivered the shares to the Optionee, and (iii) the Optionee&#146;s name
          shall have been entered as a stockholder of records on the books of the Company.
          Thereupon, the Optionee shall have full voting, dividend and other ownership
          rights with respect to such Shares. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Flush Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(g)
          TERMINATION OF DIRECTORSHIP. In the event that an Optionee ceases to be a
          director of the Company, any outstanding Options held by such Optionee shall
          terminate as follows: </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Flush Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(i)
          If the Optionee&#146;s termination of directorship is due to his death or
          Disability, the Option (to the extent exercisable at the time of the
          Optionee&#146;s termination of directorship) shall be exercisable for a period
          of one (1) year following such termination of directorship, and shall thereafter
          terminate; </FONT></P>

<p align=center>
<font size=2>Page A-14</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px">
<HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<P STYLE="page-break-after:always"></P>


<!-- MARKER FORMAT-SHEET="Para (List) Flush Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(ii)
          If the Optionee&#146;s termination of directorship is by the Company for Cause,
          the Option shall terminate on the date of the Optionee&#146;s termination of
          directorship; </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Flush Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(iii)
          If the Optionee&#146;s directorship terminates for any other reason, the Option
          (to the extent exercisable at the time of the Optionee&#146;s termination of
          directorship) shall be exercisable for a period of ninety (90) days following
          such termination of directorship, and shall thereafter terminate; and </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Flush Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(iv)
          If the Optionee&#146;s directorship terminates under circumstances described in
          paragraph (iii) above, and the Optionee dies prior to the permissible period of
          exercise for any outstanding Option then held by the Optionee, the Option (to
          the extent exercisable at the time of the Optionee&#146;s termination of
          directorship) shall be exercisable for a period of one (1) year following the
          Optionee&#146;s death, and shall thereafter terminate. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Flush Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(h)
          EXCLUSIVITY OF AWARDS. Non-Employee Directors shall not receive any Options or
          Awards under the Plan other than the Options granted pursuant to this Section
          22. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>COMPLIANCE WITH SECTION 409A OF THE
CODE. To the extent applicable, it is intended that this Plan and any grants made
hereunder comply with the provisions of Section 409A of the Code. The Plan and any grants
made hereunder shall be administered in a manner consistent with this intent, and any
provision that would cause the Plan or any grant made hereunder to fail to satisfy Section
409A of the Code shall have no force and effect until amended to comply with Section 409A
of the Code (which amendment may be retroactive to the extent permitted by Section 409A of
the Code and may be made by the Company without the consents of Participants). Any
reference in this Plan to Section 409A of the Code will also include any proposed,
temporary or final regulations, or any other guidance, promulgated with respect to such
Section by the U.S. Department of the Treasury or the Internal Revenue Service. </FONT></P>

<p align=center>
<font size=2>Page A-15</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px">
<HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<P STYLE="page-break-after:always"></P>

<table width="100%"  border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td align="left" valign="top"><font size="2" face="Arial, Helvetica, sans-serif"><b>THIS
      PROXY WILL BE VOTED AS DIRECTED, OR IF NO DIRECTION IS INDICATED, WILL BE
      VOTED &#147;FOR&#148; THE PROPOSALS.</b></font></td>
    <td width="3%" valign="top"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td width="7%" valign="top" nowrap><font size="1" face="Arial, Helvetica, sans-serif">Please
      <br>
      Mark Here <br>
      for Address<br>
      Change or <br>
      Comments</font></td>
    <td width="10%" valign="middle"><FONT color="#FF0000" size="7" face="wingdings">&#111;</FONT></td>
  </tr>
  <tr>
    <td align="left" valign="top">&nbsp;</td>
    <td width="3%" valign="top">&nbsp;</td>
    <td colspan="2" valign="top" nowrap><font face="Arial, Helvetica, sans-serif" size="1"><b>SEE
      REVERSE SIDE</b></font></td>
  </tr>
  <tr>
    <td align="left" valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td valign="top" nowrap>&nbsp;</td>
    <td valign="top" nowrap>&nbsp;</td>
  </tr>
  <tr>
    <td align="left" valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td width="5%" valign="top" nowrap><font size="1" face="Arial, Helvetica, sans-serif">Please
      mark <br>
      your votes as <br>
      indicated in <br>
      this example</font></td>
    <td width="10%" valign="middle"><FONT color="#FF0000" size="7" face="wingdings">&#253</FONT></td>
  </tr>
</table>

