Document:

EXHIBIT 10.35

EXHIBIT 10.35

THIRD AMENDMENT AGREEMENT

THIRD AMENDMENT AGREEMENT (this "Agreement") dated as of July 9, 2004 by and among (1) Gerber Scientific, Inc. and Gerber Scientific International, Inc. (collectively, the "Borrowers"), (2) Gerber Venture Capital Corp., Gerber Coburn Optical International, Inc., Ultramark Adhesive Products, Ltd., Spandex Limited, Spandex Benelux BV, ND Graphic Products Limited,  H. Brunner GmbH, and Gerber Scientific UK Ltd., (collectively, the "Guarantors"), (3) Fleet Capital Corporation ("Fleet Capital"), and the other financial institutions party to the Credit Agreement (as defined below) as lenders (collectively, the "Lenders" and individually, a "Lender"), (4) Fleet National Bank as issuing bank (the "Issuing Bank"), and (5) Fleet Capital, as administrative agent (the "Administrative Agent") for the Lenders with respect to a certain Credit and Security Agreement dated as of May 5, 2003 by and among the Borrowers, the Guarantors, the Lenders, the Issuing Bank and the Administrative Agent (the "Credit Agreement").

W I T N E S S E T H:

WHEREAS, the Borrowers and the Guarantors have requested that the Lenders and the Issuing Bank amend certain terms and conditions of the Credit Agreement on the terms and conditions set forth herein and consent to an amendment of the Tranche B Loan Agreement; and

WHEREAS, the parties hereto have agreed to amend certain provisions of the Credit Agreement and consent to an amendment of the Tranche B Loan Agreement on the terms and conditions set forth herein.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

	Definitions.

  Capitalized terms used herein without definition that are defined in the Credit Agreement (after giving effect to the amendments thereof set forth herein) shall have the same meanings herein as therein.

	Ratification of Existing Agreements.  

All of the Borrowers' and the Guarantors' obligations and liabilities to the Lenders and the Issuing Bank as evidenced by or otherwise arising under the Credit Agreement, the Revolving Credit Notes and the other Loan Documents, are, by the Borrowers' and the Guarantors' execution of this Agreement, ratified and confirmed in all respects.  In addition, by the Borrowers' and the Guarantors' execution of this Agreement, each of the Borrowers and the Guarantors represents and warrants that to the best of each of the Borrowers' and the Guarantors' knowledge it does not have any counterclaim, right of set-off, recoupment, defense or independent action of any kind with respect to such obligations and liabilities.

	Representations and Warranties.  

Each of the Borrowers and the Guarantors hereby represents and warrants to the Lenders and the Issuing Bank that all of the representations and warranties made by the Borrowers and the Guarantors in the Credit Agreement, the Revolving Credit Notes and the other Loan Documents are true in all material respects on the date hereof as if made on and as of the date hereof, except to the extent that such representations and warranties relate expressly to an earlier date.

	Conditions Precedent.

  The effectiveness of the amendments contemplated hereby shall be subject to the satisfaction on or before the date hereof of each of the following conditions precedent:

Representations and Warranties.  All of the representations and warranties made by the Borrowers and the Guarantors herein, whether directly or incorporated by reference, shall be true and correct on the date hereof except as provided in §3 hereof.

Performance; No Event of Default.  The Borrowers and the Guarantors shall have performed and complied in all respects with all terms and conditions herein required to be performed or complied with by them prior to or at the time hereof, and there shall exist no Default or Event of Default.

Corporate Action.  All requisite corporate action necessary for the valid execution, delivery and performance by the Borrowers and the Guarantors of this Agreement and all other instruments and documents delivered by the Borrowers and the Guarantors in connection therewith shall have been duly and effectively taken.

Delivery.  The Borrowers, the Guarantors, the Required Lenders and the Issuing Bank shall have executed and delivered this Agreement.

Tranche B Amendment.  The Tranche B Lenders and the Borrowers shall have entered into an amendment to the Tranche B Documents in the form attached hereto as Exhibit A and, subject only to this Agreement taking effect, the amendments to the Tranche B Documents set forth therein shall become effective.

	Amendments to the Credit Agreement.

	Amendments to Section 1.1

(a)The definition of "EBITDA" appearing in Section 1.1 of the Credit Agreement is hereby amended by adding the following to the end of such definition:
and minus (d) the aggregate amount of Restricted Junior Payments referred to in clauses (i), (ii) and (iii) of the definition of Restricted Junior Payments herein that were made during such period.

(b)The definition of "Permitted Acquisition" appearing in Section 1.1 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

"Permitted Acquisition" means an Acquisition by a Credit Party to the extent that each of the following conditions shall have been satisfied:

	the aggregate Purchase Price for any individual Acquisition or series of related Acquisitions that are consummated after the Third Amendment Effective Date shall not exceed $5,000,000, and the aggregate Purchase Price for all Acquisitions shall not exceed $10,000,000 in the aggregate during the term of this Agreement after giving effect to the proposed Acquisition;

	no Default or Event of Default shall have occurred and be continuing or would result from the consummation of the proposed Acquisition;

	without limiting the generality of clause (b) above, the Credit Parties shall be in compliance with each of the covenants set forth in Section 8.10 for and as of the end of the fiscal quarter most recently ended immediately preceding the consummation of the Acquisition, both without giving effect to the Acquisition and on a pro forma basis after giving effect to the Acquisition;

	the Purchase Price for such Acquisition shall not exceed an amount equal to three (3) times the Consolidated EBITDA (for the immediately preceding twelve-month period) of the Person whose Capital Stock or assets are the subject of the proposed Acquisition;

