EXHIBIT NO. 10.21

GERBER SCIENTIFIC, INC.

2000-2004 EXECUTIVE ANNUAL INCENTIVE BONUS PLAN

 

Purpose

The purpose of the Plan is to reward certain Designated Executives of the
Company and its subsidiaries by providing annual cash bonuses based upon the
achievement of Performance Goals which are to be predefined by the Committee.

Definitions

For purposes of this Plan, the following terms shall have the definitions set
forth below:

 a. "Board." The Board of Directors of the Company.

    "Bonus Stock." Shares of the Company's Common Stock acquired in lieu of a
    portion of the cash bonus earned under this Plan.

 b. "CEO." The Chief Executive Officer of the Company.
 c. "Change of Control." A change of control as defined in the Employee Stock
    Plan.

    "Code." The Internal Revenue Code of 1986, as amended, and as it may be
    amended from time to time, or any corresponding federal tax statute enacted
    after the date this Plan is adopted by the Committee. A reference to a
    specific section of the Code refers not only to such specific section but
    also to any corresponding provision of any federal tax statute enacted after
    the date this Plan is adopted by the Committee, as such specific section or
    corresponding provision is in effect on the date of application of the
    provisions of this Plan containing such reference.

    "Committee." The Management Development and Compensation Committee, as
    appointed from time to time by the Board and consisting solely of two or
    more outside directors who are not otherwise Employees of the Company or any
    subsidiary.

 d. "Company." Gerber Scientific, Inc.

    "Corporate Employees." Employees of the Company (as distinguished from
    Employees of any subsidiary) who are not Corporate Officers.

    "Corporate Designated Executives." Corporate Officers and other key
    Corporate Employees designated by the Committee as eligible to receive cash
    bonuses pursuant to section 6, hereof.

    "Corporate Officers." Officers of the Company at the level of Vice President
    or above.

    "Designated Executives." Corporate Designated Executives and Subsidiary
    Designated Executives.

    "Employees." Individuals employed by either the Company or one of its
    Subsidiaries.

    "Employee Stock Plan." The Company's 1992 Employee Stock Plan, As Amended
    and as it may be further amended from time to time.

    "Management." The Chairman and the Chief Executive Officer of the Company.

    "Performance Goals." Goals based on business criteria established by the
    Committee in accordance with section 5, hereof, computed in accordance with
    the directions of the Committee.

    "Permanent Disability." Permanent and Total Disability as provided in
    Section 22(e)(3) of the Code.

    "Plan." This 2000-2004 Executive Annual Incentive Bonus Plan, as it may be
    amended from time to time.

    "Regular Wages Paid." The annual salary payable by the Company (or its
    Subsidiary) to the plan participant on the last day of each fiscal year
    covered by this Plan.

 e. "Retirement." Retirement as defined in the Employee Stock Plan.

    "Restricted Stock." Shares of Company Common Stock granted or to be granted
    subject to certain restrictions as provided in Sections 8.2 and 8.2.1.

    "Subsidiary" or "Subsidiaries." The Company's existing U.S. operating
    subsidiaries (i.e. Gerber Scientific Products, Inc.; Gerber Technology,
    Inc.; and Gerber Coburn Optical, Inc.) and such other corporations which are
    or may become wholly owned subsidiaries of the Company and which are
    designated by the Committee as a subsidiary to be included within the terms
    of this Plan.

    "Subsidiary Designated Executives." The President of each Subsidiary and
    other key employees of the Subsidiary designated by the Committee as
    eligible to receive cash bonuses pursuant to section 6 hereof.

    "Target Bonus Potential." The bonus percentages as set forth in, or
    authorized by, section 6.1 hereof.

Summary

Bonuses under the Plan are payable to the Designated Executives upon the
achievement of one or more Performance Goals. The Committee will establish
Performance Goals each year for the Company and for each of the Subsidiaries.
Designated Executives shall be entitled to bonuses based upon the achievement of
the Performance Goals by the Company for Corporate Designated Executives or by
the Subsidiary for a Subsidiary Designated Executive; provided, however, that no
bonuses shall be paid until the Committee has certified in writing the
achievement of the applicable Performance Goal(s).
 

Plan Years

This Plan shall become effective on May 1, 1999 and shall be in effect for each
of the succeeding five fiscal years through April 30, 2004.
 

