<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
[X] Definitive Proxy Statement RULE 14C-5(D)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
Gerber Scientific, Inc.
------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Same
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(4) Date Filed:
Notes:
<PAGE>
[LOGO OF GERBER
SCIENTIFIC APPEARS GERBER SCIENTIFIC, INC.
HERE]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 13, 1995
TO OUR SHAREHOLDERS:
The annual meeting of shareholders of Gerber Scientific, Inc. will be held
on Friday, October 13, 1995, at 2:30 p.m., Eastern Daylight Saving Time, at
the Sheraton Hotel at Bradley International Airport, Windsor Locks,
Connecticut, for the following purposes, as more fully set forth in the
attached Proxy Statement:
1. To elect two Directors;
2. To obtain shareholder approval of the Gerber Scientific, Inc. 1992
Employee Stock Plan as amended and restated as of April 28, 1995; and,
3. To transact such other business as may properly come before the
meeting.
The Board of Directors has fixed August 4, 1995, as the record date for the
determination of shareholders entitled to notice of and the right to vote at
the annual meeting. Only persons who are shareholders of record on such date
shall be entitled to notice of and the right to vote at the meeting.
Shareholders are cordially invited to attend the meeting in person, but if
unable to attend, are requested to date and sign the enclosed form of proxy
and return it in the envelope provided. Any shareholder executing a proxy may
revoke it at any time before it is voted at the annual meeting, provided that
written notice of such revocation or a properly executed proxy bearing a later
date shall have been received by the Company's Secretary prior to its
exercise.
By Order of the Board of Directors
/s/ David J. Gerber
David J. Gerber
Secretary
Dated at South Windsor, Connecticut,
this 28th day of August, 1995
<PAGE>
GERBER SCIENTIFIC, INC.
83 GERBER ROAD WEST
SOUTH WINDSOR, CONNECTICUT 06074
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Gerber Scientific, Inc. (the "Company"),
for use at the annual meeting of shareholders to be held on Friday, October
13, 1995, and any adjournment thereof. The cost of solicitation of proxies
will be borne by the Company. In addition to use of the mails, proxies may be
solicited by Directors, officers, and employees of the Company by telephone or
otherwise, without additional compensation. The Company also intends to use
the services of Georgeson & Company, Inc., of New York, New York, to aid in
the solicitation of proxies. It is estimated that their charges and expenses
will not exceed $17,000. The Company expects to reimburse brokers and other
custodians, nominees, and fiduciaries for their reasonable expenses in
forwarding proxy material to beneficial owners of shares and soliciting their
proxies.
Abstentions and broker non-votes are not counted in the calculation of the
vote but do count toward a quorum. A proxy may be revoked at any time prior to
voting, but no revocation will be effective until written notice thereof or a
properly executed proxy bearing a later date has been received by the
Company's Secretary. The Company's mailing address is 83 Gerber Road West,
South Windsor, Connecticut 06074. Proxies will be voted as directed, and in
the absence of such direction will be voted FOR the nominees for Director
described herein and FOR the Gerber Scientific, Inc. 1992 Employee Stock Plan
as amended and restated as of April 28, 1995. This Proxy Statement and the
accompanying form of proxy are being first mailed to shareholders on or about
August 28, 1995.
VOTING RIGHTS AND PRINCIPAL SHAREHOLDERS
The Board of Directors has fixed the close of business on August 4, 1995, as
the record date for the determination of shareholders entitled to notice of
and the right to vote at the annual meeting. On the record date there were
23,797,220 shares of the Company's common stock, $1.00 par value, issued,
outstanding, and entitled to vote. Each shareholder of record at the close of
business on August 4, 1995, will be entitled to one vote for each share of
common stock then held.
The following table presents certain information regarding the beneficial
and record owners of more than five percent of the Company's common stock who
were known to the Company as of August 4, 1995.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF NUMBER OF PERCENT
BENEFICIAL OWNER SHARES OWNED OF CLASS
------------------- ------------ --------
<S> <C> <C>
H. Joseph Gerber...................................... 3,178,365(1) 13.4%
83 Gerber Road West, South Windsor, CT 06074
Norwest Corporation................................... 3,106,000 13.1%
Norwest Center, Sixth and Marquette, Minneapolis, MN
55479
Mitchell Hutchins Institutional Investors, Inc. ...... 2,235,700 9.4%
1285 Avenue of the Americas, New York, NY 10019
</TABLE>
--------
(1) Shares totaling 3,178,365 are owned beneficially and of record. They
include 103,475 shares owned beneficially by his wife, as to which he
disclaims any beneficial ownership, and options to purchase 40,000 shares
which are exercisable within 60 days. Except for the shares owned
beneficially by his wife, and those which can be acquired by the exercise
of stock options, Mr. Gerber has sole voting and investment power.
<PAGE>
ELECTION OF DIRECTORS
Two Directors are to be elected at the annual meeting. The Board of
Directors of the Company is divided into three classes, and one class is
elected each year for a three-year term. The term of the two Class II
Directors expires this year. The terms of the two Class III Directors and the
three Class I Directors expire in 1996 and 1997, respectively. The By-Laws of
the Company presently provide for a Board of Directors of not less than three
nor more than seven Directors.
The following information is provided for the nominees for the Class II
Directors, who, if elected, will serve for a term expiring at the 1998 annual
meeting, and also for the Class I and Class III Directors whose terms are
continuing. Directors receiving a plurality of the votes will be elected.
Unless otherwise directed in the proxy, it is intended that all shares
represented by proxies will be voted for the election of the nominees named
below. In the event that the nominees are unable to stand for election (which
is not anticipated), it is intended that all proxies, unless otherwise
specified, will be voted for such substitute nominees as the Board of
Directors may propose, or the Board may reduce the number of Directors to
eliminate the vacancy.
NOMINEES FOR DIRECTOR TO BE ELECTED AT THE 1995 ANNUAL MEETING (CLASS II)
George M. Gentile, 59, has been a Director since 1989. Mr. Gentile is the
Senior Vice President, Finance, of the Company and has served in that capacity
since 1977. He has been employed by the Company in various financial positions
since 1963 and presently serves as a director of several of the Company's
subsidiaries.
David J. Gerber, 34, the son of H. Joseph Gerber, has been a Director since
1992. Mr. Gerber has been an attorney in the Company's Legal Department since
1989, and in February, 1995, Mr. Gerber was appointed the Secretary of the
Company.
DIRECTORS SERVING UNTIL THE 1996 ANNUAL MEETING (CLASS III)
H. Joseph Gerber, 71, is the President and a Director of the Company and has
held those positions since 1948. In 1988, Mr. Gerber was elected as Chairman
of the Board of the Company. Mr. Gerber is a "control person" of the Company,
as defined by the Rules and Regulations of the Securities and Exchange
Commission. (See "Voting Rights and Principal Shareholders.") Mr. Gerber is an
honorary trustee of Rensselaer Polytechnic Institute, a trustee of the
Hartford Graduate Center, a member of the National Academy of Engineering, and
a member of the Connecticut Academy of Science and Engineering.
A. Robert Towbin, 60, has been a Director since 1992. Mr. Towbin is Vice
Chairman and a Director of the U.S. Russia Investment Fund. Mr. Towbin was
president, chief executive officer, and a director of the Russian-American
Enterprise Fund from January, 1994 to May, 1995, and managing director, Lehman
Brothers from January 1, 1987 to December 31, 1993. Mr. Towbin is also a
director of Columbus New Millenium Fund, K & F Industries, Inc., Bradley Real
Estate, Inc., and Globstar Telecommunications, Ltd.
DIRECTORS SERVING UNTIL THE 1997 ANNUAL MEETING (CLASS I)
Stanley Simon, 78, has been a Director since 1967. Since 1958, Mr. Simon has
been the owner and principal of Stanley Simon and Associates, of New York, New
York, a financial and management consulting firm. Mr. Simon is also a trustee
of Vornado Realty Trust Co., and a director of General Microwave, Inc. and J.
Baker, Inc.
Edward E. Hood Jr., 64, has been a Director of the Company since 1994. Mr.
Hood was Vice Chairman of General Electric Company, of Fairfield, Connecticut,
from 1979 to 1993. Mr. Hood is also a director of Lockheed Martin Corp., The
Lincoln Electric Co., and FlightSafety International, Inc., and chairman of
the board of trustees of Rensselaer Polytechnic Institute.
2
<PAGE>
William Jerome Vereen, 54, was appointed a Director of the Company by the
Board of Directors effective November 17, 1994. Mr. Vereen is President, Chief
Executive Officer, Treasurer, and Acting Chairman of the Board of Directors of
Riverside Manufacturing Company, of Moultrie, Georgia. Mr. Vereen is also a
director of Georgia Power Company and Blue Cross/Blue Shield of Georgia, and
is an advisory director for Southern Region, Nations Bank of Georgia N.A.
Other than the relationships described above, there is no significant
business relationship between the Company and any of the companies mentioned
above as the principal employer of the nominee or continuing Director, or
which the nominee or continuing Director also serves as a director. Other than
as set forth above, the nominees are not in any way related to any continuing
Director, no continuing Director is in any way related to the nominees or any
other continuing Director, and neither the nominees nor any continuing
Director is in any way related to any executive officer of the Company or its
subsidiaries. There is no arrangement or understanding between the nominees
and any other person pursuant to which he was selected as a nominee.
Any shareholder wishing to nominate other persons for Director of the
Company must do so in writing to the Secretary of the Company for receipt by
the close of business on the tenth day following the mailing of this Proxy
Statement by the Company or the public announcement of the date of the annual
meeting of shareholders.
The following information concerning the beneficial ownership of the
Company's common stock by each of the Directors and the nominees, by each of
the executive officers named in the Summary Compensation Table, and by all
Directors and executive officers as a group is provided as of August 4, 1995.
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
NAME OF BENEFICIAL OWNER SHARES OWNED(1) CLASS
------------------------ --------------- ----------
<S> <C> <C>
H. Joseph Gerber................................... 3,178,365(2) 13.4%
David J. Gerber.................................... 98,771(3) *
George M. Gentile.................................. 66,406(4) *
Stanley Simon...................................... 23,125(5) *
A. Robert Towbin................................... 28,000(6) *
Edward E. Hood, Jr. ............................... 2,000(7) *
William Jerome Vereen.............................. 2,000(8) *
Fredric K. Rosen................................... 37,500(9) *
Ronald B. Webster.................................. 31,600(10) *
Richard F. Treacy, Jr. ............................ 18,750(11) *
All Directors and executive officers as a group (11
persons).......................................... 3,496,017(12) 14.7%
</TABLE>
--------
* Less than 1%.
(1) Unless otherwise indicated below, each Director and executive officer has
sole voting and investment power with respect to such shares.
(2) Includes 103,475 shares owned beneficially by his wife, as to which he
disclaims any beneficial ownership, and options to purchase 40,000 shares
which are exercisable within 60 days. Except for the shares owned
beneficially by his wife, and those which can be acquired by the exercise
of stock options, Mr. Gerber has sole voting and investment power.
(3) Includes 30,746 shares held in trust, and 500 shares covered by stock
options which are exercisable within 60 days.
(4) Includes 39,375 shares covered by stock options which are exercisable
within 60 days.
(5) Includes 13,000 shares covered by stock options which are exercisable
within 60 days.
(6) Includes 3,000 shares covered by stock options which are exercisable
within 60 days.
(7) Includes 1,000 shares covered by stock options which are exercisable
within 60 days.
(8) Includes 1,000 shares which he holds as trustee for his children and 1,000
shares covered by stock options which are exercisable within 60 days.
3
<PAGE>
(9) Includes 4,000 shares owned beneficially by his wife, as to which he
disclaims any beneficial ownership, and options to purchase 10,000 shares
which are exercisable within 60 days.
(10) Includes 29,000 shares covered by stock options which are exercisable
within 60 days.