	Excess Availability, calculated on (i) an actual basis as of the Business Day immediately preceding the proposed Acquisition with respect to the amount of the Revolving Credit Exposure and based on the most recently delivered Borrowing Base and Collateral Update Certificate with respect to the amount of the Borrowing Base, and (ii) a pro forma basis giving effect to the making of such Acquisition, shall have been (and shall be projected to be) no less than $10,000,000;

	the Parent and its Subsidiaries shall, on a consolidated basis, have cash, Cash Equivalents and Excess Availability, calculated on (i) an actual basis as of the Business Day immediately preceding the date of the Acquisition with respect to the amount of the Revolving Credit Exposure and based on the most recently delivered Borrowing Base and Collateral Update Certificate with respect to the amount of the Borrowing Base, and (ii) a pro forma basis giving effect to the making of such Acquisition, of not less than $18,500,000 in the aggregate;

	as of the date of the purchase, the Credit Parties shall be generally paying their trade payables in accordance with their terms;

	the Borrowers shall have furnished to the Agent at least 10 Business Days prior to the consummation of such Acquisition (1) an executed term sheet and/or commitment letter (setting forth in reasonable detail the purchase price and other terms and conditions of such Acquisition) and, at the request of the Agent, such other information and documents that the Agent may request, including, without limitation, executed counterparts of the respective agreements, instruments or other documents pursuant to which such Acquisition is to be consummated (including, without limitation, any related management, non-compete, employment, option or other material agreements), any schedules to such agreements, instruments or other documents and all other material ancillary agreements, instruments or other documents to be executed or delivered in connection therewith, (2) pro forma financial statements of the Parent and its Subsidiaries after the consummation of such Acquisition, (3) a certificate of the chief financial officer of the Parent, demonstrating on a pro forma basis compliance with all covenants set forth in Section 8.10 hereof after the consummation of such Acquisition, and (4) copies of the documents required by Section 7.14 and such other agreements, instruments or other documents as the Agent shall reasonably request;

	the agreements, instruments and other documents referred to in paragraph (h) above shall provide that (1) neither the Credit Parties nor any of their Subsidiaries shall, in connection with such Acquisition, assume or remain liable in respect of any Indebtedness (or any other obligation) of the sellers or of the issuer of the Capital Stock that is being acquired (except for Permitted Indebtedness, obligations incurred in the ordinary course of business in operating the property so acquired and necessary and desirable to the continued operation of such property, and Indebtedness that the Agent, with the consent of the Required Lenders, otherwise expressly consents to in writing after review of the terms of the proposed Acquisition), and (2) all property to be so acquired in connection with such Acquisition shall be free and clear of any and all Liens, except for Permitted Liens (and if any such property is subject to any Lien not permitted by this clause (2) then concurrently with such Acquisition such Lien shall be released);

	any Subsidiary to be acquired or formed as a result of such Acquisition (or, with respect to an Acquisition of assets by a Credit Party, the seller of such assets) shall be engaged in the same or similar business as one or more Credit Parties, and any such Subsidiary will be a direct wholly-owned Subsidiary of a Credit Party and will become a Credit Party; 

	such Acquisition shall be effected in such a manner so that the acquired Capital Stock or assets are owned by a Credit Party and, if effected by merger or consolidation involving a Credit Party, such Credit Party shall be the continuing or surviving Person; and

	any such Subsidiary (and its equityholders) shall execute and deliver the agreements, instruments and other documents required by Section 7.14

(c)The definition of "RJP Permitted Percentage" appearing in Section 1.1 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

"RJP Permitted Percentage" means, with respect to any fiscal quarter, the lesser of (a) 35%, and (b) result (but not less than zero) of (i) 100%, minus (ii) the percentage of Excess Cash Flow that is paid as a prepayment of the Tranche B Loans with respect to such fiscal quarter.

(d)The following definitions are added in alphabetical order to Section 1.1 of the Credit Agreement:

"Acquisition" means the acquisition of all of the Capital Stock of any Person or all or substantially all of the assets of any Person.

"Purchase Price" means, with respect to any Acquisition, an amount equal to the sum of (i) the aggregate consideration (however characterized), whether cash or property or securities (but excluding the fair market value of any Capital Stock of any Credit Party issued in connection with such Acquisition), paid or delivered by or for the account of any Credit Party in connection with such Acquisition, plus (ii) the aggregate amount of Indebtedness assumed but excluding consideration consisting of royalties based upon a percentage of sale or other similar percentage of sale arrangements.

"Third Amendment Agreement" means the Third Amendment Agreement dated as of July __, 2004 among the Borrowers, the Guarantors, the Lenders, the Issuing Bank and the Administrative Agent with respect to the Credit Agreement.

"Third Amendment Effective Date" means the date on which all of the conditions precedent set forth in Section 4 of the Third Amendment Agreement have been satisfied (or waived by the Agent).

	Amendment to Section 8.6.