<p>&nbsp;</p>
<table width="100%" border="0" cellspacing="0" cellpadding="1">
  <tr>
    <td width="2%" valign="top"><b><font size="2" face="Arial, Helvetica, sans-serif">1.&nbsp;</font></b></td>
    <td colspan="3" valign="top"><b><font size="2" face="Arial, Helvetica, sans-serif">ELECTION
      OF DIRECTORS </font></b><font size="2" face="Arial, Helvetica, sans-serif"><br>
      </font><font size="1" face="Arial, Helvetica, sans-serif">&nbsp;</font></td>
    <td width="13%" align="center" valign="bottom">&nbsp;</td>
    <td width="3%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="20%" colspan="2">&nbsp;</td>
    <td width="10%" align="center" valign="bottom"><font size="1" face="Arial, Helvetica, sans-serif">FOR</font></td>
    <td width="9%" align="center" valign="bottom"><font size="1" face="Arial, Helvetica, sans-serif">AGAINST</font></td>
    <td width="9%" align="center" valign="bottom"><font size="1" face="Arial, Helvetica, sans-serif">ABSTAIN</font></td>
    <td width="9%" align="center" valign="bottom">&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td width="12%" align="center" valign="bottom"><font size="1" face="Arial, Helvetica, sans-serif"><b>FOR
      all nominees<br>
      listed below</b><br>
      (except as marked <br>
      to the contrary <br>
      to below)</font></td>
    <td width="2%" align="center" valign="bottom">&nbsp;</td>
    <td width="13%" align="center" valign="bottom"><font size="1" face="Arial, Helvetica, sans-serif"><b>WITHHOLD
      <br>
      AUTHORITY</b> <br>
      to vote for all nominees<br>
      listed below</font></td>
    <td width="13%" align="center" valign="bottom">&nbsp;</td>
    <td>&nbsp;</td>
    <td valign="top"><font size="2" face="Arial, Helvetica, sans-serif">2<b>.&nbsp;</b></font></td>
    <td colspan="2" valign="top"><font size="2" face="Arial, Helvetica, sans-serif">Approval
      of an amendment to the Company&#146;s Amended and Restated Long Term Stock
      Incentive Plan.</font></td>
    <td align="center" valign="top"><FONT color="#FF0000" size="7" face="wingdings">&#111;</FONT></td>
    <td align="center" valign="top"><FONT color="#FF0000" size="7" face="wingdings">&#111;</FONT></td>
    <td align="center" valign="top"><FONT color="#FF0000" size="7" face="wingdings">&#111;</FONT></td>
    <td align="center" valign="top">&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="center" valign="top"><FONT color="#FF0000" size="7" face="wingdings">&#111;</FONT></td>
    <td align="center" valign="top">&nbsp;</td>
    <td align="center" valign="top"><FONT color="#FF0000" size="7" face="wingdings">&#111;</FONT></td>
    <td align="center" valign="top">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="2" valign="top">&nbsp;</td>
    <td width="10%" align="center" valign="bottom"><font size="1" face="Arial, Helvetica, sans-serif">FOR</font></td>
    <td width="9%" align="center" valign="bottom"><font size="1" face="Arial, Helvetica, sans-serif">AGAINST</font></td>
    <td width="9%" align="center" valign="bottom"><font size="1" face="Arial, Helvetica, sans-serif">ABSTAIN</font></td>
    <td align="center" valign="bottom">&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td valign="top"><font size="2" face="Arial, Helvetica, sans-serif">3.&nbsp;</font></td>
    <td colspan="2" valign="top"><font size="2" face="Arial, Helvetica, sans-serif">Ratification
      of the Appointment of Ernst &amp; Young LLP as the Company&#146;s independent
      accountants for fiscal year 2005.</font></td>
    <td align="center" valign="top"><FONT color="#FF0000" size="7" face="wingdings">&#111;</FONT></td>
    <td align="center" valign="top"><FONT color="#FF0000" size="7" face="wingdings">&#111;</FONT></td>
    <td align="center" valign="top"><FONT color="#FF0000" size="7" face="wingdings">&#111;</FONT></td>
    <td align="center" valign="top">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="5"></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="2">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td colspan="5"><b><font color="#FF0000" size="2" face="Arial, Helvetica, sans-serif">Nominees
      for election by holders of Common Stock: 01 Stephen W. Bershad, 02 Anthony
      J. Fiorelli, Jr., 03 Eliot M. Fried, 04 Richard F. Hamm, Jr. and 05 Robert
      G. Stevens</font></b></td>
    <td>&nbsp;</td>
    <td valign="top"><font size="2" face="Arial, Helvetica, sans-serif">4.&nbsp;</font></td>
    <td colspan="5" valign="top"><font size="2" face="Arial, Helvetica, sans-serif">In
      their discretion, the Proxies are authorized to vote upon such other business
      as may properly come before the meeting.</font></td>
    <td valign="top">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="5">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="2">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td colspan="5" valign="top"><font color="#FF0000" size="2" face="Arial, Helvetica, sans-serif">Instruction:
      TO WITHHOLD AUTHORITY to vote for one or more nominees listed above, write
      the name of the nominee(s) in the space provided below.</font></td>
    <td>&nbsp;</td>
    <td colspan="4" align="left" valign="top"><font size="2" face="Arial, Helvetica, sans-serif"><b>PLEASE
      MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.</b></font></td>
    <td colspan="2" align="right"><font size="2" face="Arial, Helvetica, sans-serif">I
      PLAN TO ATTEND THE MEETING</font></td>
    <td align="center" valign="middle"><FONT color="#FF0000" size="7" face="wingdings">&#111;</FONT></td>
  </tr>
  <tr>
    <td colspan="5"><hr size="1" color="#FF0000"></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="2">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="2">&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="5"><font size="2" face="Arial, Helvetica, sans-serif">Choose
      <b>MLink<sup><font size="1">SM</font></sup></b> for Fast, easy and secure
      24/7 online access to your future proxy materials, investment plan statements,
      tax documents and more. Simply log on to Investor <b>ServiceDirect<sup>&reg;</sup></b>
      at www.melloninvestor.com/isd where step-by-step instructions will prompt
      you through enrollment.</font></td>
  </tr>
</table>