(11) Represents stock options which are exercisable within 60 days.
(12) Includes 164,925 shares covered by stock options which are exercisable
within 60 days.
DIRECTORS' COMPENSATION
Effective February, 1995, each non-employee Director receives an annual
Director's Fee of $16,000 for membership on and services to the Board, an
attendance fee of $1,000 for each meeting of the Board attended in person, and
annual compensation of $1,000 for membership on and services to each Committee
of the Board. During the year ended April 30, 1995, non-employee Directors
received fees for their services as Directors and Committee members as
follows: Mr. Simon, $9,703; Mr. Towbin, $9,703; Mr. Hood, $6,437; and Mr.
Vereen, $4,353. During the same period, Mr. Simon received annual consulting
fees of $3,000, and the firm of Stanley Simon and Associates received a
consulting fee of $17,917. No other Directors received fees for their services
as Directors or Committee members during the year ended April 30, 1995.
In 1992, shareholders approved the 1992 Non-Employee Director Stock Option
Plan (the "Director Option Plan"), pursuant to which directors of the Company
who are not (and have not been during the past twelve months) employees of the
Company are automatically granted 1,000 nonqualified options to purchase
shares of the Company's common stock on May 1 of each year. These options are
granted at 100% of the fair market value (as that term is defined in the
Director Option Plan) of a share of the Company's common stock on the date of
grant. The purpose of the Director Option Plan is to provide an incentive to
non-employee directors, to encourage ownership of the Company's common stock,
and to enable the Company to attract and maintain qualified non-employee
directors whose services are considered important to the success of the
Company. Up to 75,000 shares of common stock (subject to proportionate
adjustment in certain events) are available for grant under the plan. The
Director Option Plan is administered by the members of the Board who are
employees of the Company.
COMMITTEES OF THE BOARD OF DIRECTORS
The Company has three standing committees: the Audit and Finance Committee,
the Management Development and Compensation Committee, and the Business
Development Committee. It does not have a nominating committee.
The Audit and Finance Committee, formerly the Audit Committee, composed of
Messrs. Hood, Simon, Towbin, and Vereen, held one meeting during the fiscal
year ended April 30, 1995. The principal functions of the Audit and Finance
Committee are to review the selection and qualifications of the Company's
independent auditors and make recommendations to the Board, to review with the
independent auditors and the internal auditors the scope and adequacy of their
examinations and audits, and to review and approve non-audit services
performed by the independent auditors.
The Management Development and Compensation Committee, formerly the
Compensation and Stock Option Committee, composed of Messrs. Hood, Simon,
Towbin, and Vereen, held one meeting and acted by unanimous written consent on
one occasion during the fiscal year ended April 30, 1995. The principal
functions of the Management Development and Compensation Committee are to
establish and determine salaries and other compensation to be paid to
executive officers; to establish and determine terms and conditions of bonus
and stock option plans; to establish and administer performance goals and
other criteria for payment of any compensation of executive officers which is
intended to be performance based for purposes of Section 162(m) of the
Internal Revenue Code (the
4
<PAGE>
"Code"); to amend the Company's employee stock option plans, subject to
shareholder and other approvals as may be required by applicable law; and to
make recommendations to the Board of Directors concerning training and other
development of the Company's management personnel.
The Business Development Committee, composed of Messrs. Hood, Simon, Towbin,
and Vereen, was formed in February, 1995 and did not meet during the fiscal
year ended April 30, 1995. The principal function of the Business Development
Committee is to evaluate opportunities presented by the management of the
Company for development of existing and new business for the Company and its
subsidiaries.
The Board of Directors held four meetings and acted by unanimous written
consent on 23 occasions during the year ended April 30, 1995. All of the
Directors attended 75% or more of the aggregate of their respective Board and
Committee meetings.
SECTION 16(A) REPORTING
The Company believes that all required reports pursuant to Section 16(a) of
the Securities Exchange Act of 1934 have been timely filed by all officers,
Directors, and shareholders of the Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Management Development and Compensation Committee is composed of Messrs.
Hood, Simon, Towbin, and Vereen. During the fiscal year ended April 30, 1995,
Mr. Simon received $3,000 for consulting services performed for the Company
and Stanley Simon and Associates of New York, New York, a financial and
management consulting firm owned by Mr. Simon, received $17,917 in consulting
fees.
REPORT OF THE MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEEOF THE BOARD OF
DIRECTORS ON EXECUTIVE COMPENSATION
The Management Development and Compensation Committee of the Board of
Directors of Gerber Scientific, Inc. (the "Committee") consists of four non-
employee Directors of the Company: Mr. Edward E. Hood, Jr., Chairman; Mr.
Stanley Simon; Mr. A. Robert Towbin; and Mr. William Jerome Vereen.
The Committee is authorized to establish and determine salaries and other
compensation to be paid to executive officers; to establish and determine
terms and conditions of bonus and stock option plans; to establish and
administer performance goals and other criteria for payment of any
compensation to executive officers which is intended to be performance based
for purposes of Section 162(m) of the Internal Revenue Code (the "Code"); to
amend the Company's employee stock plans, subject to shareholder and other
approvals as may be required by applicable law; and to make recommendations to
the Board of Directors concerning training and other development of the
Company's management personnel. All decisions by the Committee relating to
compensation of executive officers may be reviewed and approved by the full
Board prior to taking effect, except for actions taken by the Committee
pursuant to the Company's employee stock plans.
Executive Compensation Philosophy
The Company's executive compensation philosophy continues to stress:
. Basing a major portion of each executive's annual cash compensation on
annual profitability of the Company or subsidiary for which the executive
is primarily responsible;
5
<PAGE>
. Aligning the financial interests of executives with long-term returns to
the shareholders; and,
. Providing a competitive executive compensation package to enable the
Company to attract and retain talented executives.
Executive Compensation Program
The Company's executive compensation program has three major components:
executives' base salaries, an incentive plan for awarding annual cash bonuses,
and a long-term incentive plan for awarding stock options.
BASE SALARY. In fiscal year 1995, the Committee determined base salaries of
the Company's executive officers, including those named in the Summary
Compensation Table (the "Named Executives"), based on the Committee's
subjective assessment of several factors. These factors included (1) the
performance of the Company or applicable subsidiary, (2) the executive's
individual accomplishments, (3) the executive's managerial capabilities, and
(4) other subjective factors deemed relevant by the Committee. There was no
specific weighting of these factors. The Committee's base salary
determinations followed annual appraisals of each executive which were
conducted by the Company's President and Senior Vice President, Finance,
except that the appraisal of the Senior Vice President, Finance was made by
the President and the appraisal of the President was made by the Committee
alone.
For fiscal year 1996, base salaries of the Company's executive officers were
determined by the Committee following completion of an executive compensation
study. The study was prepared at the Committee's direction by an external
compensation consultant from KPMG Peat Marwick L.L.P. to evaluate the
Company's executive compensation practices. The study examined salaries of
senior executives at companies similar to the Company in revenue and asset
size, as such salaries were reported in proxy data (in the case of thirteen
such companies engaged in technology-based manufacturing in the United States)
and surveys. These companies differed from the peer companies included in the
Dow Jones Diversified Technology Index used for comparing share investment
performance set forth below in this Proxy Statement, which are generally
substantially larger in revenue and asset size and were, therefore, deemed
inappropriate for purposes of base salary comparisons. The Committee
determined to target the Company's executive salaries within a range between
the median and seventy-fifth percentile of the range of corresponding surveyed
salaries to be competitive in the hiring and retention of high caliber
executives. The Committee's determination of salaries was made subjectively
with reference to these base salary ranges based on the same factors
considered by the Committee in determining base salary in fiscal 1995,
including annual appraisals of each executive's performance. As in fiscal
1995, there was no specific weighting of these factors.
ANNUAL INCENTIVE BONUS PLAN. In fiscal year 1995, cash bonuses were awarded
to employees of the Company and its subsidiaries, including the Named
Executives, pursuant to the Company's annual incentive bonus plan. Bonuses
under the plan are paid from bonus pools which are funded on the basis of
formulas determined at the beginning of the year by the Committee and
submitted to the full Board of Directors for approval. Separate bonus pools
are provided for employees of the Company and for employees of each of its
subsidiaries, with each pool being funded based on a percentage of the pre-
tax, pre-bonus profits of the applicable entity plus a percentage of the
improvement, if any, in such profits over a threshhold level based on the
highest annual pre-tax, pre-bonus profits achieved by the entity during the
prior three years. Such respective percentages in 1995, as in 1994, were 0.75%
and 2.25% for the corporate-level pool and 1% and 3% for each subsidiary-level
pool. Profit figures may be adjusted by the Committee to offset the effect of
certain income or expense items. Target and maximum amounts for cash bonus
awards in fiscal 1995 were determined at the beginning of the fiscal year as a
percentage of each participant's salary. For the Named Executives, the maximum
attainable
6
<PAGE>
amount was 100% and the target amount was 50% of base salary, based on a
subjective determination made by the Committee and approved by the Board of
Directors; for other participants, the target and maximum attainable amount
depended on the employee's position. Awards are made under the plan only to
the extent that the applicable bonus pool has been funded.
For fiscal year 1996, the bonus pool funding formulas used in fiscal year
1995 were retained, except that the Committee determined that interest income
and expense, as well as bonuses and taxes, shall be excluded from the
calculation of profit for the purpose of determining profit improvement
between current and past years for purposes of making bonus pool funding
determinations. This change was made to emphasize growth in core operating
earnings of the Company. The 50%-of-base-salary bonus target was also retained
for fiscal 1996, but the Committee reduced the maximum attainable bonus
percentage for 1996 to 75% of base salary, which is more consistent with
market practice based on the study.
LONG-TERM INCENTIVE PLAN. In fiscal year 1995, stock options were granted
pursuant to the Company's 1992 Employee Stock Plan (the "Employee Plan").
Option grants are intended to provide a form of long-term incentive that links
management rewards to shareholder value creation over a period of time which
is longer than the annual profit incentive bonus. Option grants also
facilitate the accumulation by each key employee of an equity interest in the
Company. Under the Employee Plan, incentive and non-qualified stock options to
purchase up to a maximum of 1,500,000 shares (or, 3,000,000 shares if the
amendments referred to below are approved by shareholders) of the Company's
common stock (subject to proportionate adjustment in certain events) over the
ten year duration of the plan may be granted to key managers of the Company
and its subsidiaries, including the Named Executives. The exercise price of
stock options equals 100% of the fair market value of a share of the Company's
common stock on the option grant date (or, 110% of the fair market value in
the case of grants of incentive stock options to Mr. H. Joseph Gerber, who
owns more than 10% of the Company's outstanding common stock). No option may
be exercised later than ten years from the grant date (or, five years from the
grant date in the case of incentive stock options granted to Mr. Gerber). The
size and timing of option grants depends on several factors. These factors
include: (1) previous grants to the executive, (2) recent corporate or
subsidiary profit performance, as applicable, and (3) the Committee's
subjective assessment of the executive's overall contribution to the Company's
success. No particular weighting is given to these factors. Option grants have
generally been considered every four years and on certain events such as
promotions. In keeping with this pattern, in fiscal year 1995, options to
purchase 7,500 shares of the Company's common stock were granted to one of the
Named Executives in connection with a promotion, making his cumulative option
total commensurate with the number of options granted to other senior
executives at the same organizational level. There were no stock option grants
to any of the other Named Executives, who had all received grants within the
prior four years.
For fiscal year 1996, the Committee revised the Company's long-term
incentive plan for executive officers and other key managers by amending and
restating the Employee Plan, subject to the approval of shareholders at the
annual meeting. The revision is intended to strengthen the tie between long-
term returns to the Company's shareholders and the financial interests of the
Company's executive officers and other key managers, through additional
incentives and rewards for generating increased shareholder value. The
proposed amendments permit cash "Performance Units" to be granted in
conjunction with options granted under the amended and restated Employee Plan.
