**Exhibit 10.39**
**CHANGE OF CONTROL AGREEMENT**
AGREEMENT made as of this 6th day of May, 2002, between Meridian MedicalTechnologies, Inc., a Delaware corporation (hereinafter “the Company”), andCarl J. Rebert (hereinafter “the Executive”).
     WHEREAS, the Company wishes to assure the continued availability of theExecutive’s services and to create an environment which will promote theExecutive’s giving impartial and objective advice in circumstances resultingfrom the possibility of a Change of Control (as herein defined); and
     WHEREAS, the Company and the Executive wish to provide the Executive withfinancial protection in the event significant changes in the Executive’semployment status occur following a Change of Control.
     NOW, THEREFORE, the Company and the Executive, in consideration of theterms and conditions set forth herein and other valuable consideration, receiptand sufficiency of which are hereby acknowledged, mutually covenant and agreeas follows:
1.     Term.
     The term of this Agreement shall commence on the date hereof and terminateon May 6, 2005 unless the Executive’s employment with the Company or asubsidiary is sooner terminated prior to a Change of Control in which case itwill terminate upon the termination of the Executive’s employment (the “Term”),provided, however, if a Change of Control occurs prior to May 6, 2005, thenthis Agreement will terminate on the second anniversary of the Change ofControl.
2.     Payments Upon Change of Control and Termination Event.
     The Company (or after any assumption of the Company’s obligationshereunder by a Successor Employer, the Successor Employer) shall make paymentsto the Executive as provided for in paragraph 4 hereof upon the occurrence ofboth a Change of Control and a Termination Event, as such terms are defined inparagraph 3.
3.     Definitions.
     (a)  “Annual Bonus” shall mean the greater of (a) the annual bonus paid orpayable to the Executive by the Company or any Successor Employer for thefiscal year immediately preceding the Termination Event and (b) the average ofthe bonuses paid or payable to the Executive in the three (3) fiscal yearsimmediately preceding the fiscal year in which the Change of Control falls.
     (b)  “Base Salary” shall mean an amount equal to the Executive’s highestannual base salary after the date hereof and preceding a Termination Event.
 

 

     (c)  “Cause” means (i) the Executive’s failure or refusal to performsatisfactorily any duties reasonably required of the Executive by the Companyor any Successor Employer, as applicable (other than by reason of disability),after reasonable demand for substantial performance is delivered by the Companyor Successor Employer specifically identifying the manner in which the Companyor Successor Employer believes the Executive has not performed his duties; (ii)the commission by the Executive of a felony or the perpetration by theExecutive of a dishonest act against or breach of fiduciary duty toward theCompany or any Successor Employer, or any of their customers, employees, orvendors; or (iii) any willful act or omission by the Executive which isinjurious in any material respect to the financial condition or businessreputation of the Company or any Successor Employer. For purposes of thisdefinition, no act, or failure to act, on the Executive’s part shall beconsidered “willful” unless done, or omitted to be done, by him not in goodfaith and without reasonable belief that his act or omission was in the bestinterests of the Company or any Successor Employer, as applicable.
     (d)  A “Change of Control” shall be deemed to have occurred if any of thefollowing have occurred prior to the expiration of the Term:
           (i) any person or group of persons (as defined in Section 13(d) and 14(d)of the Securities Exchange Act of 1934, as amended (“1934 Act”)) together withits affiliates, excluding employee benefit plans of the Company, is or becomes,directly or indirectly, the “beneficial owner” (as defined in Rule 13d-3promulgated under the 1934 Act) of securities of the Company representing 30%or more of the combined voting power of the Company’s then outstandingsecurities;
           (ii) individuals who at the beginning of any two-year period during theTerm constitute the Board of Directors of the Company (the “Board”), plus newDirectors whose election or nomination for election by the Company’sshareholders is approved by a vote of at least two-thirds (2/3) of theDirectors then still in office who were Directors at the beginning of suchtwo-year period (including for this purpose any new director whose election ornomination for election by the Company’s shareholders was approved by a vote ofat least two-thirds (2/3) of the directors still in office who were directorsat the beginning of such period), cease for any reason during such two-yearperiod to constitute at least two-thirds (2/3) of the members of the Board;
           (iii) the consummation of a merger or consolidation of the Company withany other corporation or entity regardless of which entity is the survivor,other than a merger or consolidation which would result in the votingsecurities of the Company outstanding immediately prior thereto continuing torepresent (either by remaining outstanding or being converted into votingsecurities of the surviving entity) at least 60% of the combined voting powerof the voting securities of the Company or such surviving entity outstandingimmediately after such merger or consolidation;
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           (iv) the shareholders of the Company approve a plan of completeliquidation or winding-up of the Company or an agreement for the sale ordisposition by the Company of all or substantially all of the Company’s assets;
           (v) the sale or other disposition by the Company of all or substantiallyall of the assets of the Company’s Cardiopulmonary Systems Organization; or
           (vi) any other event which the Board determines should constitute aChange of Control.