<br>
<br>
<br>
<table width="100%"  border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td>&nbsp;</td>
  </tr>
</table>
<table width="100%"  border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td align="left" nowrap><font color="#FF0000" size="2" face="Times New Roman, Times, serif"><b>Signature</b>
      ________________________________ <b>Signature </b> ________________________________<b>
      Date</b> ______________</font></td>
  </tr>
  <tr>
    <td><b><font color="#FF0000" size="1" face="Arial, Helvetica, sans-serif">Please sign
exactly as name appears above. When shares are held by  joint tenants, both should sign.
When signing as attorney, executor,  administrator, trustee or guardian, please give full
title as such. If  a corporation, please sign in full corporate name by President or
other  authorized officer. If partnership, please sign in partnership name by  authorized
person.</font></b></td>
  </tr>
</table>

<table width="100%"  border="0" cellspacing="5" cellpadding="0">
  <tr>
    <td> <hr noshade> </td>
  </tr>
  <tr align="center" valign="top">
    <td> <font size="2" face="Arial, Helvetica, sans-serif"><b><FONT size="2" face="wingdings">&#217;</FONT>
      FOLD AND DETACH HERE <FONT size="2" face="wingdings">&#217;</FONT></b></font></td>
  </tr>
</table>
<p align="center"><font color="#FF0000" size="4" face="Arial, Helvetica, sans-serif"><b>Vote
  by Internet or Telephone or Mail</b></font><font color="#FF0000" face="Arial, Helvetica, sans-serif"><br>
  <b><font size="3">24 Hours a Day, 7 Days a Week</font></b></font></p>
<P ALIGN="center"><FONT color="#FF0000" SIZE="2" face="Arial, Helvetica, sans-serif"><B>Internet
  and telephone voting is available through 11:59 PM Eastern Time <br>
  the day prior to annual meeting day.</B></FONT></P>
<P ALIGN="center"><FONT size="2" FACE="Arial, Helvetica, sans-serif"><B>Your Internet
  or telephone vote authorizes the named proxies to vote your shares in the same
  manner<br>
  as if you marked, signed and returned your proxy card.</B></FONT> </P>