These Performance Units are payable on attainment of certain pre-established
performance goals to be set by the Committee covering periods of at least 12
months. Their value equals the exercise price of a related stock option and
associated income taxes on a grossed-up basis, and are only payable if the
holder has previously exercised or simultaneously exercises a related stock
option. For a more detailed description of the proposed amendments to the
Employee Plan, see "Approval of the Gerber Scientific,
7
<PAGE>
Inc. 1992 Employee Stock Plan, as Amended and Restated as of April 28, 1995"
in this Proxy Statement. The Committee intends to consider grants under the
amended and restated Employee Plan every two years to reflect competitive
award opportunities for similar executive positions in comparable companies,
but may make grants at any time in the exercise of its discretion.
Compensation of the Chief Executive Officer
The fiscal year 1995 base salary of the Chief Executive Officer of the
Company was based on the Committee's subjective assessment of the same factors
described above in this report under the caption "Base Salary." Mr. H. Joseph
Gerber's fiscal year 1995 base salary was established at $469,000,
approximately a 6% increase over the $442,000 rate in effect for the preceding
fiscal year. This increase was determined subjectively and was based on the
Company's improved sales and significant improvement in earnings. It was
further based on the Committee's subjective assessment of Mr. Gerber's
continued extraordinary leadership of the Company, including significant
technical and managerial contributions.
The fiscal year 1995 annual cash bonus awarded to Mr. Gerber was based on
the Company's annual incentive bonus plan pertaining to the corporate bonus
pool described above in this report under the caption "Annual Incentive Bonus
Plan." For Mr. Gerber, like the other Named Executives, the maximum attainable
amount was 100% and the target amount was 50% of base salary. Mr. Gerber's
annual cash bonus was $293,041, an increase from the $181,726 amount paid for
the preceding fiscal year. This increase was due primarily to increased pre-
tax, pre-bonus profits of the corporate entity. No grant was made to Mr.
Gerber under the Company's long-term incentive plan during fiscal year 1995.
As indicated above in this report under the caption "Long-Term Incentive
Plan," prior to fiscal year 1996, option grants generally were considered
every four years, and Mr. Gerber had already received grants within the then-
prior four years.
Policy on Deductibility of Executive Compensation
The Committee's policy on deductibility of executive compensation is made
with reference to Section 162(m) of the Code and regulations thereunder, which
would disallow a deduction by the Company generally on compensation in excess
of $1 million for any of the Named Executives, but not on compensation which
is performance-based compensation within the meaning of Section 162(m).
Compensation which is payable because of the attainment of pre-established
performance goals will qualify as 162(m) performance-based compensation if (1)
the performance goals are established by an independent compensation committee
of the board of directors and (2) the material terms of the compensation and
performance goals have been approved by shareholders prior to payment.
The Committee intends to provide for the deductibility of all long-term
incentive plan expenses and will seek to qualify the proposed amended and
restated Employee Plan as performance-based compensation within the meaning of
Section 162(m). Indeed, the Committee generally intends to retain the
deductibility of all executive compensation expenses, although the Committee
recognizes that circumstances may arise in which the interests of the Company
and shareholders are best served by decisions which limit this deductibility,
and the Committee will act in its best judgment in such circumstances.
Management Development and Compensation
Committee
Mr. Edward E. Hood, Jr., Chairman
Mr. Stanley Simon
Mr. A. Robert Towbin
Mr. William Jerome Vereen
8
<PAGE>
EXECUTIVE COMPENSATION AND TRANSACTIONS
The following table shows compensation for services during the years ended
April 30, 1995, 1994, and 1993 for the President and the four other most highly
compensated executive officers of the Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------------------- ------------------------ -----------
(A) (B) (C) (D) (E) (F) (G) (H) (I)
SECURITIES
OTHER UNDERLYING ALL OTHER
ANNUAL COM- RESTRICTED OPTIONS/ LONG-TERM COMPEN-
NAME AND PENSATION STOCK SARS INCENTIVE SATION
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) ($) AWARDS ($)(1) (#)(2) PLAN ($)(3) ($)(4)
------------------ ---- ---------- --------- ----------- ------------- ---------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
H. Joseph Gerber........ 1995 $465,885 $293,041 $0 $0 0 $0 $500
President 1994 440,039 181,736 0 0 0 0 500
1993 425,000 66,725 0 0 0 0 500
George M. Gentile....... 1995 276,165 173,708 0 0 0 0 500
Senior Vice President, 1994 260,934 107,766 0 0 2,500 0 500
Finance 1993 250,846 39,383 0 0 0 0 500
Fredric K. Rosen........ 1995 228,421 226,684 0 0 0 0 500
Senior Vice President 1994 215,360 34,089 0 0 0 0 500
1993 207,231 122,975 0 0 20,000 0 500
Ronald B. Webster....... 1995 239,408 166,388 0 0 0 0 500
Senior Vice President 1994 226,015 131,767 0 0 0 0 500
1993 218,400 68,492 0 0 0 0 500
Richard F. Treacy, Jr... 1995 158,269 99,551 0 0 7,500 0 500
Senior Vice President 1994 143,846 59,408 0 0 1,500 0 500
and General Counsel 1993 134,038 21,044 0 0 12,500 0 500
</TABLE>
--------
(1) The Company does not offer any such restricted stock award plan.
(2) The securities underlying the options are shares of the Company's common
stock; the Company does not grant stock appreciation rights (SARs).
(3) The Company did not have a long-term incentive plan in effect for the years
covered in this table.
(4) Each executive officer received $300 in matching contributions under the
Company's 401(k) defined contribution plan and $200 as a Christmas bonus.
9
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
------------------------------------------------------ ----------------------
(A) (B) (C) (D) (E) (F) (G)
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING OPTIONS GRANTED EXERCISE OR
OPTIONS TO EMPLOYEES BASE PRICE(2) EXPIRATION
NAME GRANTED(#)(1) IN FISCAL YEAR ($ PER SHARE) DATE 5%(3) 10%(3)
---- ------------- --------------- ------------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
H. Joseph Gerber........ 0 0.0% n/a n/a n/a n/a
George M. Gentile....... 0 0.0% n/a n/a n/a n/a
Fredric K. Rosen........ 0 0.0% n/a n/a n/a n/a
Ronald B. Webster....... 0 0.0% n/a n/a n/a n/a
Richard F. Treacy, Jr. . 7,500 8.6% $14.37 10/5/04 $67,800 $171,800
</TABLE>
--------
(1) These options become exercisable in installments of 25% per year beginning
in fiscal year 1996. The terms of the plan provide that these options may
become exercisable in full in the event of a change of control (as defined
in the plan).
(2) All stock options were granted at the fair market value of the common
stock on the date of grant. These options were granted on October 6, 1994.
(3) Pursuant to Securities and Exchange Commission rules, columns (f) and (g)
show gains that might exist for the options over a period of ten years at
5% and 10% annual compounded appreciation in the stock price. This method
of valuation is hypothetical; if the stock price does not increase above
the exercise price, the compensation to the named executive will be zero.
If this same methodology was used to determine the potential realizable
gain for all stockholders over this same period (October 6, 1994 through
October 5, 2004), the gain based on 5% annual appreciation would be
approximately $215,000,000 and the gain based on 10% annual appreciation
would be approximately $544,000,000. The potential gain related to the
options granted to all of the named executives above represents
approximately .03% of the total potential gain to stockholders using this
valuation method. These are assumed rates of appreciation and are not
intended to forecast future appreciation of the Company's common stock.
Actual gains, if any, on option exercises and share holdings are dependent
on the future performance of the Company's stock price.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
<TABLE>
<CAPTION>
(A) (B) (C) (D) (E) (F) (G)
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT FISCAL OPTIONS AT FISCAL
SHARES YEAR-END (#) YEAR-END ($)(1)
ACQUIRED ON VALUE ------------------------- -------------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
H. Joseph Gerber........ 0 $ 0 30,000 10,000 $ 86,102 $ 28,700
George M. Gentile....... 0 0 34,375 6,875 211,237 22,162
Fredric K. Rosen........ 0 0 5,000 10,000 26,250 52,500
Ronald B. Webster....... 0 0 24,000 5,000 131,130 19,350
Richard F. Treacy, Jr. . 0 0 15,625 14,875 106,455 42,000
</TABLE>
--------
(1) These amounts represent the difference between the exercise price of the
stock options and the closing price of the Company's common stock on April
28, 1995 ($15.37) for all options held by each named executive. The stock
option exercise prices ranged from $7.25 to $14.37. All stock options are
granted at the fair market value of the common stock on the date of grant
except in the case of incentive stock option grants to Mr. Gerber which
are at 110% of the fair market value on the date of grant.
10
<PAGE>
PERFORMANCE GRAPH
The following graph and table compare the performance of the Company's
common stock with that of the S&P 500(R) and the Dow Jones Diversified
Technology group for the past five years. The graph plots the growth in value
of an initial $100 investment over the indicated time periods, with dividends
reinvested.
CUMULATIVE TOTAL RETURN
Based on investment of $100 on April 30, 1990,
assuming reinvestment of dividends
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
Apr-90 Apr-91 Apr-92 Apr-93 Apr-94 Apr-95
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Gerber Scientific, Inc. $100 $ 85 $ 95 $106 $126 $131
--------------------------------------------------------------------------------
S&P 500(R) $100 $118 $134 $147 $154 $181
--------------------------------------------------------------------------------
Dow Jones Diversified
Technology Index $100 $116 $129 $155 $164 $200
--------------------------------------------------------------------------------
</TABLE>
In accordance with rules promulgated by the Securities and Exchange
Commission, the information included under the caption "Report of the
Management Development and Compensation Committee of the Board of Directors on
Executive Compensation" will not be deemed to be filed or to be proxy
soliciting material or incorporated by reference in any prior or future
filings by the Company under the Securities Act of 1933 or the Securities
Exchange Act of 1934.
11
<PAGE>
PENSION PLANS
The Company maintains a non-contributory defined benefit pension plan, the
Gerber Scientific, Inc. and Participating Subsidiaries Pension Plan ("Pension
Plan"), covering full-time domestic employees, and a supplemental pension
benefit plan ("Supplemental Pension Benefit Plan"). Effective May 1, 1995
retirement benefits under the Pension Plan are based on an employee's years of
service and average annual compensation during the employee's five consecutive
highest-paid years in the last ten years. Compensation for this purpose
includes salary and other compensation paid by the Company and reportable on
Form W-2, but excludes fringe benefits (cash and noncash) including
compensation related to stock option plans which is reported in the Summary
Compensation Table in this Proxy Statement. The Code limits the amount of
compensation that may be considered and the annual benefits which may be
payable from the Pension Plan. Retirement benefits in excess of these
limitations are provided under the Supplemental Pension Benefit Plan which is
an unfunded arrangement.
The following table shows the estimated annual benefits payable to a
participant attaining age 65 in 1995 under the Pension Plan and the
Supplemental Pension Benefit Plan for specified years of service at age 65.
The table assumes that the given level of compensation is the compensation for
the last calendar year in the five-year averaging period, and uses a five
percent per year salary progression to determine five-year average
compensation. The benefits shown in the table are the plan formula benefits
and reflect a reduction for social security benefits. Each of the benefits
shown is payable as a straight life annuity. Benefits are reduced if a
survivor's benefit is payable. On retirement at ages earlier than 65, benefits
may be reduced depending upon age and service at retirement.