Performance Goal(s)

Performance Goal(s) for each fiscal year for the Company and each Subsidiary
shall be determined by the Committee, but must be based on one or more of the
following business criteria, each business criteria to be subject to such
adjustments for changes in accounting principles and/or other items that are
required by generally accepted accounting principles ("GAAP") to be separately
disclosed in the Company's or each Subsidiary's financial statements: return on
equity, return on assets, net income, cash flow, book value, earnings before
interest and taxes ("EBIT"), revenues, financial return ratios, market
performance of the Company, total shareholder return and/or earnings per share.
Performance Goals established by the Committee may specifically provide for
graduated levels of achievement by the Company, or the Subsidiary, both above
and below one or more stated Performance Goal(s) and consequent preestablished
bonus payment amounts as a result of the achievement of each graduated level of
the Performance Goal(s). Cash bonuses to Corporate Designated Executives are
determined in accordance with achievement of the Performance Goal(s) of the
Company. Cash bonuses to Subsidiary Designated Executives are determined in
accordance with achievement of the Performance Goal(s) of the applicable
Subsidiary by which each such Subsidiary Designated Executive is employed,
subject to the provisions of Section 7.1.3. The Performance Goal(s) for each
fiscal year shall be established by the Committee within the first three months
of that fiscal year or within such other time as may be required pursuant to
Section 162(m) of the Code.

 

Determination of Individual Bonus Amounts

6.1. 
The Target Bonus Potential
. The Target Bonus Potential for cash bonus awards for each fiscal year will be
fixed by the Committee as a percentage of each participant's Regular Wages Paid.
Except for grants of Restricted Stock in accordance with section 8.2, awards
shall be made under the Plan according to these targets only to the extent that
the applicable Performance Goal(s) has been achieved in accordance with the
term(s) of such goal. All bonus amounts payable hereunder are subject to the
maximum bonus percentage and maximum bonus amount stated in section 6.2.

6.2. 
Maximum Bonus Percentages and Amounts
. The maximum cash bonus payable any Designated Executive is two times the
Target Bonus Potential. This maximum bonus amount may be increased by up to
one-sixth of the amount of such bonus by an additional award of Restricted
Stock, subject to the Designated Executive's stock election pursuant to section
8.2. In no event shall any cash bonus payable to any Designated Executive under
this plan exceed $1.5 Million Dollars for any fiscal year (as computed prior to
any election to receive Company Stock and Restricted Stock under section 8.2).

6.3. 
Committee Authority
. The Committee shall have the sole authority to designate which Employees are
classified as Corporate Officers, and Management shall have authority to
designate other Corporate Designated Executives and Subsidiary Designated
Executives subject to ratification by the Committee.

Eligibility

Eligible Participants

. Eligibility under this Plan is limited to Designated Executives who are on the
active permanent payroll on the last day of the fiscal year and who have been
employed continuously by the Company or a Subsidiary for more than two (2)
months.

7.1.1.  An approved leave of absence shall not be considered a break in service
for purposes of eligibility to receive bonuses under the Plan.

7.1.2.  Designated Executives who as of the last day of the fiscal year have
been employed by the Company or a Subsidiary for less than two (2) months are
not eligible to receive any bonus under the Plan. Designated Executives who as
of April 30 have been employed continuously by the Company or a Subsidiary for
more than two (2) months but less than one (1) year shall participate pro rata
in the Plan.

7.1.3.  Designated Executives who transfer between participating companies but
who otherwise qualify under the terms hereof, shall participate pro-rata in the
Plan of each company where they were employed during the fiscal year. Bonus
amounts payable under this Plan are to be based on the respective Regular Wages
Paid and applicable Target Bonus Potential at each company where the transferred
Designated Executive was employed.

7.2. 
Excluded Employees
. Specifically excluded from participating in the Plan are: Employees who
participate in other forms of cash incentive compensation plans (e.g.,
commission plans).

 

Distribution of Incentive Bonus

8.1 
Cash Distribution
. Except as provided in this section 8 and subject to any voluntary deferral
under the Company's 401(k) plan, Deferred Compensation plan or other voluntary
deferral plans as the Committee may adopt, the incentive bonus shall be paid in
cash to eligible Designated Executives in accordance with section 6
("Determination of Individual Bonus Amounts"). It is expected that any
distribution for each fiscal year will be made on or before July 15
th
following the close of each fiscal year, subject to certification by the
Committee that the applicable Performance Goal(s) have been achieved.

 