<table width="100%" border="0" align="center" cellpadding="0" cellspacing="10">
  <tr>
    <td width="1"nowrap></td>
    <td width="200" valign="top"> <center>
        <font color="#FF0000" size="2" face="Arial, Helvetica, sans-serif"><b>Internet<br>
        http://www.proxyvoting.com/axys</b></font>
      </center>
      <p align="left"><font size="2" face="Arial, Helvetica, sans-serif">Use       the
internet   to
vote     your
proxy.   Have
your    proxy
card       in
hand     when
you    access
the       web
site.</font></p></td>
    <td width="1" nowrap><font size="2" face="Arial, Helvetica, sans-serif">&nbsp;</font></td>
    <td width="50"><center>
        <font size="3" face="Arial, Helvetica, sans-serif"><b>OR</b></font></center></td>
    <td width="1" nowrap><font size="2" face="Arial, Helvetica, sans-serif">&nbsp;</font></td>
    <td width="200" valign="top"> <center>
        <font color="#FF0000" size="2" face="Arial, Helvetica, sans-serif"><b>Telephone<br>
       1-866-540-5760</b></font>
      </center>
      <p align="left"><font size="2" face="Arial, Helvetica, sans-serif">Use       any
touch-tone
telephone
to       vote
your   proxy.
Have     your
proxy    card
in       hand
when      you
call.</font></p></td>
    <td  width="1" nowrap><font size="2" face="Arial, Helvetica, sans-serif">&nbsp;</font></td>
    <td width="50"><center>
        <font size="3" face="Arial, Helvetica, sans-serif"><b>OR</b></font></center></td>
    <td width="1" nowrap><font size="2" face="Arial, Helvetica, sans-serif">&nbsp;</font></td>
    <td width="200" align="center" valign="top"><center>
        <font color="#FF0000" size="2" face="Arial, Helvetica, sans-serif"> <b>Mail</b></font></center>
        <br>

        <font size="2" face="Arial, Helvetica, sans-serif">Mark, sign and date your proxy card and return it in the enclosed
                             postage-paid envelope.</font></td>
    <td width="1" nowrap></td>
  </tr>
</table>
<P ALIGN="center"><FONT SIZE="2" face="Arial, Helvetica, sans-serif"><B>If you
  vote your proxy by Internet or by telephone, <br>
  you do NOT need to mail back your proxy card.</B></FONT></P>
<P ALIGN="LEFT"><b><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2" face="Arial, Helvetica, sans-serif">You
  can view the Annual Report and Proxy Statement<br>
  on the internet at www.axsys.com<br>
  </FONT></FONT> </b></P>
<hr size="2" noshade>
<P align="left" style="page-break-before:always">&nbsp;</P>



<P ALIGN="CENTER"><FONT FACE="Arial, Helvetica, Serif"><FONT SIZE="4"><B>AXSYS
  TECHNOLOGIES, INC. <br>
  <font size="3">ANNUAL MEETING OF STOCKHOLDERS &#151; May 5, 2005 <br>
  PROXY <br>
This
  Proxy is Solicited by the Board of Directors</font></B></FONT></FONT></P>




<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Arial, Helvetica, Serif"><FONT SIZE="2">The
undersigned  hereby  appoints  Stephen W. Bershad and David A.  Almeida,  and each of
them, the attorneys and proxies of the undersigned  (each  with  power  to  act  without
the  other  and  with  power  of  substitution)  to vote, in accordance with the terms of
this proxy,  all  shares  of  Common  Stock  of  Axsys  Technologies,  Inc.,  which  the
undersigned  may  be  entitled  to  vote  at  the  Annual  Meeting  of  Stockholders  to
be  held  at  the  Hartford  Marriott  Rocky  Hill  at  Corporate Ridge, 100 Capital
Boulevard, Rocky Hill, Connecticut,  on the  5th day of May 2005, at 10:00 a.m., and any
adjournment or postponement  thereof, upon all matters which may properly come before
said meeting.<br></FONT></FONT> </P>