<TABLE>
<CAPTION>
YEARS OF SERVICE
-----------------------------------------------------------------------
COMPENSATION 15 20 25 30 35 40 45 50
------------ -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$125,000 $ 21,906 $ 31,033 $ 37,239 $ 43,826 $ 52,330 $ 60,833 $ 69,337 $ 77,840
150,000 27,008 37,836 45,743 54,030 64,235 74,439 84,643 94,847
175,000 32,110 44,639 54,246 64,235 76,139 88,044 99,949 111,854
200,000 37,212 51,441 62,749 74,439 88,044 101,650 115,255 128,860
225,000 42,314 58,244 71,253 84,643 99,949 115,255 130,561 145,867
250,000 47,416 65,047 79,756 94,847 111,854 128,860 145,867 162,874
300,000 57,620 78,652 96,763 115,255 135,663 156,071 176,479 195,888
400,000 78,028 105,863 130,777 156,071 183,282 210,493 237,704 264,915
500,000 98,437 133,074 164,790 196,888 230,901 264,915 298,928 332,942
600,000 118,845 160,285 198,804 237,704 278,520 319,337 360,153 400,969
700,000 139,253 187,496 232,817 278,520 326,139 373,758 421,377 468,996
800,000 159,661 214,707 266,831 319,337 373,758 428,180 482,602 537,024
</TABLE>
As of normal retirement age (65) or attained age, if later, the years of
service credited for retirement benefits for the Company's named executives in
the Summary Compensation Table would be as follows: 47 years for H. Joseph
Gerber; 38 years for George M. Gentile; 16 years for Fredric K. Rosen; 43
years for Ronald B. Webster; and 23 years for Richard F. Treacy, Jr.
The current compensation covered by the plans for the named executive
officers does not differ substantially from that set forth in the annual
compensation columns of the Summary Compensation Table.
12
<PAGE>
401(K) PLAN
The Company's 401(k) deferred compensation plan (the "401(k) Plan") covers
full-time domestic employees who have attained age 21 and have one year of
service. Under the 401(k) Plan, participating employees may contribute from 2%
to 15% of their salary on a "pre-tax" basis, subject to a calendar year
limitation of $9,240 in 1994 and 1995, plus up to 10% of their salary on an
"after-tax" basis. The Company matches 50% of the first 6% of a participant's
pre-tax contribution, up to a maximum annual Company contribution of $300 per
participant. Upon termination of service, disability, death, or retirement, a
participant is entitled to receive the value of his/her account, adjusted for
any investment earnings or losses.
APPROVAL OF THE GERBER SCIENTIFIC, INC. 1992 EMPLOYEE STOCK PLAN, AS AMENDED
AND RESTATED AS OF APRIL 28, 1995
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR APPROVAL OF THE
1992 EMPLOYEE STOCK PLAN, AS AMENDED AND RESTATED.
On September 24, 1992, the Company's shareholders approved the Gerber
Scientific, Inc. 1992 Employee Stock Plan (the "Employee Plan"). The Employee
Plan provides for grants of Incentive Stock Options and Nonqualified Options
(collectively, "Options") to key employees of the Company or any of its
majority-owned U.S. subsidiaries ("Subsidiaries") who make important and direct
contributions to the success of the Company and its Subsidiaries. The purpose
of the Employee Plan is to allow the Company to offer as an additional
incentive to these individuals the opportunity to increase their proprietary
interest in the Company.
The Management Development and Compensation Committee of the Company's Board
of Directors, which is responsible for compensation matters relating to the
Company's key employees, recently determined that it was in the best interests
of the Company to amend and restate the Employee Plan. Accordingly, the
Committee approved and adopted the Employee Plan, as amended and restated (the
"Amended and Restated Employee Plan"), subject to ratification and approval by
the Board of Directors and approval by the Company's shareholders. The Board of
Directors ratified and approved the Amended and Restated Employee Plan on April
28, 1995, and now submits the Amended and Restated Employee Plan to
shareholders for their approval.
PROPOSED AMENDMENTS
The proposed amendments to the Employee Plan are designed to further the
original purpose of the Employee Plan as well as to create additional
incentives and rewards for key employees for generating increased shareholder
value. A number of the proposed amendments incorporate requirements imposed
under Section 162(m) of the Code to maximize the tax deductibility of
compensation paid to key employees under the Amended and Restated Employee
Plan. Code Section 162(m), enacted in 1993, generally limits to $1 million per
individual per year the federal income tax deduction for compensation paid by a
publicly-held company to certain executive officers. Compensation that
qualifies as "performance-based compensation" for purposes of Code Section
162(m) is not subject to the $1 million compensation deduction limitation. The
Amended and Restated Employee Plan includes provisions that, when approved by
shareholders, are intended to permit compensation attributable to grants made
under the plan to qualify as "performance-based compensation." In addition, the
proposed amendments:
. increase the number of shares of Company common stock available for
grants of Options from 1,500,000 to 3,000,000;
. permit grants of performance units in conjunction with Option grants
where the performance units become payable in cash in the event
specified performance goals are attained and the grantee simultaneously
exercises related Options with that cash; and
13
<PAGE>
. allow for grants of Options that are transferable under limited
circumstances for estate planning purposes.
SUMMARY DESCRIPTION OF THE AMENDED AND RESTATED EMPLOYEE PLAN
The following is a summary of the material features of the Amended and
Restated Employee Plan. Capitalized terms used in this summary which are not
defined herein have the meanings ascribed to them in the Amended and Restated
Employee Plan. The full text of the Amended and Restated Employee Plan is
attached to this Proxy Statement as Exhibit A, and this summary is qualified
in its entirety by reference to that Exhibit.
Shares Available Under the Amended and Restated Employee Plan. The aggregate
number of shares of common stock of the Company, $1.00 par value ("Common
Stock"), with respect to which Options may be granted under the Amended and
Restated Employee Plan is 3,000,000 shares, an increase of 1,500,000 shares
over the number of shares of Common Stock originally made available for grant
under the Employee Plan. The shares of Common Stock issuable upon exercise of
Options may be authorized but unissued shares or shares which have been
reacquired by the Company, including shares purchased in the open market. If
any Option expires or is terminated unexercised, new Options may thereafter be
granted covering such shares.
The aggregate number of Performance Units that may be granted under the
Amended and Restated Employee Plan is 2,000,000.
The Amended and Restated Employee Plan includes anti-dilution provisions
that provide for proportionate adjustments in the number of Performance Units
and the number of shares of Common Stock available for grant of Options under
the plan, and in outstanding Options and Performance Units (collectively
"Grants") in the event of certain corporate restructuring events, stock
dividends, or similar transactions.
Eligibility. Grants may be made only to key employees, including officers,
who on the date of grant are employed by the Company or any of its
Subsidiaries and have managerial, supervisory, professional, scientific,
engineering, or similar responsibilities. A director of the Company or any
Subsidiary who is not an employee is not eligible to receive Options or
Performance Units under the Amended and Restated Employee Plan. Approximately
140 employees are eligible to receive Grants under the Amended and Restated
Employee Plan.
Administration. The Amended and Restated Employee Plan is to be administered
by a committee of the Company's Board of Directors (the "Committee"). Each
member of the Committee must be a "disinterested person" for purposes of Rule
16b-3 under the Securities Exchange Act of 1934 (the "Exchange Act") and an
"outside director" for purposes of Code Section 162(m). The Management
Development and Compensation Committee of the Board of Directors serves as the
Committee. Among its responsibilities, the Committee has sole and exclusive
discretion (subject to the terms of the Amended and Restated Employee Plan):
to designate key employees to whom Grants are to be made; to authorize and
make Grants; to determine the number of shares subject to each Option and
number of Options granted pursuant to any Grant Agreement, the Option Price
thereof, and whether the Options covered thereby are Incentive Stock Options
or Nonqualified Options; to determine the number of Performance Units granted
to any Participant; to determine the time or times when and the manner in
which each Option shall be exercisable; to determine the time or times when,
and the conditions to and manner in which, each Performance Unit shall be
paid; to establish the criteria, including but not limited to performance-
based criteria, for the vesting and/or acceleration of the vesting of Grants;
to determine the duration of the exercise period for each Option and the
duration of each Performance Unit; and to make all other determinations deemed
necessary or advisable for the
14
<PAGE>
administration of the Amended and Restated Employee Plan. The terms of each
Grant will be reflected in a Grant Agreement executed by the recipient of the
Grant and a proper officer of the Company.
Options
Types of Options. Options may be granted under the Amended and Restated
Employee Plan as Incentive Stock Options or as Nonqualified Options. Options
that are granted as Incentive Stock Options are intended to satisfy the
requirements of Code Section 422.
Exercise Price. The price per share of Common Stock subject to Options will
be no less than 100% (110% in the case of a grant of an Incentive Stock Option
to an owner of more than 10% of the total combined voting power of all classes
of stock of the Company or its Subsidiaries) of the Fair Market Value of such
stock on the date of grant.
On August 4, 1995 the closing price of Common Stock as reported in the New
York Stock Exchange-Composite Transactions listing was $17.375 per share.
Duration of Options. Each Grant Agreement will specify the exercise period
for an Option. No Option will be exercisable later than ten years from the
date of its grant, or five years from the date of its grant in the case of an
Incentive Stock Option granted to an owner of more than 10% of the total
combined voting power of all classes of stock of the Company or its
Subsidiaries.
Exercise of Options. Options will be exercisable on or following the date or
dates determined by the Committee and specified in each Grant Agreement. The
Committee may exercise discretion to change the date on which an outstanding
Option becomes exercisable; provided, that an exercise date designated in a
Grant Agreement may not be changed to a later date without the consent of the
Participant. The Committee expects that some Option grants under the Amended
and Restated Employee Plan will provide for accelerated vesting upon
certification by the Committee that certain preestablished performance goals,
which will be specified in Grant Agreements relating to such Options, have
been attained. It is anticipated that Options granted under the Amended and
Restated Employee Plan that provide for accelerated vesting in the event of
certification of the attainment of performance goals will be granted in
conjunction with, and will be related to, Performance Units.
As under the Employee Plan, the following terms will apply to an Option
granted under the Amended and Restated Employee Plan: (i) an Option will
become fully vested and exercisable as of the date a Participant terminates
employment with the Company or its Subsidiaries because of the Participant's
death or Permanent Disability; (ii) an Option or part thereof that would
become exercisable within two years from the date a Participant terminates
employment with the Company or its Subsidiaries because of Retirement at
normal retirement age of 65 will become immediately exercisable at such time
without regard to any accelerated vesting upon attainment of performance
goals; (iii) in the event of a Change of Control of the Company, all
unexercised outstanding Options will become immediately exercisable in full
and generally may be exercised any time on or after the first day following
public disclosure of the Change of Control; and (iv) in the event of a Change
of Control by reason of a merger, consolidation, liquidation, dissolution, or
sale of all or substantially all of the assets of the Company, Options will
become exercisable and generally may be exercised as of the effective date of
such event and will expire on such date if not exercised. In addition, the
Amended and Restated Employee Plan provides that in the event a Grant
Agreement includes provisions with respect to accelerated vesting upon the
attainment of performance goals, and as of the date of a Participant's
termination of employment due to Retirement at normal retirement age of 65 the
Company has completed a performance period, but the Committee has not yet
certified the attainment of the applicable performance goals, then the
Participant will become vested upon such certification in such Options as have
become vested as a result of the attainment of such performance goals.
15
<PAGE>
As under the Employee Plan, an Option granted under the Amended and Restated
Employee Plan that has become exercisable generally may be exercised following
termination of employment with the Company or any of its Subsidiaries, to the
extent it was exercisable on the date of such termination, within the earlier
of the expiration date of the Option or 30 days after such termination.
Options will expire on the date of termination if termination is the result of
the Participant's fraud or other gross misconduct. In addition, if employment
terminates as a result of death or Permanent Disability, the exercise period
is extended to the earlier of the expiration date of the Option or two years
following the date of death or Permanent Disability. If a Participant retires
after attaining normal retirement age of 65, an Option may be exercised, to
the extent it would become exercisable within two years from the date of
Retirement (without regard to any accelerated vesting upon attainment of
performance goals), within the earlier of the expiration date of the Option or
two years following such Retirement. If a Participant dies within two years
following termination of employment by reason of Retirement or Permanent
Disability, an Option may be exercised within the greater of (i) one year
following the date of death or (ii) the remainder of the two-year period
following such Retirement or Permanent Disability, but in no event later than
the expiration date of the Option.