8.2 
Stock Election
. Designated Executives whose Target Bonus Potential is thirty per cent (30%) or
higher and who are authorized by the Committee may elect to receive up to 50
percent of their bonus in the form of Company Common Stock in lieu of cash less
applicable withholding taxes. To encourage the election of Bonus Stock, the
Company shall award additional shares of the Company's Common Stock which shall
equal in value (valued as of the date of purchase of the Bonus Stock without
regard to any restrictions that may attach to such shares) one-third of the
bonus amount elected to be received in stock before tax withholding and shall be
subject to certain restrictions ("Restricted Stock"). The restrictions and other
terms of such Restricted Stock award shall be determined by the Committee and
set forth in separate grant agreements. The agreement shall provide, among other
things, that such Restricted Stock shall vest (and the restrictions shall lapse)
in equal installments at each of the three anniversary dates following the date
of payment, provided that the Restricted Stock has not been forfeited prior to
any such vesting date. In the event that all or any portion of the Bonus Stock
(after deduction for taxes withheld) is sold, transferred, or otherwise disposed
of by the recipient thereof during the three year period following the grant of
the Restricted Stock, a proportional number of the shares of Restricted Stock
not yet vested shall be forfeited. [Example: If a participant received 150
shares of Common Stock in lieu of a portion of his or her cash bonus, after
withholding 60 shares for taxes, the participant will receive 90 shares of Bonus
Stock. The participant would then be granted 50 shares of Restricted Stock (one
third of 150 shares). If the participant then sells all 90 shares of the Bonus
Stock after the first anniversary of the Restricted Stock Grant date but before
the second anniversary thereof, two-thirds of the shares of Restricted Stock
(33.33 shares) would be forfeited to the Company. The restrictions as to
one-third of the Shares of Restricted Stock (16.67 shares) would have lapsed
after one year and those shares would no longer be Restricted Stock.] The
foregoing provisions with respect to forfeiture shall not be applicable with
respect to Bonus Shares which are transferred or otherwise disposed of to the
Company in satisfaction of amounts due the Company incident to the exercise of
stock options or other Company plans with respect to the purchase of Company
stock provided, however, that shares resulting from such transaction equivalent
in number to the Bonus Shares transferred or otherwise disposed of to the
Company incident to such transactions are retained by the Designated Executive
consistent with the terms of this Plan regarding the vesting of Restricted
Shares. Upon termination of employment for any reason other than death,
Permanent Disability or Retirement, all Restricted Stock not yet vested shall be
forfeited. If termination of a Designated Executive's employment is due to
death, Permanent Disability or Retirement, all restrictions on the Restricted
Stock issued to such Designated Executive pursuant to the Plan shall terminate
upon such termination. All restrictions on Restricted Stock issued to a
Designated Executive pursuant to this Plan shall also terminate in the event of
a Change of Control.

 

8.2.1.  Restrictions. Restricted Stock shall be subject to such additional
restrictions on transferability, risk of forfeiture and other restrictions, if
any, as the Committee may impose, which restrictions may lapse separately or in
combination at such times or under circumstances as the Committee may determine
on the date of election or thereafter. Except as stated in section 8.2, a
Designated Executive granted Restricted Stock shall have all of the rights of a
shareholder, including the right to vote the restricted shares and the right to
receive dividends thereon (subject to any mandatory reinvestment or other
requirement imposed by the Committee). Prior to vesting, Restricted Stock may
not be sold, transferred, pledged, hypothecated, margined or otherwise
encumbered by the Designated Executive. Certificates representing shares of
Restricted Stock may be legended to restrict transfer.

 

8.2.2.  Income Tax Withholding. It shall be a condition of an Employee's right
to receive a bonus under this Plan whether in the form of Bonus Stock (including
Restricted Stock) or cash, that the Designated Executive consents to the
withholding by the Company of any federal, state or other taxes which the
Company is obligated to withhold or collect. The Company is authorized to
withhold any such federal, state or other taxes resulting from such bonus by
withholding such number of shares of Company Common Stock otherwise issuable to
such Employee that, based on the fair market value of the shares on the date the
bonus payment is made, will satisfy such federal, state or other tax
withholding. It shall be a condition of a Designated Executive's right to
receive Restricted Stock pursuant to this Plan that the Designated Executive
agrees and authorizes the Company to either withhold from such Designated
Executive's Regular Wages Paid or, at the Company's election, to reduce the
number of shares of Restricted Stock which would otherwise be due to the
Designated Executive under this Plan by an amount which, in the sole discretion
of the Company, is sufficient to pay all income taxes that the Company is
required to withhold or collect in connection with the Restricted Stock award.
 

8.2.3.  Investment Representation. Unless the Committee otherwise determines,
Participants who elect to receive Common Stock in lieu of cash must agree to
take such Common Stock for investment and not for distribution. Delivery of such
representations as may be requested by the Committee shall be a condition
precedent to the right of the Participant to receive any shares of Common Stock
under this Plan. Certificates representing such shares of Common Stock may be
legended to restrict transfer absent compliance with the federal securities
laws.
 

8.2.4.  Issuance of Bonus Stock and Restricted Stock. Company Common Stock
received by Designated Executives in lieu of cash may, in the sole discretion of
the Committee, be issued by the Company, purchased in the open market using the
applicable portion of the Designated Executive's cash bonus amount, or issued
under the Employee Stock Plan. In the Committee's discretion, Restricted Stock
may be issued as Restricted Shares under this Plan or under the Employee Stock
Plan.

8.3 The maximum number of Company shares which may be purchased under this Plan
shall not exceed 375,000 shares and in addition, the corresponding maximum
number of restricted shares to be issued shall not exceed 125,000 shares subject
to section 10.5 below.