<P ALIGN="LEFT"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Arial, Helvetica, Serif"><FONT SIZE="2">This
  proxy when properly executed will be voted in the manner directed herein by
  the undersigned stockholder. If no direction is made, this proxy will be voted
  &#147;FOR&#148; ALL NOMINEES FOR DIRECTOR AND WILL BE VOTED &#147;FOR&#148;
  Proposal 2 and Proposal 3.<br>
  </FONT></FONT></b></P>
<P ALIGN="center"><font size="2" face="Arial, Helvetica, sans-serif">(Continued,
  and to be dated and signed, on reverse side.)</font></P>


<table border="1" align="center" cellpadding="0" cellspacing="0" width="100%">
  <tr>
    <td align="center"><font color="#FF0000" size="2" face="Arial, Helvetica, sans-serif"><b>Address
      Change/Comments <font size="1">(Mark the corresponding box on the reverse
      side)</font></b></font></td>
  </tr>
  <tr>
    <td><br>
      <br>
      <br>
    </td>
  </tr>
</table>
<p align="left">
<table width="100%"  border="0" align="center" cellpadding="0" cellspacing="5">
  <tr>
    <td>
        <hr noshade>
    </td>
  </tr>
  <tr>
    <td align="center" valign="top"> <font size="2" face="Arial, Helvetica, sans-serif"><b><FONT size="2" face="wingdings">&#217;</FONT>
      FOLD AND DETACH HERE <FONT size="2" face="wingdings">&#217;</FONT></b></font></td>
  </tr>
</table>


<P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">&nbsp;</P>

<p align=center>
<font size=2></font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px">
<HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<P STYLE="page-break-after:always"></P>

<table width="100%"  border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td align="left" valign="top"><font size="2" face="Arial, Helvetica, sans-serif"><b>THIS PROXY WILL
BE VOTED AS DIRECTED, OR IF NO DIRECTION IS INDICATED,  WILL BE VOTED &#147;FOR&#148; THE
PROPOSALS.</b></font></td>
    <td width="3%" valign="top"><font size="2" face="Times New Roman, Times, serif">&nbsp;</font></td>
    <td width="7%" valign="top" nowrap><font size="1" face="Arial, Helvetica, sans-serif">Please
      <br>
      Mark Here <br>
      for Address<br>
      Change or <br>
      Comments</font></td>
    <td width="10%" valign="middle"><FONT color="#FF0000" size="7" face="wingdings">&#111;</FONT></td>
  </tr>
  <tr>
    <td align="left" valign="top">&nbsp;</td>
    <td width="3%" valign="top">&nbsp;</td>
    <td colspan="2" valign="top" nowrap><font face="Arial, Helvetica, sans-serif" size="1"><b>SEE
      REVERSE SIDE</b></font></td>
  </tr>
  <tr>
    <td align="left" valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td valign="top" nowrap>&nbsp;</td>
    <td valign="top" nowrap>&nbsp;</td>
  </tr>
  <tr>
    <td align="left" valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td width="5%" valign="top" nowrap><font size="1" face="Arial, Helvetica, sans-serif">Please
      mark <br>
      your votes as <br>
      indicated in <br>
      this example</font></td>
    <td width="10%" valign="middle"><FONT color="#FF0000" size="7" face="wingdings">&#253</FONT></td>
  </tr>
</table>