     (e)  A “Termination Event” shall be deemed to have occurred underthe circumstances described in paragraph 3(e)(i) and paragraph 3(e)(ii),as applicable.
           (i) Within the twenty-four (24) month period following a Change ofControl, other than a Change of Control described exclusively inparagraph 3(d)(v), (A) the Executive’s employment with the Company isterminated by the Company without Cause, other than by reason of death,retirement on or after the Executive attains the age of sixty-five (65)or disability that entitles the Executive to long-term disabilitybenefits under the Company’s long-term disability plan or policy, or (B)the Executive voluntarily terminates his employment with the Companywithin 30 days after the occurrence of any of the following events:
                 (A) the assignment to the Executive of any duties inconsistent inany material respect with the Executive’s position (including status,offices, titles and reporting requirements), authority, duties orresponsibilities immediately prior to the Change of Control, or anyother action by the Company which results in a diminution in anymaterial respect in such position, authority, duties orresponsibilities, excluding for this purpose an isolated, insubstantialand inadvertent action not taken in bad faith that is remedied by theCompany promptly after receipt of notice thereof given by the Executive;
                 (B) a reduction by the Company in the Executive’s annual basesalary as in effect on the date hereof, as the same may be increasedfrom time to time;
                 (C) the Company’s requiring the Executive to be based at anyoffice or location that is more than fifty (50) miles from theExecutive’s office or location immediately prior to the Change ofControl;
                 (D) the failure by the Company (i) to continue in effect anybonus, stock option, or other cash or equity-based incentive plan inwhich the Executive participates immediately prior to a Change ofControl that is material to the Executive’s total compensation, unlessan arrangement not materially less
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 favorable to the Executive (embodied in an ongoing substitute oralternative plan) has been made with respect to such plan, or (ii) tocontinue the Executive’s participation in such plan (or in suchsubstitute or alternative plan) on a basis at least as favorable, bothin terms of the amount of benefits provided and the level of theExecutive’s participation relative to other participants, as existedimmediately prior to the Change of Control; or
                 (E) the failure by the Company to continue to provide theExecutive with benefits that in the aggregate are not materially lessfavorable to the Executive than those received by the Executive underthe Company’s pension (including, but not limited to, tax-qualifiedplans), life insurance, health, accident, disability or other welfareplans in which the Executive was participating, at costs not materiallygreater than to those paid by the Executive, immediately prior to theChange of Control.
           (ii) Within the twenty-four (24) month period following a Change ofControl described exclusively in paragraph 3(d)(v), (A) the Executive’semployment with the Successor Employer is terminated by the SuccessorEmployer without Cause, other than by reason of death, retirement on orafter the Executive attains the age of sixty-five (65) or disabilitythat entitles the Executive to long-term disability benefits under theSuccessor Employer’s long-term disability plan or policy, or (B) theExecutive voluntarily terminates his employment with the SuccessorEmployer within 30 days after the occurrence of any of the followingevents:
                 (A) a reduction by the Successor Employer in the Executive’sannual base salary as in effect on the date hereof, as the same may beincreased from time to time;
                 (B) the failure by the Successor Employer to provide the Executivewith benefits that are comparable, on an overall basis, to thoseprovided (or made available) to the Executive under the Company’spension plan(s) (including, but not limited to, tax-qualified plans),life insurance, health, accident, disability or other welfare plans inwhich the Executive was participating, at costs not materially greaterthan to those paid by the Executive, immediately prior to the Change ofControl; or
                 (C) the failure by the Successor Employer to provide the Executivewith incentive compensation opportunities that are at least comparableon an overall basis to those made available to the Executive immediatelyprior to the Change of Control.