9. Termination of Participation in Gerber Scientific, Inc. 1999-2001 Annual
Incentive Bonus Plan

Pursuant to the rights of the Committee under the terms of section 9.3 of the
Gerber Scientific, Inc. 1999-2001 Annual Incentive Bonus Plan approved by
shareholders on or about September 25, 1998, upon shareholder approval of this
Plan the Committee has, and does hereby, terminate the right of Designated
Executives included as participants under this Plan to receive any payment of
any cash or other bonuses under the Gerber Scientific, Inc. 1999-2001 Annual
Incentive Bonus Plan effective on the date of approval of this Plan by
shareholders of the Company at its Annual Meeting of Shareholders presently
scheduled for September 15, 1999. On request of the Company and as a condition
of receiving any bonus under the terms of this Plan, the Committee may require
any Designated Executive to acknowledge, in writing, that such Designated
Executive is not entitled to any bonus under the terms of the Gerber Scientific,
Inc. 1999-2001 Annual Incentive Bonus Plan.

10. Miscellaneous

10.1 Transferability. A Designated Executive's rights and interests under the
Plan may not be assigned or transferred. In the event of a Designated
Executive's death after the end of a fiscal year but prior to the bonus payment
date, the Company shall pay any bonus amounts due under the Plan to the
employee's designated beneficiary, or in the absence of such designation, by
will or the laws of descent and distribution.

10.2 Administration of Plan. The Plan shall be administered by the Committee.
The Committee shall have the authority to interpret the Plan, to adopt plans
whereby the bonus payments otherwise payable under the Plan may be voluntarily
deferred, at the participant's election, to establish and revise rules, amounts
and regulations relating to the Plan, and to make any other determinations that
it believes necessary or advisable for the administration of the Plan. Decisions
of the Committee shall be final, conclusive, and binding upon all parties,
including the Company, Subsidiaries, shareholders, and Designated Executives.
The Committee shall, in the exercise of its sole discretion, determine any and
all issues relating to the manner by which Performance Goals are to be
calculated and certified and upon whom it shall rely in the determination of
achievement and certification of Performance Goals or computation of any and all
compensation due hereunder including bonus amounts payable under the Plan.

10.3 Amendment and Termination. The Committee reserves the right to modify,
suspend or terminate the Plan in whole or in part at any time; provided,
however, that no modification of the Plan by the Committee without approval of
the shareholders will materially increase the maximum amount allocated to the
CEO and the four most highly compensated Employees or render any member of the
Committee eligible for a bonus award. Any modification to material terms of the
Plan (i.e., employees eligible, business criteria on which the performance goal
is based, or maximum amount of compensation payable) shall require shareholder
approval prior to the payment of any benefit.

10.4 No Agreement to Employ. Nothing in the Plan shall be construed to
constitute or evidence an agreement or understanding, express or implied, by the
Company to employ or retain any Designated Executive for any specific period of
time.

10.5 In the event that the number of the outstanding shares of Common Stock is
changed by reason of stock dividend or stock split or other combination or
circumstance which results in the issuance of additional shares of Common Stock
to existing shareholders, the number of shares which may thereafter be purchased
under this Plan and the number of shares that may be issued as Restricted Stock
under this Plan shall be adjusted proportionately so as to reflect such change.
If any shares of Restricted Stock are forfeited, such shares shall thereafter be
available for reissuance under this Plan.

10.6 Certification That Terms Have Been Satisfied. Prior to payment of any bonus
amount under the Plan, the Committee shall certify in writing that the
Performance Goal(s) and all other material terms stated herein have been
attained. For this purpose, the approved minutes of a Committee meeting in which
a certification is made shall be treated as a written certification.

10.7 Indemnification. Current and past members of the Board or Committee shall
be indemnified and held harmless by the Company against and from any and all
loss, cost, liability or expense that may be imposed upon or reasonably incurred
by such member in connection with or resulting from any claim, action, suit or
proceeding to which such member may be or become a party or in which such member
may be or become involved by reason of any action taken or failure to act under
this Plan and against and from any and all amounts paid by such member in
settlement thereof (with the Company's written approval) or paid by such member
in satisfaction of a judgment in any such action, suit or proceeding, except a
judgment in favor of the Company based upon a finding of such member's lack of
good faith. Indemnification pursuant to this provision is subject to the
condition that, upon the institution of any claim, action, suit, or proceeding
against such member, such member shall in writing give the Company an
opportunity, at its own expense, to handle and defend the same before such
member undertakes to handle and defend it on such member's behalf. The foregoing
right of indemnification shall not be exclusive of any other right to which such
member may be entitled as a matter of law or otherwise, or any power that the
Company may have to indemnify or hold such member harmless.

10.8 Governing Law. This Plan shall be governed by the laws of the State of
Connecticut.