<p>&nbsp;</p>
<table width="100%" border="0" cellspacing="0" cellpadding="1">
  <tr>
    <td width="2%" valign="top"><b><font size="2" face="Arial, Helvetica, sans-serif">1.&nbsp;</font></b></td>
    <td colspan="3" valign="top"><b><font size="2" face="Arial, Helvetica, sans-serif">ELECTION
      OF DIRECTORS </font></b><font size="2" face="Arial, Helvetica, sans-serif"><br>
      </font><font size="1" face="Arial, Helvetica, sans-serif">&nbsp;</font></td>
    <td width="13%" align="center" valign="bottom">&nbsp;</td>
    <td width="3%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="20">&nbsp;</td>
    <td width="10%" align="center" valign="bottom"><font size="1" face="Arial, Helvetica, sans-serif">FOR</font></td>
    <td width="9%" align="center" valign="bottom"><font size="1" face="Arial, Helvetica, sans-serif">AGAINST</font></td>
    <td width="9%" align="center" valign="bottom"><font size="1" face="Arial, Helvetica, sans-serif">ABSTAIN</font></td>
    <td width="9%" align="center" valign="bottom">&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td width="12%" align="center" valign="bottom"><font size="1" face="Arial, Helvetica, sans-serif"><b>FOR
      all nominees<br>
      listed below</b><br>
      (except as marked <br>
      to the contrary <br>
      to below)</font></td>
    <td width="2%" align="center" valign="bottom">&nbsp;</td>
    <td width="13%" align="center" valign="bottom"><font size="1" face="Arial, Helvetica, sans-serif"><b>WITHHOLD
      <br>
      AUTHORITY</b> <br>
      to vote for all nominees<br>
      listed below</font></td>
    <td width="13%" align="center" valign="bottom">&nbsp;</td>
    <td>&nbsp;</td>
    <td valign="top"><font size="2" face="Arial, Helvetica, sans-serif">2<b>.&nbsp;</b></font></td>
    <td valign="top"><font size="2" face="Arial, Helvetica, sans-serif">Approval
      of an amendment to the Company&#146;s Amended and Restated Long Term Stock
      Incentive Plan.</font></td>
    <td align="center" valign="top"><FONT color="#FF0000" size="7" face="wingdings">&#111;</FONT></td>
    <td align="center" valign="top"><FONT color="#FF0000" size="7" face="wingdings">&#111;</FONT></td>
    <td align="center" valign="top"><FONT color="#FF0000" size="7" face="wingdings">&#111;</FONT></td>
    <td align="center" valign="top">&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="center" valign="top"><FONT color="#FF0000" size="7" face="wingdings">&#111;</FONT></td>
    <td align="center" valign="top">&nbsp;</td>
    <td align="center" valign="top"><FONT color="#FF0000" size="7" face="wingdings">&#111;</FONT></td>
    <td align="center" valign="top">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td valign="top">&nbsp;</td>
    <td width="10%" align="center" valign="bottom"><font size="1" face="Arial, Helvetica, sans-serif">FOR</font></td>
    <td width="9%" align="center" valign="bottom"><font size="1" face="Arial, Helvetica, sans-serif">AGAINST</font></td>
    <td width="9%" align="center" valign="bottom"><font size="1" face="Arial, Helvetica, sans-serif">ABSTAIN</font></td>
    <td align="center" valign="bottom">&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td valign="top"><font size="2" face="Arial, Helvetica, sans-serif">3.&nbsp;</font></td>
    <td valign="top"><font size="2" face="Arial, Helvetica, sans-serif">Ratification
      of the Appointment of Ernst &amp; Young LLP as the Company&#146;s independent
      accountants for fiscal year 2005.</font></td>
    <td align="center" valign="top"><FONT color="#FF0000" size="7" face="wingdings">&#111;</FONT></td>
    <td align="center" valign="top"><FONT color="#FF0000" size="7" face="wingdings">&#111;</FONT></td>
    <td align="center" valign="top"><FONT color="#FF0000" size="7" face="wingdings">&#111;</FONT></td>
    <td align="center" valign="top">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="5"></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td colspan="5"><b><font color="#FF0000" size="2" face="Arial, Helvetica, sans-serif">Nominees
      for election by holders of Common Stock: 01 Stephen W. Bershad, 02 Anthony
      J. Fiorelli, Jr., 03 Eliot M. Fried, 04 Richard F. Hamm, Jr. and 05 Robert
      G. Stevens</font></b></td>
    <td>&nbsp;</td>
    <td valign="top"><font size="2" face="Arial, Helvetica, sans-serif">4.&nbsp;</font></td>
    <td colspan="4" valign="top"><font size="2" face="Arial, Helvetica, sans-serif">In
      their discretion, the trustee is authorized to vote upon such other business
      as may properly come before the meeting.</font></td>
    <td valign="top">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="5">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td colspan="5" valign="top"><font color="#FF0000" size="2" face="Arial, Helvetica, sans-serif">Instruction:
      TO WITHHOLD AUTHORITY to vote for one or more nominees listed above. Write
      the name of the nominee(s) in the space provided below.</font></td>
    <td>&nbsp;</td>
    <td colspan="3" align="left" valign="top"><font size="2" face="Arial, Helvetica, sans-serif">PLEASE
      MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.</font></td>
    <td colspan="2" align="right"><font size="2" face="Arial, Helvetica, sans-serif">I
      PLAN TO ATTEND THE MEETING</font></td>
    <td align="center" valign="middle"><FONT color="#FF0000" size="7" face="wingdings">&#111;</FONT></td>
  </tr>
  <tr>
    <td colspan="5"><hr size="1" color="#FF0000"></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="2">&nbsp;</td>
  </tr>
</table>