     (f) “Successor Employer” shall mean any person or entity thatacquires from the Company all or substantially all of the assets of theCompany’s Cardiopulmonary Systems Organization.
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4.     Cash Payments.
     In the event of a Termination Event, the Company (or after any assumptionof the Company’s obligations hereunder by a Successor Employer, the SuccessorEmployer) shall pay to the Executive the following amounts:
     (a)  the Executive’s full base compensation as earned through the date ofthe Termination Event at the rate in effect on the date the Termination Eventoccurs;
     (b)  any bonus to which the Executive has become entitled but which has notyet been paid to the Executive;
     (c)  a lump sum cash payment equal to the sum of: (i) the Executive’scombined base compensation for the twelve-month period immediately precedingthe Notice of Termination, and (ii) the Executive’s Annual Bonus; and
     (d)  a lump sum cash payment equal to the product of:
           (i) the higher of (A) the target bonus to which the Executive would havebecome entitled for the fiscal year in which the Termination Event falls,assuming that all applicable performance goals for the year of terminationwould have been satisfied, or (B) the Executive’s Annual Bonus; and
           (ii) a fraction, the numerator of which is the number of days in thethen-current fiscal year through the date of the Termination Event, and (B) thedenominator of which is 365.
5.     Death of Executive.
     If the Executive dies before receiving all payments payable to him underparagraph 4 of this Agreement, the Company (or after any assumption of theCompany’s obligations hereunder by a Successor Employer, the SuccessorEmployer) shall continue to make payments pursuant to paragraph 4 hereof to theExecutive’s spouse, or if the Executive leaves no spouse, to the estate of theExecutive.
6.     Health and Life Insurance Benefits.
     The Company (or after any assumption of the Company’s obligationshereunder by a Successor Employer, the Successor Employer) shall maintain, fora period of twelve (12) months following the date of the occurrence of aTermination Event, the Executive’s eligibility for and participation in anyhealth and life insurance plans in which the Executive was eligible toparticipate prior to the Termination Event and upon the same basis and cost asprior to the Termination Event, provided however, that if, for any reason, theCompany or Successor Employer, as applicable, is unable to continue theExecutive’s participation in any such plan, the Company or Successor Employershall cause the Executive to be eligible to participate in a substantiallyequivalent arrangement upon substantially the same basis and cost (determinedon an after-tax basis) as prior to the Termination Event. Notwithstanding anyother provision of this Agreement to the
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 contrary, if in connection with the termination of the Executive’semployment for any reason, the Company or Successor Employer, as applicable, isobligated by law or by contract (including any employment or severanceagreement other than this Agreement) or by a Company or Successor Employer planor policy to provide the Executive with life or health insurance after theExecutive’s termination (or a cash payment in lieu thereof), then any healthand life insurance required to be provided under this paragraph shall bereduced by the amount of any payments and similar benefits described above, asapplicable.
7.     No Duty to Seek Other Employment.
     Amounts payable to the Executive under this Agreement shall not be reducedby the amount of any compensation received by the Executive from any otheremployer or source, and the Executive shall not be under any obligation to seekother employment or gainful pursuit as a result of this Agreement.
