Exhibit No. 10.39
February 28, 2005
Mr. Jay Zager
Senior Vice President and Chief Financial Officer
Gerber Scientific, Inc.
83 Gerber Road West
South Windsor, Connecticut 06074
Dear Jay:
Gerber Scientific, Inc. (the "Company") considers it essential to
the best interests of its stockholders to foster the continuous
employment of key management personnel. In this connection, should
the Company face a possible Change in Control (as defined in
Section 2 of this Agreement), such as the acquisition of a
substantial share of the equity or voting securities of the
Company, the Board of Directors of the Company (the "Board") has
determined that it is imperative that it and the Company be able to
rely upon your continued services without concern that you might be
distracted by the personal uncertainties and risks that the
possibility of a Change in Control might entail.
Accordingly, the Board has determined that appropriate steps should
be taken to reinforce and encourage the continued attention and
dedication of members of the Company's management to their assigned
duties without distraction in the face of potentially disturbing
circumstances that could arise out of a possibility for a Change in
Control of the Company.
In order to induce you to remain in the employ of the Company and
its subsidiaries and in consideration of your agreement set forth
in Section 2(B) hereof, the Company agrees that you shall receive
the severance benefits set forth in this letter agreement
("Agreement") in the event your employment with the Company and its
subsidiaries is terminated subsequent to a Change in Control under
the circumstances described below.
1. Term of Agreement
This Agreement shall commence on the date hereof and shall continue
in effect through April 30, 2005, provided , however, the
term of this Agreement shall automatically be extended for one
additional year commencing on May 1, 2005 and on each May 1
thereafter, unless, not later than April 30 of the preceding year,
the Company shall have given notice that it does not wish to extend
this Agreement; provided further that, notwithstanding any
such notice by the Company not to extend, if a Change in Control
shall have occurred during the original or any extended term of
this Agreement, this Agreement shall continue in effect for a
period of twenty-four (24) months beyond the expiration of the term
in effect immediately before such Change in Control;
provided further that, notwithstanding anything herein to
the contrary, if at any time prior to a Change in Control you, for
whatever reason, cease to be Senior Vice President and Chief
Financial Officer of the Company, then this Agreement shall
automatically terminate and, at all times thereafter, shall be null
and void and of no further force and effect and you shall not be
entitled to any benefits whatsoever hereunder.
2. Change in Control
(A) No benefits shall be payable hereunder
unless there shall have been a Change in Control of the Company, as
set forth below. For purposes of this Agreement a "Change in
Control" of the Company shall mean the occurrence of any one or
more of the following events:
(i) the Company shall (1) merge or consolidate with or into
another corporation or entity or enter into a share exchange
between the Company or stockholders of the Company and another
individual, corporation or other entity and as a result of such
merger, consolidation or share exchange less than fifty percent
(50%) of the outstanding voting securities of the surviving or
resulting corporation or entity shall then be owned in the
aggregate by the former stockholders of the Company; or (2) sell,
lease, exchange or otherwise dispose of more than two-thirds (2/3)
of the Company's property and assets in one transaction or a series
of related transactions to one or more individuals, corporations or
other entities that are not subsidiaries of the Company, assuming
that if consummation of such transaction is subject, at the time of
such approval by stockholders, to the consent of any government or
governmental agency, such consent by the government or governmental
agency is obtained (either explicitly or implicitly by consummation
of the transaction);
(ii) the stockholders of the Company adopt a plan of complete
liquidation of the Company;
(iii) any "person" (as such term is used in Sections 13(d) or
14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) (other than the Employee, the Company, any of the
Company's subsidiaries, any employee benefit plan of the Company
and/or one or more of its subsidiaries or any person or entity
organized, appointed or established pursuant to the terms of any
such employee benefit plan) becomes the beneficial owner (within
the meaning of Rule 13d-3 under the Exchange Act) of voting
securities of the Company representing thirty percent (30%) or more
of the total number of votes eligible to be cast at any election of
directors of the Company; provided , however, that no Change
in Control shall be deemed to have occurred under this subparagraph
(iii) if such "person" becomes a holder of the Company's securities
in one or more transactions initiated or pursued by the Company
unless after such transaction(s) less than fifty percent (50%) of
the outstanding voting securities of the Company shall be owned in
the aggregate by the former stockholders of the Company; or
(iv) as a result of, or in connection with, any tender offer
or exchange offer, share exchange, merger, consolidation or other
business combination, sale, lease, exchange or other disposition of
more than two-thirds (2/3) of the Company's assets, a contested
election, or any combination of the foregoing transactions, the
persons who are directors of the Company on the date hereof (the
"Incumbent Board") shall cease to constitute a majority of the
Board of Directors of the Company or any successor to the Company;
provided that any person becoming a director subsequent to
the date hereof whose election or nomination for election by the
Company's stockholders was approved by a vote of at least
three-quarters (3/4) of the directors comprising the Incumbent
Board (either by a specific vote or by approval of a proxy
statement of the Company in which such person is named as a nominee
for director without any objection to such nomination) shall be,
for purposes herein, considered as though such person were a member
of the Incumbent Board.