<br>
<br>
<br>
<table width="100%"  border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td>&nbsp;</td>
  </tr>
</table>
<table width="100%"  border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td align="left" nowrap><font color="#FF0000" size="2" face="Times New Roman, Times, serif"><b>Signature</b>
      ________________________________ <b>Signature </b> ________________________________<b>
      Date</b> ______________</font></td>
  </tr>
  <tr>
    <td><b><font color="#FF0000" size="1" face="Arial, Helvetica, sans-serif">Please sign
exactly as name appears above. When shares are held by  joint tenants, both should sign.
When signing as attorney, executor,  administrator, trustee or guardian, please give full
title as such. If  a corporation, please sign in full corporate name by President or
other  authorized officer. If partnership, please sign in partnership name by  authorized
person.</font></b></td>
  </tr>
</table>

<table width="100%"  border="0" cellspacing="5" cellpadding="0">
  <tr>
    <td> <hr noshade> </td>
  </tr>
  <tr align="center" valign="top">
    <td> <font size="2" face="Arial, Helvetica, sans-serif"><b><FONT size="2" face="wingdings">&#217;</FONT>
      FOLD AND DETACH HERE <FONT size="2" face="wingdings">&#217;</FONT></b></font></td>
  </tr>
</table>
<p align="center"><font color="#FF0000" size="4" face="Arial, Helvetica, sans-serif"><b>Vote
  by Internet or Telephone or Mail</b></font><font color="#FF0000" face="Arial, Helvetica, sans-serif"><br>
  <b><font size="3">24 Hours a Day, 7 Days a Week</font></b></font></p>
<P ALIGN="center"><FONT color="#FF0000" SIZE="2" face="Arial, Helvetica, sans-serif"><B>Internet
  and telephone voting is available through 11:59 PM Eastern Time <br>
  the day prior to annual meeting day.</B></FONT></P>
<P ALIGN="center"><FONT size="2" FACE="Arial, Helvetica, sans-serif"><B>YYour
  Internet or telephone vote authorizes the named proxies to vote your shares
  in the same manner <br>
  as if you marked, signed and returned your proxy card.</B></FONT> </P>

<table width="100%" border="0" align="center" cellpadding="0" cellspacing="10">
  <tr>
    <td width="1"nowrap></td>
    <td width="200" valign="top">
      <center>
        <font color="#FF0000" size="2" face="Arial, Helvetica, sans-serif"><b>Internet<br>
        http://www.proxyvoting.com/axys-esop</b></font>
      </center>
      <p align="left"><font size="2" face="Arial, Helvetica, sans-serif">Use       the
internet   to
vote     your
proxy.   Have
your    proxy
card       in
hand     when
you    access
the       web
site.</font></p></td>
    <td width="1" nowrap><font size="2" face="Arial, Helvetica, sans-serif">&nbsp;</font></td>
    <td width="50"><center>
        <font size="3" face="Arial, Helvetica, sans-serif"><b>OR</b></font></center></td>
    <td width="1" nowrap><font size="2" face="Arial, Helvetica, sans-serif">&nbsp;</font></td>
    <td width="200" valign="top"> <center>
        <font color="#FF0000" size="2" face="Arial, Helvetica, sans-serif"><b>Telephone<br>
       1-866-540-5760</b></font>
      </center>
      <p align="left"><font size="2" face="Arial, Helvetica, sans-serif">Use       any
touch-tone
telephone
to       vote
your   proxy.
Have     your
proxy    card
in       hand
when      you
call.</font></p></td>
    <td  width="1" nowrap><font size="2" face="Arial, Helvetica, sans-serif">&nbsp;</font></td>
    <td width="50"><center>
        <font size="3" face="Arial, Helvetica, sans-serif"><b>OR</b></font></center></td>
    <td width="1" nowrap><font size="2" face="Arial, Helvetica, sans-serif">&nbsp;</font></td>
    <td width="200" align="center" valign="top"><center>
        <font color="#FF0000" size="2" face="Arial, Helvetica, sans-serif"> <b>Mail</b></font></center>
        <br>