8.     Reduction of Payments.
     Notwithstanding any other provision of this Agreement, in the event thatany payment or benefit received or to be received by the Executive inconnection with a Change of Control or the termination of the Executive’semployment (whether pursuant to the terms of this Agreement or any other plan,arrangement or agreement (all such payments and benefits, including thepayments and benefits provided for hereunder, being hereinafter called “TotalPayments”) would not be deductible (in whole or part), by the Company, anaffiliate or other person or entity making such payment or providing suchbenefit as a result of Section 280G of the Internal Revenue Code of 1986, asamended, then, to the extent necessary to make such portion of the TotalPayments deductible, (A) the cash payments provided for by paragraph 4 hereofshall first be reduced (if necessary, to zero), and (B) the benefits providedfor by paragraph 6 hereof shall next be reduced. For purposes of thislimitation, no portion of the Total Payments the receipt or enjoyment of whichthe Executive shall have waived by written notice to the Company prior to thedate of payment shall be taken into account. All determinations required to bemade under the provisions of this paragraph 8 hereof shall be made by taxcounsel selected by the Company’s independent auditors and reasonablyacceptable to the Executive.
9.     Payment of Compensation to Termination Date.
     In addition to any other payments payable to the Executive hereunder, theCompany (or after any assumption of the Company’s obligations hereunder by aSuccessor Employer, the Successor Employer) shall pay the Executive fullcompensation and all other amounts and benefits to which the Executive isentitled through the termination of his employment.
10.     No Right to Continued Employment.
     This Agreement shall not confer upon the Executive any right with respectto continuance of employment by the Company, any Successor Employer, or their
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 subsidiaries, nor shall it interfere in any way with the right of hisemployer to terminate his employment at any time. No payments hereunder shallbe required except upon the occurrence of both a Change of Control and aTermination Event. Thus, except as specifically provided herein, no paymentshereunder shall be made on account of termination of the Executive’s employment(i) upon the Executive’s death, disability or retirement, (ii) by the Companyor any Successor Employer with or without cause or (iii) upon the Executive’svoluntary termination.
11.     Waiver of Breach.
     Waiver by any party of a breach of any provision of this Agreement shallnot operate as or be construed as a waiver by such party of any subsequentbreach hereof.
12.     Invalidity.
     The invalidity or unenforceability of any provision of this Agreementshall not affect the validity or enforceability of any other provision, whichshall remain in full force and effect.
13.     Legal Fees and Expenses.
     The Company (or after any assumption of the Company’s obligationshereunder by a Successor Employer, the Successor Employer) shall pay to theExecutive all reasonable legal fees and expenses incurred by the Executive as aresult of a bona fide dispute regarding the application of any provision ofthis Agreement. Such payments shall be made within five (5) business daysafter delivery of the Executive’s respective written requests for paymentaccompanied with such evidence of fees and expenses incurred as the Company orSuccessor Employer, as applicable, reasonably may require.
14.     Ratification of Previous Employment Agreement.
     The Executive ratifies and confirms the terms and obligations of theagreement entered into between the Company and the Executive relating to, amongother things, non-competition with the Company.
15.     Entire Agreement; Written Modification; Termination.
     This Agreement contains the entire agreement between the partiesconcerning the matters covered hereby. No modification, amendment or waiver ofany provision hereof shall be effective unless in writing specificallyreferring hereto and signed by the party against whom such provision asmodified or amended or such waiver is sought to be enforced. This Agreementshall terminate as of the time the Company or any Successor Employer, asapplicable, makes the final payment which it may be obligated to pay hereunderor provides the final benefit which it may be obligated to provide hereunder.This Agreement supersedes and replaces any earlier agreement on the subjectmatter hereof.
16.     Counterparts.
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     This Agreement may be made and executed in counterparts, each of which maybe considered an original for all purposes.
17.     Successors.
     This agreement shall be binding upon the Company’s successors by reason ofmerger, consolidation or otherwise. In addition, the Company shall require anySuccessor Employer to expressly assume this Agreement and the Company’sobligations hereunder, unless such Successor Employer becomes a SuccessorEmployer after a Termination Event has occurred with respect to the Executive.
18.     Governing Law.
     This Agreement is governed by and is to be construed and enforced inaccordance with the laws of the State of Delaware.
     IN WITNESS WHEREOF, the undersigned parties have executed or caused to beexecuted this Agreement as of the day and year first above written.     MERIDIAN MEDICAL TECHNOLOGIES, INC. By: /s/ JAMES H. MILLER