Payment for stock purchased upon exercise of an Option must be made in full
at the time of exercise, either in cash or by delivery of previously-owned
shares of Common Stock.
Sales of Stock Underlying Options. The Amended and Restated Employee Plan,
like the Employee Plan, specifies that Common Stock purchased upon exercise of
an Option by a Participant who is subject to the reporting requirements of
Section 16(a) of the Exchange Act ("Insider Participants") may not be disposed
of until a date at least six months after the date of grant of such Option,
unless such disposition would not otherwise result in liability under Section
16(b) of the Exchange Act.
Performance Units
Granting of Performance Units. The Amended and Restated Employee Plan
provides the Committee with discretion to grant Performance Units in
conjunction with Options granted under the Amended and Restated Employee Plan.
The Committee, in its sole discretion, will determine the number of
Performance Units, if any, granted to a Participant in conjunction with
Options. Performance Units will relate to Options that are granted to a
Participant at the same time and which vest at the same time as the
Performance Units or earlier in accordance with the terms of a Grant Agreement
("Related Options"). A Performance Unit entitles its holder to receive from
the Company, subject to realizing certain preestablished performance goals to
be set by the Committee, an amount of cash equal to the Option Price of a
Related Option plus the amount of federal and state personal income taxes owed
by the Participant as a result of receiving a cash payment under a vested
Performance Unit. In addition, the value of a vested Performance Unit includes
the amount of federal and state personal income taxes owed by the Participant
in connection with his or her exercise of the Related Option. The portion of
the value of a vested Performance Unit that is related to a Participant's tax
liability in connection with payment under a Performance Unit and exercise of
a Related Option is calculated assuming the maximum combined federal and
Connecticut state income tax rates on a specified date and is determined on a
"grossed-up" basis. See Section 7.1 of Exhibit A to this Proxy Statement for a
description of the specific formula that applies in determining the amount of
cash payable under a vested Performance Unit.
16
<PAGE>
Preestablished Performance Goals. A Performance Unit does not become payable
unless a preestablished performance goal relating to such payment has been
attained and the Committee has so certified. Performance goals will be
established for a consecutive twelve-month or longer period (each, a
"Performance Period") by the Committee in compliance with Code Section 162(m).
Performance goals must be based on one or more of the following business
criteria:
return on equity;
return on assets;
net income; and/or
earnings per share,
provided, however, that in establishing performance goals based on these
business criteria, the Committee may make adjustments to the business criteria
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 financial statements, such as the effects of any accounting
changes, and after-tax gains or losses as a result of patent litigation.
Payment of Performance Units. No payment will be made under any Performance
Unit unless (i) the Committee has certified that the performance goal with
respect to such Performance Unit has been met, and (ii) the holder of such
Performance Unit has previously exercised or simultaneously exercises a
Related Option. If, as of the date a Participant terminates employment with
the Company because of death, Permanent Disability, or Retirement, the Company
has completed a performance period and attained the performance goals relating
to such performance period, but the Committee has not yet so certified, then
any outstanding Performance Unit earned by virtue of attaining such
performance goals may be paid to the Participant or, in the event of the
Participant's death, to the Participant's beneficiary, provided the
Participant, or the Participant's beneficiary in the event of the
Participant's death, simultaneously exercises or has previously exercised a
Related Option. Except as provided in the immediately preceding sentence, if a
Participant's employment with the Company is terminated for any reason, all
Performance Units granted to such Participant shall terminate and be of no
further force or effect.
The Committee has determined that Participants will be advised that Common
Stock underlying a Related Option that is purchased with the proceeds of a
vested Performance Unit is expected to be owned by the Participant for at
least three years and that earlier disposition of such Common Stock could
adversely affect the number of Grants in the future to such Participant under
the Amended and Restated Employee Plan.
Form of Payment for Performance Units. The Company will make payment under a
vested Performance Unit solely in cash.
Amendment and Termination. As under the Employee Plan, the Committee may
amend the Amended and Restated Employee Plan from time to time as it deems
advisable; provided, however, that no amendment will become effective without
prior approval of the shareholders which would (i) materially increase the
benefits accruing to Insider Participants, (ii) materially increase the number
of securities which may be issued under the Amended and Restated Employee Plan
to Insider Participants, or (iii) materially modify the requirements as to
eligibility for participation in the Amended and Restated Employee Plan to add
a class of Insider Participants. Any increase in the number of shares
available under the Amended and Restated Employee Plan for grant as Incentive
Stock Options and any change in the designation of the group of employees
eligible to receive Incentive Stock Options will be subject to shareholder
approval in accordance with Section 422 of the Code. No amendment of the
Amended and Restated Employee Plan may, without the consent of the holder of
an existing Grant, adversely affect the Participant's rights thereunder.
17
<PAGE>
The Board of Directors may terminate the Amended and Restated Employee Plan
at any time. Unless terminated sooner, the Amended and Restated Employee Plan
will terminate on August 19, 2002.
Other Terms and Conditions. The Amended and Restated Employee Plan provides
that the maximum number of shares of Common Stock with respect to which
Options may be granted to any Participant cannot exceed 300,000 shares in any
two-year period, subject to adjustment under the plan's anti-dilution
provisions. In addition, the Amended and Restated Employee Plan provides that
the maximum number of Performance Units that may be granted to any Participant
cannot exceed 300,000 in any two-year period, subject to adjustment under the
plan's anti-dilution provisions.
Options granted under the Amended and Restated Employee Plan will not be
transferable other than by will or by the laws of descent and distribution.
However, in the event Rule 16b-3 under the Exchange Act is revised in a manner
that would permit transfer of Options without affecting the exemption of the
Option under such rule, the Committee, in its sole and absolute discretion may
grant Options that can be transferred by gift to or for the benefit of family
members of the Participants or that can be transferred without consideration
to a trust established by the Participant for his beneficiaries.
Notwithstanding the foregoing, Options granted in conjunction with Performance
Units will not be transferable under any circumstances other than by will or
the laws of descent and distribution. Performance Units are not transferable
under any circumstances.
The Amended and Restated Employee Plan provides that it is a condition of a
Participant's right to exercise an Option or to receive payment under a
Performance Unit that the Participant pay, consent to the withholding by the
Company of, or make other provision satisfactory to the Company for the
payment of, any federal, state, or other taxes that the Company is obligated
to withhold or collect with respect to Options and/or Performance Units.
Federal Income Tax Consequences
Nonqualified Options. Generally, a Participant will not realize taxable
income at the time a Nonqualified Option is granted, nor will the Company be
entitled to a deduction at that time. Upon exercise, the Participant generally
will be treated as receiving compensation, taxable as ordinary income, in an
amount equal to the difference between the fair market value of the shares at
the time of exercise and the Option Price. At that time, subject to the
limitations of Code Section 162(m), the Company normally will be entitled to a
tax deduction in an amount equal to the amount included in income by the
Participant.
If a Participant pays all or a portion of the Option Price for a
Nonqualified Option by surrendering previously acquired Common Stock, the
exchange will not affect the tax treatment of the exercise. Upon such
exchange, no gain or loss is recognized upon the surrender of the previously
acquired shares of Common Stock to the Company, and the shares received by the
Participant equal in number to the surrendered shares will have the same basis
and holding period for capital gain or capital loss purposes as the
surrendered shares. Shares received by the Participant in excess of the number
of surrendered shares will have a basis equal to the fair market value of the
Common Stock on the date of exercise and the holding period for capital gains
purposes will commence on that date.
Upon the sale of stock acquired upon exercise of a Nonqualified Option, the
difference between any amount realized upon the sale and the fair market value
of the shares at the time of exercise will be treated as a long or short-term
capital gain or capital loss depending on how long the stock has been held.
Incentive Stock Options. Generally, a Participant will not realize taxable
compensation income at the time an Incentive Stock Option is granted or
exercised. However, except in the event of death or
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disability, if an Incentive Stock Option is exercised more than three months
following the Participant's termination of employment (a disqualifying
exercise), the Participant will be treated as receiving compensation and will
recognize ordinary income in an amount equal to the difference between the
fair market value of the shares on the date of exercise and the Option Price.
Also, the excess of the fair market value of the shares received upon exercise
of an Incentive Stock Option and the Option Price is potentially subject to
the alternative minimum tax. If a Participant exercises an Incentive Stock
Option by surrendering previously acquired shares of Common Stock, the
exchange will not affect the tax treatment of the exercise. Upon such
exchange, and except for disqualifying dispositions discussed below, no gain
or loss is recognized upon the surrender of the previously acquired shares to
the Company, and the shares received by the Participant equal in number to the
surrendered shares will have the same basis and holding period for capital
gain or capital loss purposes as the surrendered shares. Shares received by
the Participant in excess of the number of surrendered shares will have a
basis of zero and a holding period that commences on the date shares are
issued to the Participant upon exercise of the Incentive Stock Option.
When stock covered by an Incentive Stock Option is sold, the Participant
will be taxed on the difference between the sale price and the Option Price.
If the Participant has held the stock for at least one year after exercise of
the Incentive Stock Option and two years after the date the Incentive Stock
Option was granted, the gain, if any, will be treated as a long-term capital
gain. If a Participant sells stock covered by an Incentive Stock Option in a
disqualifying disposition, i.e., within one year after the exercise of the
Incentive Stock Option or within two years after the grant of the Incentive
Stock Option, the Participant will be treated as receiving compensation,
taxable as ordinary income, in the year of the disqualifying disposition in
the amount of the difference between the Option Price and the lesser of the
fair market value of the stock on the date of exercise and the sale price of
the stock. Any amount recognized as ordinary income upon the exercise of an
Incentive Stock Option is added to the Option Price in determining the
Participant's basis in the shares sold. In addition, under these
circumstances, there may be an adjustment in the calculation of the
Participant's alternative minimum tax.
The Company generally is not entitled to a deduction as a result of the
grant or exercise of an Incentive Stock Option. However, if the Participant
recognizes ordinary income as a result of a disqualifying exercise or
disposition, the Company is entitled to a deduction of an equivalent amount in
the taxable year of the Company in which the disqualifying disposition or
exercise occurs.
Performance Units. Participants who are granted Performance Units will not
recognize income at the time of grant. However, at the time the value of a
Performance Unit is paid to a Participant, the full amount of the payment is
treated as compensation that is taxable as ordinary income to the Participant,
and will be subject to tax withholding at the time it is paid. Subject to the
limitations of Code Section 162(m), the Company generally is entitled to claim
an income tax deduction in an amount equal to the amount of ordinary income
realized by the Participant.
Code Section 162(m). The Amended and Restated Employee Plan includes
provisions which, when approved by shareholders, are intended to make
compensation attributable to Options and Performance Units eligible for the
"performance-based compensation" exception to the $1 million compensation
deduction limitation. In addition, the Committee intends to administer the
Amended and Restated Employee Plan in a manner that would permit such
compensation to so qualify. As a result, it is anticipated that the Company
will be able to maximize the tax deductibility of the compensation
attributable to Grants under the Amended and Restated Employee Plan.
NEW PLAN BENEFITS
On May 21, 1995, the Committee granted certain Options and Performance Units
to certain of the Company's key employees including its President and the four
other most highly compensated
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executive officers of the Company. Each of these Grants has been conditioned
on shareholder approval of the Amended and Restated Employee Plan. The
following table provides information about such Grants.
GERBER SCIENTIFIC, INC.