Section 8.6 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

8.6Restricted Junior Payments.  The Credit Parties will not declare or make any Restricted Junior Payment at any time, except that (a) any Credit Party that is a Subsidiary of another Credit Party may pay dividends to such other Credit Party, (b) so long as no Default or Event of Default exists or would result therefrom and commencing following receipt by the Agent of the financial statements for each fiscal year commencing with the fiscal year ending April 30, 2004, the Credit Parties may, not more frequently than quarterly, make Restricted Junior Payments referred to in clauses (i), (ii) and (iii) of the definition of Restricted Junior Payments, subject to the condition that the Credit Parties shall have delivered to the Agent, not less than 30 days prior to the making of any such Restricted Junior Payment, a certificate demonstrating, in form and substance reasonably satisfactory to the Agent, that the conditions set forth in clauses (i), (ii), (iii) and (iv) of subsection (c) of this definition have been (and will be) satisfied, and (c) so long as no Default or Event of Default exists or would result therefrom and commencing following receipt by the Agent of the financial statements for each fiscal year commencing with the fiscal year ending April 30, 2004, the Credit Parties may, not more frequently than quarterly, make Restricted Junior Payments referred to in clauses (iv) and (v) of the definition of Restricted Junior Payments herein in an aggregate amount in any fiscal year not in excess of an amount equal to the result of (x) the amounts that constitute for each fiscal quarter of such fiscal year the RJP Permitted Percentages of the Excess Cash Flow of the Parent and its Subsidiaries in each such fiscal quarter, minus (y) the amount of any Restricted Junior Payment referred to in clauses (i), (ii) and (iii) of the definition of Restricted Junior Payments that have been or will be made in such fiscal quarter, subject to the condition that the Credit Parties shall have delivered to the Agent, not less than 30 days prior to the making of any such Restricted Junior Payment, a certificate demonstrating, in form and substance reasonably satisfactory to the Agent, that:

(i) the Credit Parties were in compliance with each of the covenants set forth in Section 8.10 for and as of the end of the fiscal quarter most recently ended immediately preceding the proposed payment date, calculated both on an actual basis and on a pro forma basis after giving effect to the proposed Restricted Junior Payment; and

(ii) Excess Availability, calculated on (i) an actual basis as at the end of the Business Day immediately preceding the date on which the Restricted Junior Payment is made with respect to the amount of the Revolving Credit Exposure and based on the most recently delivered Borrowing Base and Collateral Update Certificate with respect to the amount of the Borrowing Base, and (ii) a pro forma basis giving effect to the making of such Restricted Junior Payment, shall have been (and shall be projected to be) no less than $10,000,000;

(iii) the Parent and its Subsidiaries shall, on a consolidated basis, have cash, Cash Equivalents and Excess Availability, calculated on (i) an actual basis as of the Business Day immediately preceding the date of the Restricted Junior Payment with respect to the amount of the Revolving Credit Exposure and based on the most recently delivered Borrowing Base and Collateral Update Certificate with respect to the amount of the Borrowing Base, and (ii) a pro forma basis giving effect to the making of such payment, of not less than $18,500,000 in the aggregate; and

(iv) as of the date of such certificate, the Credit Parties shall be generally paying their trade payables in accordance with their terms.

	Amendment to Section 8.10.

Section 8.10 of the Credit Agreement is hereby amended as follows:

(a)Subsection (a) of Section 8.10(a) of the Credit Agreement is hereby deleted and designated as "Intentionally Deleted".

(b)Subsection (b) of Section 8.10(a) of the Credit Agreement is hereby deleted; subsection (c) of Section 8.10 is renumbered so as to be subsection (b) and subsection (d) is renumbered so as to be subsection (c).

	Amendments to Section 8.13

(a)Subsection (a) of Section 8.13 is hereby amended and restated in its entirety to read as follows:

(a)the Credit Parties may make cash payments of interest, expenses and fees on the Tranche B Loans as and when required pursuant to the Tranche B Loan Agreement; and

(b)The introductory paragraph of Section 8.13(b) is hereby amended and restated in its entirety to read as follows:
(b)the Credit Parties may, not more than once per fiscal quarter, commencing with respect to the fiscal quarter ending July 31, 2003, prepay the principal of Term Loan A and Term Loan B, as such terms are defined in the Tranche B Documents, subject to the following conditions:

(c)Section 8.13(b)(i) of the Credit Agreement is hereby amended by deleting "30 days" therefrom and substituting "10 days" therefor.

(d)Section 8.13(b)(i)(B) of the Credit Agreement is hereby amended by deleting "$8,500,000" therefrom and substituting "$7,500,000" therefor.

(e)Section 8.13(b)(i)(C) of the Credit Agreement is hereby amended by deleting "$18,500,000" therefrom and substituting "$12,500,000" therefor.

(f)The following clause (F) is hereby added to the end of Section 8.13(b)(i) of the Credit Agreement:
(F)The Parent and its Subsidiaries shall have had Excess Cash Flow in an amount of not less than $1.00 in the fiscal quarter immediately preceding the date of such prepayment.

	Consent.  

The Lenders hereby consent to an amendment of the Tranche B Loan Agreement in the form attached hereto as Exhibit A.

	Miscellaneous Provisions.

(a)Except as otherwise expressly provided by this Agreement, all of the respective terms, conditions and provisions of the Credit Agreement, the Revolving Credit Notes and the other Loan Documents shall remain the same.  The Credit Agreement, the Revolving Credit Notes and the other Loan Documents, each as amended hereby, shall continue in full force and effect, and this Agreement and the Credit Agreement, the Revolving Credit Notes and the other Loan Documents, as applicable, shall be read and construed as one instrument.

(b)This Agreement is intended to take effect under, and shall be construed according to and governed by, the laws of the State of Connecticut.

(c)This Agreement may be executed in any number of counterparts, but all such counterparts shall together constitute but one instrument.  In making proof of this Agreement it shall not be necessary to produce or account for more than one counterpart signed by each party hereto by and against which enforcement hereof is sought.  A facsimile of an executed counterpart shall have the same effect as the original executed counterpart.