(B) In exchange for
the benefits under this Agreement, you agree that, subject to the
terms and conditions herein, in the event of a potential Change in
Control of the Company occurring after the date hereof, you will
not voluntarily terminate your employment with the Company and its
subsidiaries until the earlier of (i) the date which is six months
after the occurrence of such potential Change in Control of the
Company or (ii) the occurrence of a Change in Control of the
Company. If more than one potential Change in Control occurs during
the term of this Agreement, the provisions of the preceding
sentence shall be applicable to each potential Change in Control
occurring prior to an actual Change in Control. For the purposes of
this Agreement, a "potential Change in Control" of the Company
shall be deemed to have occurred if: (i) the Company enters into an
agreement, the consummation of which would result in the occurrence
of a Change in Control; (ii) any person (including the Company)
publicly announces an intention to take or to consider taking
actions which if consummated would constitute a Change in Control;
or (iii) the Board adopts a resolution to the effect that, for
purposes of this Agreement, a potential Change in Control of the
Company has occurred.
3. Termination Following Change in Control. If any
of the events described in Section 2 hereof constituting a Change
in Control shall have occurred, you shall be entitled to the
benefits provided in Section 4 hereof upon the subsequent
termination of your employment with the Company and its
subsidiaries during the term of this Agreement and within two (2)
years of the Change in Control, unless such termination is
(x) a result of your death, Disability, or Retirement; (y) by you
for other than Good Reason (as defined in Section 3(A)); or (z) by
the Company or any of its subsidiaries for Cause (as defined in
Section 3(C)). The benefits provided in Section 4 shall be in lieu
of any termination, separation, severance or similar benefits under
your employment agreement, if any, or under the Company's
termination, separation, severance or similar plans or policies, if
any (other than benefit plans of the Company which incidently
provide for benefits in the event of a change in control, as such
term is defined in such plans). If your employment is terminated as
a result of your death, Disability or Retirement, by you for other
than Good Reason or by the Company or any of its subsidiaries for
Cause, then you shall not be entitled to any termination,
separation, severance or similar benefits under this Agreement, and
you shall be entitled to benefits under your employment agreement,
if any, and/or under the Company's termination, separation,
severance or similar plans or policies, if any, only in accordance
with the terms of any such employment agreement, plans and
policies.
(A) Good Reason. You
shall be entitled to terminate your employment for Good Reason. For
the purposes of this Agreement, "Good Reason" shall mean the
occurrence, without your express written consent, of any of the
following circumstances:
(i) a significant change in the nature or scope of your
authorities, duties or responsibilities from those applicable to
you immediately prior to the date on which a Change in Control
occurs;
(ii) a reduction in your base annual salary from that
provided to you immediately prior to the date on which a Change in
Control occurs;
(iii) a diminution in your eligibility to participate in
compensation plans and employee benefits and perquisites which
provide opportunities to receive overall compensation and benefits
and perquisites from the greater of:
(a)
the opportunities provided by the Company (including its
subsidiaries) for executives with comparable duties; or
(b)
the opportunities under any such plans and perquisites under which
you were participating immediately prior to the date on which a
Change in Control occurs;
(iv) a change in the location of your principal place of
employment by the Company (including its subsidiaries) by more than
fifty (50) miles from the location where you were principally
employed immediately prior to the date on which a Change in Control
occurs;
(v) a significant increase in the frequency or duration of
your business travel; ora reasonable determination by the Board of
Directors of the Company that, as a result of a Change in Control
and a change in circumstances thereafter significantly affecting
your position, you are unable to exercise the authorities, powers,
functions or duties attached to your position immediately prior to
the date on which a Change in Control occurs.
(B) Disability;
Retirement.
(i) For purposes of this Agreement, "Disability" shall mean
permanent and total disability as such term is defined under
Section 22(e)(3) of the Internal Revenue Code of 1986, as amended
(the "Code"). Any question as to the existence of your Disability
upon which you and the Company cannot agree shall be determined by
a qualified independent physician selected by you (or, if you are
unable to make such selection, such selection shall be made by any
adult member of your immediate family or your legal representative)
and approved by the Company, said approval not to be unreasonably
withheld. The determination of such physician shall be made in
writing to the Company and to you and shall be final and conclusive
for all purposes of this Agreement.
(ii) For purposes of this Agreement, "Retirement" shall mean
your voluntary termination of employment with the Company at or
after the age of 65 in accordance with the Company's retirement
policies (excluding early retirement) generally applicable to its
salaried employees or in accordance with any retirement arrangement
established with your consent with respect to you.
(C) Cause. For purposes of this
Agreement, "Cause" shall mean (a) the willful and continued failure
by you t