1992 EMPLOYEE STOCK PLAN, AS AMENDED AND RESTATED
AS OF APRIL 28, 1995
<TABLE>
<CAPTION>
(A) (B) (C) (D) (E) (F)
DOLLAR
VALUE OF
OPTIONS DOLLAR
($)(1) NUMBER VALUE OF NUMBER OF
--------------------- OF PERFORMANCE PERFORMANCE
NAME AND POSITION 5% ($) 10% ($) OPTIONS (#) UNITS ($) UNITS (#)
----------------- ---------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
H. Joseph Gerber........ $ 990,509 $2,510,144 100,000 (2) 25,000
President
George M. Gentile....... 495,254 1,255,072 50,000 (2) 12,500
Senior Vice President,
Finance
Fredric K. Rosen........ 396,204 1,004,058 40,000 (2) 10,000
Senior Vice President
Ronald P. Webster....... 396,204 1,004,058 40,000 (2) 10,000
Senior Vice President
Richard F. Treacy, Jr. . 198,102 502,029 20,000 (2) 5,000
Senior Vice President
and General Counsel
All Current Executive
Officers, as a Group... 2,614,944 6,626,781 264,000 (2) 66,000
All Current Directors
Who Are Not Executive
Officers, as a Group... 0 0 0 (2) 0
All Employees Other than
Executive Officers, as
a Group................ 3,952,131 10,015,476 399,000 (2) 76,500
</TABLE>
--------
(1) Columns (b) and (c) show gains that might exist for the options over a
period of ten years at 5% and 10% annual compounded appreciation in the
stock price. This method of valuation is hypothetical; if the stock price
does not increase above the exercise price, the compensation to the
participant will be zero. If this same methodology was used to determine
the potential realizable gain for all stockholders over this same period
(May 21, 1995 through May 20, 2005), the gain based on 5% annual
appreciation would be approximately $235,000,000 and the gain based on 10%
annual appreciation would be approximately $596,000,000. The potential
gain to the Executive Officers and the other employees included in the
table represents approximately 2.8% of the total potential gain to
stockholders using this valuation method. These are assumed rates of
appreciation and are not intended to forecast future appreciation of the
Company's common stock. Actual gains, if any, on option exercises and
share holdings are dependent on the future performance of the Company's
stock price.
(2) The value of the Performance Units will depend on the price of the
Company's Common Stock on the date the Performance Units vest, if ever.
The Performance Units will not vest and become payable unless the
performance goals specified in the Grant Agreements are attained. If such
performance goals are attained in full, then each Performance Unit would
have a dollar value equal to $15.75 (the Option Price of one Related
Option) plus the amount of federal and state personal income taxes owed by
the Participant as a result of (i) exercising one related Option and (ii)
receiving a cash payment under a vested Performance Unit, on a grossed-up
basis. See Section 7.1 of Exhibit A to this Proxy Statement for a
description of the specific formula that applies in determining the amount
of cash payable under a vested Performance Unit.
Each Option reflected in the above table gives the holder the right to
acquire one share of the Company's Common Stock at the Option Price of $15.75,
the Fair Market Value of a share of Common
20
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Stock on the grant date. If the Amended and Restated Employee Plan is approved
by the Company's shareholders, and subject to the terms of the Amended and
Restated Employee Plan, the Options reflected in the above table that were
granted to the Company's named executives and certain other key employees will
vest and become exercisable six years from the grant date as specified in the
Grant Agreements relating to such Options. These Grant Agreements provide that
the vesting of all or a portion of the Options covered thereby will be
accelerated and become exercisable if the Company attains certain performance
goals relating to growth in the Company's annual compound earnings per share
over one or more performance periods beginning on May 1, 1995 and ending on
April 30 in the years 1997, 1998, 1999, and 2000. These Options also will vest
and become exercisable in the event of the death, permanent disability or (in
certain instances) retirement of the Participant or upon a Change of Control,
in accordance with the terms of the Plan. See "Exercise of Options" above.
The Committee granted Performance Units on May 21, 1995 in conjunction with
the Options that provide for accelerated vesting upon the attainment of
performance goals. These Performance Units will vest and become payable
partially or totally only in the event the performance goals specified in the
Grant Agreements are attained, and no amounts will be payable under a
Performance Unit unless and until the Company satisfies within the designated
performance periods the minimum specified performance goals that apply to
accelerated vesting of Options. For a description of the formula that will
apply in calculating the value of a vested Performance Unit, see Section 7.1
of Exhibit A to this Proxy Statement.
In the foregoing table, 93,000 options granted on May 21, 1995 to certain
key employees do not provide for accelerated vesting upon the attainment of
performance goals. Rather, such Options vest in 25% increments each year
beginning one year after the grant date as specified in the Grant Agreements
relating to such Options. These Options will also vest and become exercisable
in the event of the death, permanent disability or (in certain instances)
retirement of the Participant or upon a Change of Control, in accordance with
the terms of the Plan. See "Exercise of Options" above.
It is not possible to determine the amount of Options and Performance Units
that will be granted to any employee under the Amended and Restated Employee
Plan in future years since the grants under the Amended and Restated Employee
Plan are within the discretion of the Committee, nor is it possible to
determine the amount of Performance Units that would have been granted to any
employee under such plan during the last completed fiscal year if the Amended
and Restated Employee Plan had been in effect during such year. If
shareholders approve the Amended and Restated Employee Plan, the maximum
number of shares subject to Options which may be granted to a Participant
under the Amended and Restated Employee Plan during any two-year period is
300,000. Likewise, the maximum number of Performance Units which may be
granted to a Participant under the Amended and Restated Employee Plan during
any two-year period is 300,000. Information regarding grants made under the
Employee Plan to the Company's President and the other four most highly
compensated executive officers for the fiscal year ended April 30, 1995 is
provided in the Proxy Statement section entitled, "Option Grants in Last
Fiscal Year." In addition, during the same period, options to purchase 6,500
shares of the Company's common stock were granted to all current executive
officers as a group under the Employee Plan and options to purchase 73,000
shares were granted to approximately 33 employees, including all current
officers who are not executive officers.
VOTE REQUIRED FOR APPROVAL
The affirmative vote of the holders of a majority of the shares of common
stock represented at the meeting and entitled to vote is required for the
adoption of the Amended and Restated Employee Plan. If this proposal is not
approved by the Company's shareholders, the Employee Plan will continue in
effect in the form approved by the Company's shareholders on September 24,
1992.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE 1992 EMPLOYEE STOCK PLAN,
AS AMENDED AND RESTATED AS OF APRIL 28, 1995.
21
<PAGE>
INDEPENDENT AUDITORS
The Board of Directors has approved the appointment of KPMG Peat Marwick
L.L.P as independent auditors to audit the financial statements of the Company
for the fiscal year ending April 30, 1996. This firm has served as independent
auditors for the Company for many years. The audit services rendered to the
Company by KPMG Peat Marwick L.L.P during the year ended April 30, 1995,
included examination of the annual financial statements of the Company, review
of quarterly reports, and consultation on various accounting and tax matters.
Representatives of KPMG Peat Marwick L.L.P are expected to be present at the
annual meeting and will have the opportunity to make a statement if they wish.
They will also be available to respond to appropriate questions.
SHAREHOLDER PROPOSALS FOR 1996 ANNUAL MEETING
Shareholder proposals for the 1996 annual meeting must be received by the
Company no later than March 27, 1996, for inclusion in the 1996 Proxy
Statement and form of proxy.
OTHER BUSINESS
The Board of Directors and management do not know of any matters to come
before the annual meeting of shareholders other than those set forth in the
accompanying Notice. If any other matters properly come before the meeting,
however, it is the intention of the persons named in the enclosed form of
proxy to vote on such matters in accordance with their best judgment and in
the best interests of the Company.
By Order of the Board of Directors
/s/ David J. Gerber
David J. Gerber
Secretary
Dated at South Windsor, Connecticut,
this 28th day of August, 1995
22
<PAGE>
EXHIBIT A
GERBER SCIENTIFIC, INC.
1992 EMPLOYEE STOCK PLAN,
AS AMENDED AND RESTATED AS OF APRIL 28, 1995
ARTICLE 1. DEFINITIONS
1.1 Board shall mean the Board of Directors of the Company.
1.2 Change of Control shall mean (i) the acquisition by any person
(including a group within the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act but excluding the Company or any of its subsidiaries or any
person who or which was the beneficial owner on August 20, 1992 (the date the
Board initially adopted the Plan), as reflected in a Schedule 13D or a
Schedule 13G filed with the Securities and Exchange Commission as of such
date, of more than 6% of the combined voting power of the Company's then
outstanding voting securities) of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of 30% or more of the combined
voting power of the Company's then outstanding voting securities; (ii) the
first purchase of Common Stock pursuant to a tender offer or an exchange
offer, other than an offer by the Company or any of its subsidiaries; or (iii)
approval by shareholders of the Company of a merger, consolidation,
liquidation or dissolution of the Company, or of the sale of all or
substantially all of the assets of the Company.
1.3 Code shall mean the Internal Revenue Code of 1986, as amended.
1.4 Committee shall mean those members of the Board who are appointed by the
Board to administer the Plan in accordance with the provisions of Article 5 of
the Plan.
1.5 Common Stock shall mean the common stock, $1.00 par value, of the
Company.
1.6 Company shall mean Gerber Scientific, Inc., its Subsidiaries and their
successors and assigns.
1.7 Effective Date shall have the meaning ascribed to such term in Section
2.2 of the Plan.
1.8 Employee shall mean any employee of the Company or any Subsidiaries.
1.9 Exchange Act shall mean the Securities Exchange Act of 1934, as amended.
1.10 Fair Market Value shall mean, as applied to a specific date, the
closing price for the Common Stock on such date as reported in the New York
Stock Exchange-Composite Transactions by The Wall Street Journal, or if no
Common Stock was traded on such date, on the next preceding day on which
Common Stock was so traded. If the Common Stock is not listed and traded on
the New York Stock Exchange, the Fair Market Value shall mean, as applied to a
specific date, the closing price for the Common Stock on such date as reported
on such other principal United States securities exchange registered under the
Exchange Act on which the Common Stock is listed, or if the Common Stock is
not listed on any such exchange, the highest closing bid quotation with
respect to a share of Common Stock on the National Association of Securities
Dealers, Inc. Automated Quotations System.
1.11 Grant shall mean, individually or collectively, a grant under this Plan
of Nonqualified Stock Options, Incentive Stock Options, and/or Performance
Units.
1.12 Grant Agreement shall mean the written agreement evidencing the grant
of an Option and/or a Performance Unit entered into between a Participant and
the Company pursuant to the Plan. The Committee may designate any Grant
Agreement evidencing only the grant of an Option as an Option Agreement.
A-1
<PAGE>
1.13 Grant Date shall mean, with respect to a particular Grant, the date as
of which such Grant is granted by the Committee pursuant to the Plan.
1.14 Incentive Stock Option shall mean any Option granted under this Plan
which the Committee intends (at the time it is granted) to be an incentive
stock option within the meaning of Section 422 of the Code.
1.15 Insider Participant shall mean any individual who is selected by the
Committee to receive Grants under the Plan and who is subject to the
requirements of Section 16(a) of the Exchange Act, and the rules and
regulations thereunder.
1.16 Noninsider Participant shall mean any person who is selected by the
Committee to receive Grants under the Plan who is not an Insider Participant.
1.17 Nonqualified Option shall mean any Option granted under this Plan which
is not an Incentive Stock Option.
1.18 Option shall mean the right of a Participant to purchase Common Stock
in accordance with the provisions of this Plan.
1.19 Option Price shall mean the price per share of Common Stock to be paid
by a Participant upon exercise of an Option, as stated in the Grant Agreement.
1.20 Participant shall mean any Employee who satisfies the eligibility
requirements of Article 3 of the Plan and who is selected by the Committee to
receive a Grant under the Plan.
1.21 Performance Unit shall have the meaning set forth in Section 7.1 of the
Plan.