[Remainder of page intentionally blank; Signature Pages follow]

IN WITNESS WHEREOF, each of the parties hereto have caused this Agreement to be executed in its name and behalf by its duly authorized officer as of the date first written above.
BORROWERS

GERBER SCIENTIFIC, INC.

By: /s/ Shawn M. Harrington
Name:  Shawn M. Harrington

Title  EVP/CFO

GERBER SCIENTIFIC INTERNATIONAL, INC.

By:  /s/ Shawn M. Harrington
Name:  Shawn M. Harrington

Title

GUARANTORS

GERBER VENTURE CAPITAL CORP.

By: /s/ Shawn M. Harrington
Name:  Shawn M. Harrington

Title

GERBER COBURN OPTICAL INTERNATIONAL, INC.

By: /s/ Shawn M. Harrington
Name:  Shawn M. Harrington

Title

ULTRAMARK ADHESIVE PRODUCTS, LTD

By: /s/ Doris W. Skoch 
Name:  Doris W. Skoch

Title  Director

 

 

 

 

SPANDEX LIMITED

By: /s/ Doris W. Skoch 
Name:  Doris W. Skoch

Title  Director

SPANDEX BENELUX BV

By: /s/ Doris W. Skoch 
Name:  Doris W. Skoch

Title

ND GRAPHIC PRODUCTS LIMITED

By: /s/ Doris W. Skoch 
Name:  Doris W. Skoch

Title  Director

H. BRUNNER GMBH

By: /s/ Doris W. Skoch 
Name:  Doris W. Skoch

Title

GERBER SCIENTIFIC UK LTD

By: /s/ Doris W. Skoch 
Name:  Doris W. Skoch

Title  Director

AGENT

FLEET CAPITAL CORPORATION,

as Administrative Agent

By: /s/

Its:  Vice President

ISSUING BANK

FLEET NATIONAL BANK, 

as Issuing Bank

By: /s/

Its: 

LENDERS

FLEET CAPITAL CORPORATION

By: /s/

Its: 

CONGRESS FINANCIAL CORPORATION

By: /s/

Its:  Vice President

EXHIBIT A

Form of amendment to Tranche B Loan Agreement

\C&LDOC:.StmLib1:1066594.1 7/12/2004EXHIBIT 10.36

EXHIBIT 10.36

SEPARATION AGREEMENT BETWEEN SHAWN HARRINGTON

AND GERBER SCIENTIFIC, INC.

This Agreement is a contract between SHAWN HARRINGTON ("you"), and your employer, GERBER SCIENTIFIC, INC. (the "Company").  It sets out the terms under which your employment with the Company will continue and will terminate.  Those terms include the payment of certain monies and benefits to you in return for your agreement to be bound by conditions set forth in this Agreement. You should thoroughly review and understand the effects of the Agreement before signing it.  The Company advises you to consult an attorney before you sign this Agreement.  If you sign this Agreement, you will receive the payments and benefits described in Section II below.  

I.COMPLETE RELEASE AND WAIVER OF CLAIMS

A.  RELEASE AND WAIVER:  In exchange for the payment and benefits described in Section II, you agree to release GERBER SCIENTIFIC, INC. and all of its past, present and future subsidiaries, affiliates, successors and assigns (collectively, "the Company") from all claims, demands, actions, or liabilities you may have against the Company of whatever kind, including but not limited to those that in any way arise from or relate in any way to your employment with the Company or the termination of that employment.  You also agree to release from all such claims, demands, actions or liabilities the Company's past, present and future agents, directors, officers, employees, fiduciaries, representatives, successors, and assigns (hereinafter, "those associated with the Company"). You agree that you have executed this Agreement on your own behalf, and also on behalf of any heirs, agents, representatives, and assigns that you may have now or in the future.

You also agree that the release and waiver stated in this Agreement covers, but is not limited to, claims arising under the Age Discrimination in Employment Act of 1967 (including the amendments of the Older Workers Benefit Protection Act of 1990), Title VII of the Civil Rights Act of 1964, the Employee Retirement Income Security Act of 1974, the Worker Adjustment and Retraining Notification Act of 1988 (also known as "WARN"), the Americans with Disabilities Act, the Family and Medical Leave Act of 1993, the Connecticut Fair Employment Practices Act, and any other federal, state and local law dealing with discrimination on any basis, including sex, race, national origin, veteran status, marital status, religion, disability, sexual orientation, reservist status or age.  You also agree that the release and waiver stated in this Agreement includes claims based on contract or tort theories, whether based on common law or otherwise.  This Agreement also includes a release and waiver by you of any claims that you suffered or any other harm by or through the actions of the Company, including, but not limited to, claims for defamation or emotional distress.  This Release and Waiver does not apply to claims arising under any Workers Compensation statute, except claims for wrongful discharge or other discrimination in employment for exercising rights under this statute.   The Release and Waiver in this Agreement does not affect your vested rights, if any, in the Company's pension plans, which survive unaffected by this Agreement.

B.  NONRELEASE OF FUTURE CLAIMS AND AGREEMENT TO SIGN RELEASE AND WAIVER ON TERMINATION DATE: This Release and Waiver covers all claims or demands based on any facts or events, whether known or unknown by you, that occurred on or before the date you sign this Agreement.  The Company acknowledges that you have not released any rights or claim that you may have that arise after the date this Agreement is executed.  To accept and receive the payments benefits described below after September 30, 2004, you shall be required to sign, at the time of the Termination Date, another Separation Agreement, a form of which is attached as Appendix A hereto.  If you do not timely execute that Separation and Release Agreement, you shall not be entitled to the payments and benefits after September 30, 2004 described below.