        <font size="2" face="Arial, Helvetica, sans-serif">Mark, sign and date your proxy card and return it in the enclosed
                             postage-paid envelope.</font></td>
    <td width="1" nowrap></td>
  </tr>
</table>
<P ALIGN="center"><FONT SIZE="2" face="Arial, Helvetica, sans-serif"><B>If you
  vote your proxy by Internet or by telephone, <br>
  you do NOT need to mail back your proxy card.</B></FONT></P>
<P ALIGN="LEFT"><b><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2" face="Arial, Helvetica, sans-serif">You
  can view the Annual Report and Proxy Statement <br>
  on the internet at www.axsys.com<br>
  </FONT></FONT> </b></P>
<hr size="2" noshade>
<P align="left" style="page-break-before:always">&nbsp;</P>



<P ALIGN="CENTER"><b><FONT FACE="Arial, Helvetica, Serif"><FONT SIZE="4">AXSYS
  TECHNOLOGIES, INC. <br>
  ANNUAL MEETING OF STOCKHOLDERS &#151; May 5, 2005 <br>
  <font size="3">VOTING INSTRUCTIONS</font> <br>
  <font size="3">This Proxy is Solicited by the Board of Directors</font></FONT></FONT></b></P>




<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Arial, Helvetica, Serif"><FONT SIZE="2">The
undersigned  hereby  authorizes  and  directs  Fidelity  Investments  Institutional
Services  Company,  Inc.,  as  trustee  (the  &#147;Trustee&#148;) of Axsys
Technologies,  Inc.  Employees  Retirement  Savings  Plan to vote for the  undersigned,
in  person  or by  proxy,  as herein  stated at the Annual  Meeting  of  Stockholders  of
Axsys  Technologies,  Inc. (the  &#147;Company&#148;) to be held at the Hartford
Marriott Rocky Hill at  Corporate Ridge, 100 Capital Boulevard, Rocky Hill, Connecticut,
on the  5th day of May 2005, at 10:00 a.m.,  and any  adjournment  thereof,  all  shares
of Common  Stock of the Company  allocated  to the account of the  undersigned  under
such plan,  on the proposals set forth on the reverse  side  hereof and in  accordance
with the  Trustee&#146;s  discretion  on any  other  matters  that  may  properly  come
before  the  meeting  or  any  adjournments  or  postponement  thereof.  The  undersigned
hereby  acknowledges receipt of the Notice and Proxy Statement.<br></FONT></FONT> </P>

<P ALIGN="LEFT"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Arial, Helvetica, Serif"><FONT SIZE="2">This  proxy
when  properly  executed  will be voted in the manner  directed  herein by the
undersigned  stockholder.  If no  direction  is  made,  this proxy will be voted &#147;FOR&#148; ALL
NOMINEES FOR DIRECTOR AND WILL  BE VOTED &#147;FOR&#148; Proposal 2 and Proposal 3.<br>
  </FONT></FONT></b></P>
<P ALIGN="center"><font size="2" face="Arial, Helvetica, sans-serif">(Continued,
  and to be dated and signed, on reverse side.)</font></P>


<table border="1" align="center" cellpadding="0" cellspacing="0" width="100%">
  <tr>
    <td align="center"><font color="#FF0000" size="2" face="Arial, Helvetica, sans-serif"><b>Address
      Change/Comments <font size="1">(Mark the corresponding box on the reverse
      side)</font></b></font></td>
  </tr>
  <tr>
    <td><br>
      <br>
      <br>
    </td>
  </tr>
</table>
<p align="left">
<table width="100%"  border="0" align="center" cellpadding="0" cellspacing="5">
  <tr>
    <td>
        <hr noshade>
    </td>
  </tr>
  <tr>
    <td align="center" valign="top"> <font size="2" face="Arial, Helvetica, sans-serif"><b><FONT size="2" face="wingdings">&#217;</FONT>
      FOLD AND DETACH HERE <FONT size="2" face="wingdings">&#217;</FONT></b></font></td>
  </tr>
</table>


<P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">&nbsp;</P>

<p align=center>
<font size=2></font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px">
<HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">




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