1.22 Plan shall mean the Gerber Scientific, Inc. 1992 Employee Stock Plan
and any amendments thereto.
1.23 Retirement shall mean termination of employment, for reasons other than
Permanent Disability or death, no earlier than the normal retirement age
pursuant to the Gerber Scientific, Inc. and Participating Subsidiaries Pension
Plan or any successor thereto, or age 65 if the Company does not maintain a
pension or retirement plan.
1.24 Rule 16b-3 shall mean Rule 16b-3 of the General Rules and Regulations
under the Exchange Act or any successor act then in effect.
1.25 Subsidiary shall mean any present or future majority-owned U.S.
subsidiary of the Company which meets the definition of a "subsidiary
corporation" set forth in Section 424(f) of the Code, at the time the Grant in
question is made.
1.26 Permanent Disability shall mean "permanent and total disability" as
provided in Section 22(e)(3) of the Code.
ARTICLE 2. PURPOSE
2.1 Purpose. The purpose of this Plan is to offer as an additional incentive
to the officers and other key Employees who are the most responsible for the
growth and success of the Company and its Subsidiaries, the opportunity to
increase their proprietary interest in the Company under conditions which will
encourage their continued employment in the service of the Company or its
Subsidiaries and to recognize and reward their contribution to creating
shareholder value.
A-2
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2.2 Effective Date. The Plan initially became effective August 20, 1992. No
Incentive Stock Options, Nonqualified Options or Performance Units shall be
granted under the Plan after August 19, 2002. The amended and restated Plan
shall become effective upon approval by the affirmative vote of the holders of
a majority of shares of Common Stock present or represented and entitled to
vote at a meeting of shareholders to be held in 1995. A Grant made after the
Board has approved the Plan, as amended and restated, but prior to the date of
shareholder approval of the Plan as so amended and restated, shall be made
subject to such approval.
ARTICLE 3. ELIGIBILITY
3.1 Persons Eligible. Grants may be made only to Employees who are key
Employees (which term shall be deemed to include officers) who on the granting
date (i) are employed by the Company or any of its Subsidiaries and (ii) have
managerial, supervisory, professional, scientific, engineering or similar
responsibilities. A director of the Company or any Subsidiary who is not also
an Employee shall not be eligible to receive a Grant. During the term of this
Plan, Grants may be made to eligible Employees whether or not they hold or
have held Grants under the Plan or options under previously adopted plans.
The Committee shall determine, in its sole discretion, who is a key Employee
and its decision shall be final, binding and conclusive.
ARTICLE 4. COMMON STOCK COVERED BY THE PLAN
4.1 Plan Maximums. The aggregate number of shares of Common Stock with
respect to which Options may be granted under the Plan shall be 3,000,000
shares, subject to adjustment as provided in Section 4.4 of the Plan. If any
Option expires or is terminated unexercised, then the number of shares of
Common Stock covered by such Option shall again be available for grant of an
Option under the Plan.
The aggregate number of Performance Units that may be granted under the Plan
shall be 2,000,000, subject to adjustment as provided in Section 4.4 of the
Plan. The payment of cash under any Performance Unit shall not be deemed to
result in the issuance of any shares of Common Stock.
4.2 Limitation on Option Grants Per Participant. The maximum number of
shares of Common Stock with respect to which Options may be granted under this
Plan to any Participant shall not exceed 300,000 shares in any two-year
period, subject to adjustment as provided in Section 4.4 hereunder.
4.3 Source of Shares. The shares to be issued upon exercise of Options
granted under this Plan shall be made available, at the discretion of the
Board, either from the authorized but unissued shares of Common Stock or from
shares of Common Stock reacquired by the Company, including shares purchased
in the open market.
4.4 Adjustments to Grants. In the event that the number of outstanding
shares of Common Stock is changed by reason of a split-up or combination or an
exchange of shares or recapitalization or by reason of a stock dividend,
merger, consolidation, reorganization, liquidation or the like, the number of
shares for which Options may thereafter be granted under this Plan, the number
of shares then subject to Options theretofore granted under this Plan, the
price per share payable by the Participant upon exercise of such Options, the
number of Performance Units which may thereafter be granted under the Plan,
the number of Performance Units then granted under this Plan and the amount of
cash payable by the Company pursuant to a Performance Unit shall be adjusted
proportionately so as to reflect such change.
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ARTICLE 5. ADMINISTRATION OF THE PLAN
5.1 Committee. The Plan shall be administered by the Committee, which shall
be composed of not less than two members of the Board appointed by the Board
and serving at the Board's discretion; provided, that as long as the Company
relies on the exemption contained in Rule 16b-3 as in effect prior to May 1,
1991, the Committee shall be composed of not less than three members of the
Board. Each member of the Committee shall be a member of the Board who
qualifies as a "disinterested person" within the meaning of Rule 16b-3 and an
"outside director" within the meaning of Section 162(m) of the Code and
regulations thereunder, as amended from time to time. Any vacancy occurring in
the membership of the Committee shall be filled by appointment by the Board.
5.2 Powers of Committee. The Committee may interpret the Plan, prescribe,
amend, and rescind any rules and regulations necessary or appropriate for the
administration of the Plan, and make such other determinations under, and
interpretations of, the Plan, and take such other action, as it deems
necessary or advisable. Any interpretation, determination or other action made
or taken by the Committee shall be final, binding and conclusive upon all
parties.
5.3 Action by Committee. A majority of the members of the Committee shall
constitute a quorum. All determinations of the Committee shall be made by a
majority of its members. Any decision or determination reduced to writing and
signed by all of the members shall be fully as effective as if it had been
made by a majority vote at a meeting duly called and held. The Committee shall
also have express authority to hold Committee meetings by means of conference
telephone or similar communications equipment by which all persons
participating in the meeting can hear each other.
5.4 Discretion to Determine Grants. Subject to the provisions of the Plan,
the Committee shall have the authority in its sole discretion from time to
time to: (a) determine and designate those key Employees to whom Grants are to
be made; (b) authorize and make Grants; (c) determine the number of shares
subject to each Option and number of Options granted pursuant to any Grant
Agreement, the Option Price thereof, and whether the Options covered thereby
are Incentive Stock Options or Nonqualified Stock Options; (d) determine the
number of Performance Units granted to any Participant; (e) determine the time
or times when and the manner in which each Option shall be exercisable; (f)
determine the time or times when, and the conditions to and manner in which,
each Performance Unit shall be paid; (g) establish the criteria, including but
not limited to performance-based criteria, for the vesting and/or acceleration
of the vesting of Grants; (h) determine the duration of the exercise period
for each Option and the duration of each Performance Unit; and (i) make all
other determinations deemed necessary or advisable for the administration of
the Plan. In making these determinations, the Committee may take into account
the nature of the services rendered by respective Employees, their present and
potential contributions to the success of the Company and such other factors
as the Committee in its discretion shall deem relevant.
The Committee may, in its discretion, treat all or any portion of any period
during which a Participant is on military or on an approved leave of absence
from the Company as a period of employment of such Participant by the Company,
for purposes of accrual of his rights under his Grants.
5.5 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 the 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,
A-4
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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.
5.6 Reliance. Each member of the Board or of the Committee, and each officer
and Employee of the Company, shall be fully justified in relying or acting in
good faith upon any information furnished in connection with the
administration of the Plan by any appropriate person or persons. In no event
shall any current or past member of the Board or Committee, or an officer or
Employee of the Company, be held liable for any determination made or other
action taken or any omission to act in reliance upon any such information, or
for any action (including the furnishing of information) taken or any failure
to act, if in good faith.
5.7 Agents. In administering the Plan, the Committee may employ accountants
and counsel (who may be the independent auditors and outside counsel for the
Company) and other persons to assist or render advice to it, all at the
expense of the Company.
ARTICLE 6. TERMS AND CONDITIONS OF OPTIONS
Each Option granted under the Plan shall be subject to the following terms
and conditions:
6.1 Grant Agreement. A proper officer of the Company and each Participant
shall execute a Grant Agreement which shall set forth the Grant Date of the
Option, the total number of shares of Common Stock subject to Option to which
such Grant Agreement pertains, the Option Price, whether it is a Nonqualified
Option or an Incentive Stock Option, the time or times when the Option is
exercisable, the duration of the exercise period, and such other terms,
conditions, restrictions, and privileges as the Committee in each instance
shall deem appropriate, provided they are not inconsistent with the terms,
conditions, and provisions of this Plan.
6.2 Option Price.
(a) Incentive Stock Options. The price per share of Common Stock subject
to an Incentive Stock Option shall be no less than one hundred percent
(100%) of the Fair Market Value of a share of Common Stock on the Grant
Date of such Incentive Stock Option, except as provided in Section 6.9(c)
below.
(b) Nonqualified Options. The price per share of Common Stock subject to
a Nonqualified Option shall be no less than one hundred percent (100%) of
the Fair Market Value of the Company's Common Stock on the Grant Date of
such Nonqualified Option.
6.3 Exercise of Option. Except as otherwise provided in this Section 6 of
the Plan, an Option granted hereunder shall be exercisable at such times,
under such conditions, and in such manner as the Committee shall determine and
specify in the Grant Agreement. Pursuant to the terms of the Grant Agreement
or otherwise, the Committee may exercise discretion to change the date on
which an outstanding Option becomes exercisable; provided, that an exercise
date designated in a Grant Agreement may not be changed to a later date
without the consent of the Participant. An Option shall be exercised by (a)
written notice to the Committee of the intent to exercise the Option with
respect to a specified number of shares of Common Stock and (b) payment for
such shares as specified in Section 6.8 of the Plan. Upon vesting of an
Option, the Option may be exercised in whole or in part, but only
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with respect to whole shares of Common Stock, during the option period
determined in accordance with Sections 6.5 through 6.7.
6.4 Sales of Stock Underlying Options. Notwithstanding anything in the Plan
to the contrary, except in the case of sales by an executor or administrator
of the estate of a deceased Insider Participant, shares of Common Stock
acquired through the exercise of an Option granted hereunder to an Insider
Participant may not be disposed of until a date at least six months after the
Grant Date of such Option as specified in the Grant Agreement, unless such
disposition would not otherwise result in liability under Section 16(b) of the
Exchange Act.
6.5 Option Period. Each Grant Agreement shall specify the period during
which an Option may be exercised and shall provide that the Option shall
expire at the end of such period. However, except as otherwise provided in
Section 6.9(c) below, in no event shall an Option granted under this Plan be
exercisable later than ten (10) years from the Grant Date. Subject to Section
6.7 of the Plan, an Option granted pursuant hereto may be exercised only while
a Participant remains employed by the Company or its Subsidiaries.
6.6 Accelerated Vesting in the Event of Death, Disability, Retirement, or
Change of Control.
(a) An Option granted under this Plan that is not fully vested and
exercisable as of the date the Participant terminates his employment with
the Company because of his death or Permanent Disability shall become fully
vested and immediately exercisable on such date and may be exercised as
provided in Section 6.7.
(b) In the event of termination of employment due to Retirement, an
Option or part thereof, to the extent it would become exercisable within
two years from the date of Retirement, without regard to any provisions in
the Grant Agreement relating to accelerated vesting upon attainment of
performance goals, shall become immediately exercisable upon the
Participant's termination of employment and may be exercised by the
Participant as provided in Section 6.7. In addition, in the event a Grant
Agreement includes provisions with respect to accelerated vesting upon
attainment of performance goals, and as of the date of such Participant's
termination of employment due to Retirement the Company has completed a
performance period and attained the applicable performance goals relating
to such performance period as described in the Grant Agreement, but the
Committee has not yet certified the attainment of such performance goals,
then the Participant shall become vested upon such certification in such
Options as have become vested upon the attainment of such performance goals
(as determined under the terms of the Grant Agreement), and such Options
may be exercised by the Participant as provided in Section 6.7.