C.  NO FUTURE LAWSUITS:  As a terminating employee who chooses to accept the terms of this Agreement, you promise never to file a lawsuit asserting any claim or demand against the Company, or those associated with the Company, including claims filed in state or federal court that arise from or are related to any claim that is within the scope of the Release and Waiver or claims arising from or related to your employment.  In addition, you agree not to assist any other person or entity in bringing any lawsuit against the Company in any state or federal court unless you are compelled to do so by the court or by law.  Your failure to comply with this provision shall constitute a breach of the Agreement.
BY SIGNING THIS AGREEMENT, YOU GIVE UP ANY RIGHT YOU MAY HAVE TO BRING A LAWSUIT OR RECEIVE A RECOVERY ON ANY CLAIM AGAINST THE COMPANY AND THOSE ASSOCIATED WITH THE COMPANY BASED ON ANY ACTIONS, FAILURES TO ACT, STATEMENTS OR EVENTS OCCURRING PRIOR TO THE DATE OF THIS AGREEMENT, INCLUDING CLAIMS THAT IN ANY WAY ARISE FROM OR RELATE TO YOUR EMPLOYMENT WITH THE COMPANY OR THE TERMINATION OF THAT EMPLOYMENT.

II.PAYMENTS AND BENEFITS

If you agree to the "Complete Release and Waiver of Claims" by signing this Agreement, you will receive the following consideration to which you are not otherwise entitled and which you acknowledge as sufficient, for your obligations under this Agreement.
1.Your last day of employment will be September 30, 2004 (the "Termination Date").  You will continue in your position as Executive Vice President and Chief Financial Officer through September 30, 2004, unless a new CFO is hired prior to September 30, 2004, in which event your services will be as required by the new CFO or Chief Executive Officer but you will continue to receive salary and benefits through September 30, 2004, which will remain your Termination Date.

2.For the period October 1, 2004 to January 31, 2005, you agree to act as a consultant to the President and the Chief Executive Officer of the Company, as reasonably requested, such requests not to interfere with your right to engage in other employment as set forth herein, and you will be paid a total of $90,000.00 in four separate and equal payments at the end of each month.  You will be considered an independent contractor and a Form 1099 will be issued for the payments in this paragraph.

3.For the period February 1, 2005 to April 30, 2005, you agree to make yourself available as a consultant to the President and Chief Executive Officer, as reasonably requested, such requests not to interfere with your right to engage in other employment as set forth herein, and you will be paid a non-refundable retainer of $67,500.00 on February 1, 2005, for which a Form 1099 will be issued.  In addition, you will be paid $150.00 an hour for each hour you provide actual consulting services to the Company.

 4.Subsequent to the Termination Date, subject to the provisions of Section IV herein, you may engage in other employment, whether part-time or full-time, which shall not affect any payments you receive pursuant to paragraphs 2 and 3 above in this Section II regarding consulting you may perform for the Company.  You shall have no obligation to provide any consulting services to the Company after April 30, 2005 and the Company shall have no obligation to make any payments for any such services performed after April 30, 2005.

5.You agree and acknowledge you are not eligible to receive or otherwise entitled to receive any bonus or prorated bonus, under any policy, practice or plan of the Company or pursuant to this Agreement for the fiscal year 2005 or subsequently.

6.You acknowledge and agree that you and your immediate family's participation in any benefit plan provided by the Company will cease as September 30, 2004, including but not limited to any health, life insurance or disability plan, except to the extent any such plan provides to the contrary with regard to employees who have terminated employment and with the exception that your participation will continue in the Company's pension plan or any other "top hat" non-qualified pension benefit plan but no additional years of service will be credited to you subsequent to September 30, 2004 nor will any subsequent contribution be permitted to any such plan.  Your rights under the Consolidated Omnibus Budget Reconciliation Act ("COBRA") will commence on October 1, 2004.

7.All unvested stock options previously granted pursuant to any of the Company's stock option plans and all restricted stock granted to you shall vest on September 30, 2004.  Your opportunity to exercise all of your vested stock options is extended up to and including March 31, 2006 and such options must otherwise be exercised in accordance with the applicable stock option plans and grant agreements.

8.Marc Giles will provide a favorable letter of reference to be mutually agreed upon and attached hereto as an Exhibit.

9.The Company will reimburse you for your legal expenses and costs incurred in connection with your review of this Separation Agreement, in an amount not to exceed $5,000.

10.The Company shall continue to provide you with Directors and Officers insurance with respect to acts or omissions that occurred while you were an officer or director of the Company and shall indemnify you, hold you harmless and defend you from any and all claims that may be asserted against you by any third party with respect to your employment with the Company, including advancing reasonable attorneys fees, costs and expenses.

III.SURRENDER OF MATERIALS

You acknowledge that you have returned or will return to the Company by September 30, 2004, all Company-related reports, files, memoranda, notes, records and other documents (whether stored electronically or otherwise) as well as credit cards, card key passes, door and file keys, computer access codes, computer software and any other property that you received or prepared or helped to prepare in connection with your employment.  You further acknowledge that you have not and will not retain any copies of excerpts of the materials described above, and that you will not attempt to retrieve or recreate any of the materials described above after the termination of your employment.

IV.NON-COMPETITION

For two (2) years after September 30, 2004, you agree (1) that you shall not directly or indirectly, whether individually or as a partner, officer, director, employee, consultant or in any capacity whatsoever, own, manage, operate, control or participate in the ownership, management, operation or control of or have any substantial financial interest in the conduct of any business or venture which competes with the Company or any of its subsidiaries or affiliates,  in any country in which the Company conducts business or maintains an office; (2) you shall not directly or indirectly, on your behalf or on behalf of any other person, firm, organization, business or venture solicit, induce, influence or encourage any employee of the Company or any of its subsidiaries or affiliates to terminate his or her employment with the Company or violate any agreement or duty or responsibility to the Company; and (3) you shall not directly or indirectly, on your behalf or on behalf of any other person, firm, organization, business or venture solicit, induce, influence or encourage any customer, supplier or any person or entity which has a business relationship with the Company or any of its subsidiaries or affiliates to terminate, discontinue or materially alter its relationship with the Company or its subsidiaries or affiliates.  You acknowledge that the restrictions contained herein are reasonable in scope, area and duration and are necessary to protect the Company's legitimate business interests, and that any violation of this paragraph will cause irreparable harm for which monetary damages will not be an adequate remedy.  In the event of a breach of the provisions of this paragraph, the Company will be entitled to an injunction, specific performance or other remedies available in law or in equity.  For purposes of this paragraph, "competes" means a competitor that is engaged in the business of sign making and specialty graphics, or apparel and flexible materials, or ophthalmic lenses processing.

V.CONFIDENTIAL INFORMATION

You will not at any time directly or indirectly divulge, furnish, use, publish or make accessible to any person or entity any Confidential Information (as defined below) relating to the business of the Company or any affiliate of the Company, except as may be required by applicable law.  The term "Confidential Information" means information of the Company or an affiliate which is confidential, secret or proprietary and pertains directly or indirectly to the business activities or services of the Company or an affiliate or their customers or clients, including but not limited to methods, processes, procedures, business plans, client lists and records, potential client or customer lists and client or customer billing.  However, the term Confidential Information will not include information which has been or is subsequently generally available to the public or has been or is subsequently made public by the Company or any affiliate or a third party not obligated to keep that information secret or confidential.

VI.BREACH OF AGREEMENT

If either party  violates any part of this Agreement, the breaching party will be responsible for all costs incurred by the non-breaching party that flow from that violation, including but not limited to the non-breaching party's legal fees and other costs associated with prosecuting or defending any legal action related to said breach.

VII.GOVERNING LAW

This Agreement shall be governed by and construed under the laws of the State of Connecticut.

ACKNOWLEDGMENTS

1.You acknowledge receipt of this Agreement on July 13, 2004;

2.You acknowledge that you have read and understand this Agreement and the meaning and effect thereof;

3.You have been given a period of at least twenty-one days from the date of receipt noted above within which to consider this Agreement and determined that you did not need that entire period but had ample time to carefully review and consider this Agreement.

4.This Agreement is not effective or enforceable for seven days after you sign it and you may revoke it during that time.  If you choose to revoke the Agreement, you must do so in writing and such written notice must be received by the Company prior to the end of the seventh day after you sign the Agreement. Any revocation within this period must be submitted, in writing, to William V. Grickis, Jr., Esq., Gerber Scientific, Inc., 83 Gerber Road West, South Windsor, CT 06074.  If the Company does not receive a written revocation by the end of the seven day period, this Agreement will become fully enforceable at that time.  Revocation of this Agreement does not alter or change the fact that your employment with the Company will terminate effective September 30, 2004.

5.You have not relied on any representations, promises, or agreements of any kind made to you in connection with your decision to sign this Agreement.  This Agreement sets forth the entire agreement between you and the Company and supersedes and renders null and void any and all prior or contemporaneous oral or written understandings, statements, representations or promises.

6.You acknowledge that a finding that any term or provision of this Agreement is invalid, unlawful or unenforceable will not affect the remaining terms and provisions of this Agreement, except that if the Release and Waiver provision above, which is an essential and material element of the Agreement, is found invalid, the entire Agreement shall also be invalid.

You have read, understand and voluntarily execute this Agreement and assent to its terms, affirming that your decision to sign this Agreement has been made freely and without any duress or coercion.

Dated: July 14, 2004               /s/ Shawn Harrington

                                               Shawn Harrington

Dated: July 14, 2004              GERBER SCIENTIFIC, INC.

                                                By: /s/ William V. Grickis, Jr. 

                                                     William V. Grickis, Jr.

                                                     General Counsel

APPENDIX A

SUPPLEMENTAL SEPARATION AGREEMENT BETWEEN SHAWN HARRINGTON

AND GERBER SCIENTIFIC, INC.

This Agreement is a contract between SHAWN HARRINGTON ("you"), and your employer, GERBER SCIENTIFIC, INC. (the "Company").  It sets out the terms under which your employment with the Company will continue and will terminate.  Those terms include the payment of certain monies and benefits to you in return for your agreement to be bound by conditions set forth in this Agreement. You should thoroughly review and understand the effects of the Agreement before signing it.  The Company advises you to consult an attorney before you sign this Agreement.  If you sign this Agreement, you will receive the payments and benefits described in Section II below that are payable subsequently to September 30, 2004. 

I.COMPLETE RELEASE AND WAIVER OF CLAIMS

A.  RELEASE AND WAIVER:  In exchange for the payment and benefits described in Section II, you agree to release GERBER SCIENTIFIC, INC. and all of its past, present and future subsidiaries, affiliates, successors and assigns (collectively, "the Company") from all claims, demands, actions, or liabilities you may have against the Company of whatever kind, including but not limited to those that in any way arise from or relate in any way to your employment with the Company or the termination of that employment.  You also agree to release from all such claims, demands, actions or liabilities the Company's past, present and future agents, directors, officers, employees, fiduciaries, representatives, successors, and assigns (hereinafter, "those associated with the Company"). You agree that you have executed this Agreement on your own behalf, and also on behalf of any heirs, agents, representatives, and assigns that you may have now or in the future.

You also agree that the release and waiver stated in this Agreement covers, but is not limited to, claims arising under the Age Discrimination in Employment Act of 1967 (including the amendments of the Older Workers Benefit Protection Act of 1990), Title VII of the Civil Rights Act of 1964, the Employee Retirement Income Security Act of 1974, the Worker Adjustment and Retraining Notification Act of 1988 (also known as "WARN"), the Americans with Disabilities Act, the Family and Medical Leave Act of 1993, the Connecticut Fair Employment Practices Act, and any other federal, state and local law dealing with discrimination on any basis, including sex, race, national origin, veteran status, marital status, religion, disability, sexual orientation, reservist status or age.  You also agree that the release and waiver stated in this Agreement includes claims based on contract or tort theories, whether based on common law or otherwise.  This Agreement also includes a release and waiver by you of any claims that you suffered or any other harm by or through the actions of the Company, including, but not limited to, claims for defamation or emotional distress.  This Release and Waiver does not apply to claims arising under any Workers Compensation statute, except claims for wrongful discharge or other discrimination in employment for exercising rights under this statute.   The Release and Waiver in this Agreement does not affect your vested rights, if any, in the Company's pension plans, which survive unaffected by this Agreement.

B.  NONRELEASE OF FUTURE CLAIMS: This Release and Waiver covers all claims or demands based on any facts or events, whether known or unknown by you, that occurred on or before the date you sign this Agreement.  The Company acknowledges that you have not released any rights or claim that you may have that arise after the date this Agreement is executed.  

C.  NO FUTURE LAWSUITS:  As a terminating employee who chooses to accept the terms of this Agreement, you promise never to file a lawsuit asserting any claim or demand against the Company, or those associated with the Company, including claims filed in state or federal court that arise from or are related to any claim that is within the scope of the Release and Waiver or claims arising from or related to your employment.  In addition, you agree not to assist any other person or entity in bringing any lawsuit against the Company in any state or federal court unless you are compelled to do so by the court or by law.  Your failure to comply with this provision shall constitute a breach of the Agreement.
BY SIGNING THIS AGREEMENT, YOU GIVE UP ANY RIGHT YOU MAY HAVE TO BRING A LAWSUIT OR RECEIVE A RECOVERY ON ANY CLAIM AGAINST THE COMPANY AND THOSE ASSOCIATED WITH THE COMPANY BASED ON ANY ACTIONS, FAILURES TO ACT, STATEMENTS OR EVENTS OCCURRING PRIOR TO THE DATE OF THIS AGREEMENT, INCLUDING CLAIMS THAT IN ANY WAY ARISE FROM OR RELATE TO YOUR EMPLOYMENT WITH THE COMPANY OR THE TERMINATION OF THAT EMPLOYMENT.

II.PAYMENTS AND BENEFITS

If you agree to the "Complete Release and Waiver of Claims" by signing this Agreement, you will receive the following consideration to which you are not otherwise entitled and which you acknowledge as sufficient, for your obligations under this Agreement.
1.Your last day of employment is September 30, 2004 (the "Termination Date").  

2.For the period October 1, 2004 to January 31, 2005, you agree to act as a consultant to the President and the Chief Executive Officer of the Company, as reasonably requested, such requests not to interfere with your right to engage in other employment as set forth herein, and you will be paid a total of $90,000.00 in four separate and equal payments at the end of each month.  You will be considered an independent contractor and a Form 1099 will be issued for the payments in this paragraph.

3.For the period February 1, 2005 to April 30, 2005, you agree to make yourself available as a consultant to the President and Chief Executive Officer, as reasonably requested, such requests not to interfere with your right to engage in other employment as set forth herein,  and you will be paid a non-refundable retainer of $67,500.00 on February 1, 2005, for which a Form 1099 will be issued.  In addition, you will be paid $150.00 an hour for each hour you provide actual consulting services to the Company.

 4.Subsequent to the Termination Date, subject to the provisions of Section IV herein, you may engage in other employment, whether part-time or full-time, which shall not affect any payments you receive  pursuant to paragraphs 2 and 3 above in this Section II regarding consulting you may perform for the Company.  You shall have no obligation to provide any consulting services to the Company after April 30, 2005 and the Company shall have no obligation to make any payments for any such services performed after April 30, 2005.

5.You agree and acknowledge you are not eligible to receive or otherwise entitled to receive any bonus or prorated bonus, under any policy, practice or plan of the Company or pursuant to this Agreement for the fiscal year 2005 or subsequently.

6.You acknowledge and agree that you and your immediate family's participation in any benefit plan provided by the Company will cease as September 30, 2004, including but not limited to any health, life insurance or disability plan, except to the extent any such plan provides to the contrary with regard to employees who have terminated employment and with the exception that your participation will continue in the Company's pension plan or any other "top hat" non-qualified pension benefit plan but no additional years of service will be credited to you subsequent to September 30, 2004 nor will any subsequent contribution be permitted to any such plan.  Your rights under the Consolidated Omnibus Budget Reconciliation Act ("COBRA") will commence on October 1, 2004.

7.All unvested stock options previously granted pursuant to any of the Company's stock option plans and all restricted stock granted to you shall vest on September 30, 2004.  Your opportunity to exercise all of your vested stock options is extended up to and including March 31, 2006 and such options must otherwise be exercised in accordance with the applicable stock option plans and grant agreements.

8.Marc Giles will provide a favorable letter of reference to be mutually agreed upon and attached hereto as an Exhibit.

9.The Company will reimburse you for your legal expenses and costs incurred in connection with your review of this Separation Agreement, in an amount not to exceed $5,000.

10.The Company shall continue to provide you with Directors and Officers insurance with respect to acts or omissions that occurred while you were an officer or director of the Company and shall indemnify you, hold you harmless and defend you from any and all claims that may be asserted against you by any third party with respect to your employment with the Company, including advancing reasonable attorneys fees, costs and expenses.

III.SURRENDER OF MATERIALS

You acknowledge that you have returned or will return to the Company by September 30, 2004, all Company-related reports, files, memoranda, notes, records and other documents (whether stored electronically or otherwise) as well as credit cards, card key passes, door and file keys, computer access codes, computer software and any other property that you received or prepared or helped to prepare in connection with your employment.  You further acknowledge that you have not and will not retain any copies of excerpts of the materials described above, and that you will not attempt to retrieve or recreate any of the materials described above after the termination of your employment.

IV.NON-COMPETITION

For two (2) years after September 30, 2004, you agree (1) that you shall not directly or indirectly, whether individually or as a partner, officer, director, employee, consultant or in any capacity whatsoever, own, manage, operate, control or participate in the ownership, management, operation or control of or have any substantial financial interest in the conduct of any business or venture which competes with the Company or any of its subsidiaries or affiliates,  in any country in which the Company conducts business or maintains an office; (2) you shall not directly or indirectly, on your behalf or on behalf of any other person, firm, organization, business or venture solicit, induce, influence or encourage any employee of the Company or any of its subsidiaries or affiliates to terminate his or her employment with the Company or violate any agreement or duty or responsibility to the Company; and (3) you shall not directly or indirectly, on your behalf or on behalf of any other person, firm, organization, business or venture solicit, induce, influence or encourage any customer, supplier or any person or entity which has a business relationship with the Company or any of its subsidiaries or affiliates to terminate, discontinue or materially alter its relationship with the Company or its subsidiaries or affiliates.  You acknowledge that the restrictions contained herein are reasonable in scope, area and duration and are necessary to protect the Company's legitimate business interests, and that any violation of this paragraph will cause irreparable harm for which monetary damages will not be an adequate remedy.  In the event of a breach of the provisions of this paragraph, the Company will be entitled to an injunction, specific performance or other remedies available in law or in equity.  For purposes of this paragraph, "competes" means a competitor that is engaged in the business of sign making and specialty graphics, or apparel and flexible materials, or ophthalmic lenses processing.

V.CONFIDENTIAL INFORMATION

You will not at any time directly or indirectly divulge, furnish, use, publish or make accessible to any person or entity any Confidential Information (as defined below) relating to the business of the Company or any affiliate of the Company, except as may be required by applicable law.  The term "Confidential Information" means information of the Company or an affiliate which is confidential, secret or proprietary and pertains directly or indirectly to the business activities or services of the Company or an affiliate or their customers or clients, including but not limited to methods, processes, procedures, business plans, client lists and records, potential client or customer lists and client or customer billing.  However, the term Confidential Information will not include information which has been or is subsequently generally available to the public or has been or is subsequently made public by the Company or any affiliate or a third party not obligated to keep that information secret or confidential.

VI.BREACH OF AGREEMENT

If either party violates any part of this Agreement, the breaching party will be responsible for all costs incurred by the non-breaching party that flow from that violation, including but not limited to the non-breaching party's legal fees and other costs associated with prosecuting or defending any legal action related to said breach.

VII.GOVERNING LAW

This Agreement shall be governed by and construed under the laws of the State of Connecticut.

ACKNOWLEDGMENTS

1.You acknowledge receipt of this Agreement on July 13, 2004;

2.You acknowledge that you have read and understand this Agreement and the meaning and effect thereof;

3.You have been given a period of at least twenty-one days from the date of receipt noted above within which to consider this Agreement and determined that you did not need that entire period but had ample time to carefully review and consider this Agreement.

4.This Agreement is not effective or enforceable for seven days after you sign it and you may revoke it during that time.  If you choose to revoke the Agreement, you must do so in writing and such written notice must be received by the Company prior to the end of the seventh day after you sign the Agreement. Any revocation within this period must be submitted, in writing, to William V. Grickis, Jr., Esq., Gerber Scientific, Inc., 83 Gerber Road West, South Windsor, CT 06074.  If the Company does not receive a written revocation by the end of the seven day period, this Agreement will become fully enforceable at that time.  Revocation of this Agreement does not alter or change the fact that your employment with the Company has been terminated.

5.You have not relied on any representations, promises, or agreements of any kind made to you in connection with your decision to sign this Agreement.  This Agreement sets forth the entire agreement between you and the Company and supersedes and renders null and void any and all prior or contemporaneous oral or written understandings, statements, representations or promises.

6.You acknowledge that a finding that any term or provision of this Agreement is invalid, unlawful or unenforceable will not affect the remaining terms and provisions of this Agreement, except that if the Release and Waiver provision above, which is an essential and material element of the Agreement, is found invalid, the entire Agreement shall also be invalid.

You have read, understand and voluntarily execute this Agreement and assent to its terms, affirming that your decision to sign this Agreement has been made freely and without any duress or coercion.

Dated: July 14, 2004               /s/ Shawn Harrington

                                               Shawn Harrington

Dated: July 14, 2004              GERBER SCIENTIFIC, INC.

                                               By: /s/ William V. Grickis, Jr. 

                                                     William V. Grickis, Jr.

                                                     General Counsel

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