(c) In the event of a Change of Control of the Company, as defined in
Section 1.2, all unexercised outstanding Options under this Plan shall
become immediately exercisable in full and may be exercised at any time on
and after the first day following the date of public disclosure of a Change
of Control, provided the Option is exercised within the option period
determined in accordance with Sections 6.5 and 6.7 of the Plan, except that
in the case of a Change of Control by reason of merger, consolidation,
liquidation, dissolution or sale of all or substantially all of the assets
of the Company, such Options shall become exercisable and may be exercised
as of the effective date of such merger, consolidation, liquidation,
dissolution or sale of all or substantially all assets and, if not
exercised, shall expire on such date. Notwithstanding the foregoing, in the
event of a merger, consolidation, liquidation, dissolution or sale of all
or substantially all of the assets of the Company, the expiration of an
unexercised Option as of the effective date of such event shall occur only
if the Participant has received notice by registered or certified mail,
return receipt requested, of such proposed event not less than twenty (20)
business days in advance of the effective date of the proposed event.
6.7 Exercise in the Event of Death, Disability, Retirement, or Termination
of Employment.
(a) Death or Disability. In the event of termination of employment due to
death or Permanent Disability, an Option or part thereof may be exercised
in whole share increments
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within two years following the date of death or Permanent Disability, as
the case may be, but in no event any later than the expiration date of the
Option determined under Section 6.5. In the event of the Participant's
death within two years following termination of employment by reason of
Retirement or Permanent Disability, the Option may be exercised within the
greater of (i) one year following the date of death or (ii) the remainder
of the two-year period following the Participant's date of Retirement or
Permanent Disability, but in no event any later than the expiration date of
the Option determined under Section 6.5.
(b) Retirement. In the event of termination of employment due to
Retirement, an Option or part thereof, to the extent it becomes exercisable
in accordance with Section 6.6(b), may be exercised at any time prior to
the earlier of (i) the expiration date of the Option determined under
Section 6.5, or (ii) two years following the date of Retirement.
(c) Termination of Employment for Reasons Other than Death, Disability or
Retirement. In the event of the Participant's termination from employment
by reason other than death, Permanent Disability or Retirement, an Option
may be exercised, only to the extent it was exercisable on the date of such
termination, at any time prior to the earlier of (i) the expiration date of
the Option determined under Section 6.5, or (ii) thirty (30) days from the
date of such termination, unless the Participant's employment is terminated
as a result of fraud or other gross misconduct on the part of the
Participant (the existence of which shall be determined by the Committee in
its sole discretion), in which case such Option shall terminate on the date
of such termination of employment.
6.8 Payment of Option Price. Upon the exercise of an Option, the Option
Price shall be paid in full in cash, provided, however, that a Participant
may, at the Participant's discretion, in lieu of cash payment, deliver
certificates and appropriate stock powers for shares of the Company's Common
Stock that have been fully paid for and owned by the Participant for at least
thirty (30) days, valued at Fair Market Value on the date of exercise, as full
or partial payment for the exercise price of any Option. The Committee may
also allow broker-assisted exercises as permitted under the Federal Reserve
Board's Regulation T, subject to applicable securities and banking law
restrictions, or by any other means which the Committee determines to be
consistent with the Plan's purpose and applicable law.
6.9 Additional Terms Applicable to Incentive Stock Options. All Options
issued under the Plan as Incentive Stock Options will be subject, in addition
to the terms detailed in Sections 6.1-6.8 above, to those contained in this
Section 6.9.
(a) Special Limitation on Incentive Stock Option Grants. Except as
provided in Section 6.9(b) of the Plan, the aggregate Fair Market Value,
determined as of the time an Incentive Stock Option is granted, of the
Common Stock (and stock of a Subsidiary) with respect to which Incentive
Stock Options granted under this Plan and stock options that satisfy the
requirements of Section 422 of the Code granted under any other stock
option plan or plans maintained by the Company (or any Subsidiary) are
exercisable for the first time by a Participant during any calendar year
shall not exceed $100,000 for such year. The foregoing limitation shall not
take into account stock options which, by their terms, provide that they
shall not be treated as incentive stock options.
(b) Special Limitation on Incentive Stock Option Treatment.
(1) In General. To the extent that, as a result of the rules
described in Section 6.6 or otherwise, the aggregate Fair Market Value
of Common Stock with respect to which Incentive Stock Options granted
to a Participant are exercisable for the first time during any calendar
year exceeds $100,000, such Options shall not be treated as Incentive
Stock Options or otherwise as stock options which satisfy the
requirements of Section 422 of the Code.
(2) Ordering Rule. Clause (1) shall be applied by taking Incentive
Stock Options into account in the order that they were granted.
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(3) Allocation Rule. To the extent that the Fair Market Value of
Common Stock for which the Participant has been granted an Incentive
Stock Option causes the aggregate Fair Market Value of all Common Stock
with respect to which the Participant has been granted Incentive Stock
Options exercisable for the first time during any calendar year to
exceed $100,000, such Option shall be treated as not qualifying as an
Incentive Stock Option, and, unless the Company designates which Common
Stock acquired by such Option is to be treated as stock acquired
pursuant to the exercise of an Incentive Stock Option by issuing a
separate certificate (or certificates) for such stock and identifying
such certificate (or certificates) as Incentive Stock Option stock in
its stock transfer records, an equal proportion of each share of Common
Stock acquired pursuant to such Option shall be treated as if acquired
pursuant to the exercise of an option that does not satisfy the
requirements of Section 422 of the Code.
(4) Special Definitions. For purposes of this subsection (b), stock
options granted to a Participant under any other stock option plan or
plans maintained by the Company (or any Subsidiary) that satisfy the
requirements of Section 422 of the Code shall be included within the
term Incentive Stock Options, stock of a Subsidiary shall be included
within the term Common Stock, and options which, by their terms,
provide that they shall not be treated as incentive stock options shall
not be taken into account.
(c) Limits on Ten Percent Shareholders. The price at which shares of
Common Stock may be purchased upon exercise of an Incentive Stock Option
granted to an individual who, at the time such Incentive Stock Option is
granted, owns, directly or indirectly, more than ten percent (10%) of the
total combined voting power of all classes of stock issued to shareholders
of the Company or any Subsidiary, shall be no less than one hundred and ten
percent (110%) of the Fair Market Value of a share of the Common Stock of
the Company at the time of grant, and such Incentive Stock Option shall by
its terms not be exercisable after the earlier of the date determined in
accordance with Sections 6.5 through 6.7 or the expiration of five (5)
years from the Grant Date of such Incentive Stock Option.
(d) Federal Income Tax Treatment. A share of Common Stock transferred to
a Participant pursuant to his exercise of an Incentive Stock Option shall
not be treated as a share transferred pursuant to the exercise of an
Incentive Stock Option for federal income tax purposes unless (i) no
disposition of such share is made by the Participant within two (2) years
from the Grant Date of the Incentive Stock Option nor within one (1) year
after the transfer of such share to the Participant, and (ii) at all times
during the period beginning on the Grant Date of the Incentive Stock Option
and ending on the day three (3) months before the date of exercise of the
Incentive Stock Option, the Participant was an Employee of either the
Company, a parent of the Company or any Subsidiary. Notwithstanding Section
6.9(d)(ii), an Incentive Stock Option that is exercised within twenty-four
(24) months after the Participant's employment ceases as a result of death
shall continue to be treated as an Incentive Stock Option and an Incentive
Stock Option that is exercised within twelve (12) months after the
Participant's employment ceases as a result of a Permanent Disability shall
continue to be treated as an Incentive Stock Option. In addition, Section
6.9(d)(i) shall not apply to an Incentive Stock Option exercised after the
death of the Participant.
(e) Notice of Disposition; Withholding; Escrow. A Participant shall
immediately notify the Company in writing of any sale, transfer, assignment
or other disposition (or action constituting a disqualifying disposition
within the meaning of Section 421 of the Code) of any shares of Common
Stock acquired through exercise of an Incentive Stock Option, within two
(2) years after the Grant Date of such Incentive Stock Option or within one
(1) year after the acquisition of such shares, setting forth the date and
manner of disposition, the number of shares disposed of, and the price at
which such shares were disposed of. The Company or any Subsidiary shall be
entitled to withhold from any compensation or other payments then or
thereafter due to the Participant such amounts as may be necessary to
satisfy any withholding requirements of federal or state law or regulation
and, further, to collect from the Participant any additional amounts which
may be
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required for such purpose. The Committee may, in its discretion, require
shares of Common Stock acquired by a Participant upon exercise of an
Incentive Stock Option to be held in an escrow arrangement for the purpose
of enabling compliance with the provisions of this Section 6.9(e).
ARTICLE 7. TERMS AND CONDITIONS OF PERFORMANCE UNITS
Each Performance Unit granted under the Plan shall be subject to the
following terms and conditions:
7.1 Granting of Performance Units. Performance Units may be granted by the
Committee in conjunction with Options granted under the Plan. The Committee,
in its sole discretion, shall determine the number of Performance Units, if
any, granted to a Participant in conjunction with Options granted to the
Participant under the Plan. Performance Units shall relate to Options that are
granted to a Participant at the same time as the Performance Units are granted
and which vest at the same time as the Performance Units or earlier in
accordance with the terms of a Grant Agreement as more particularly described
in Section 7.2 ("Related Options"). A Performance Unit shall entitle its
holder to receive from the Company, subject to realizing certain
preestablished performance goals to be set by the Committee and in accordance
with the terms of a Grant Agreement as more particularly described in Section
7.2, an amount of cash equal to the sum of:
(a) the Option Price of one Related Option divided by the difference
between 1.00 and the maximum combined federal and Connecticut state income
tax rate on the date the Performance Unit becomes vested in accordance with
the terms of the Grant Agreement, and
(b) (i) the Fair Market Value of one share of Common Stock on the earlier
of the date on which the Performance Unit becomes vested in accordance with
the terms of the Grant Agreement or the date on which the Optionee first
exercised a Related Option in accordance with the terms of the Grant
Agreement minus the Option Price of such Related Option (the "Spread"),
divided by the difference between 1.00 and the maximum combined federal and
Connecticut state income tax rate on the earlier of the date the
Performance Unit becomes vested or the date on which the Participant first
exercised a Related Option, minus (ii) the Spread; provided, however, that
in the case of any Performance Unit granted in conjunction with a Related
Option that is an Incentive Stock Option, the amount determined under this
Section 7.1(b) shall be deemed to be zero.
7.2 Terms of Grant Agreement Relating to Performance Units. A proper officer
of the Company and each Participant granted a Performance Unit by the
Committee shall execute a Grant Agreement (which may be the same Grant
Agreement covering Related Options), which shall set forth the Grant Date of
the Performance Unit, the total number of Performance Units granted, the
performance requirements that shall apply to earning such Performance Units
and other conditions under which the Performance Units vest and become
payable, restrictions on the disposition of the Performance Units, the
conditions under which Performance Units are forfeited, and such other terms,
conditions, restrictions and privileges as the Committee in each instance
shall deem appropriate, provided they are not inconsistent with the terms,
conditions and provisions of this Plan. Each Grant Agreement shall provide
that payment under a Performance Unit is subject to the condition that the
Participant has previously exercised or simultaneously exercises a Related
Option. Subject to Section 7.5 of the Plan, a Performance Unit granted
pursuant hereto shall be paid only while a Participant remains employed by the
Company or its Subsidiaries.
7.3 Preestablished Performance Goals. A Performance Unit shall not be
payable unless a preestablished performance goal relating to such payment has
been attained and the Committee has so certified. Such performance goals shall
be established for a consecutive twelve-month or longer period (each, a
"Performance Period") by the Committee in compliance with Section 162(m) of
the
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Code and regulations thereunder, as amended from time to time. Performance
goals 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 financial statements as the Committee
may set forth in the preestablished performance goals: return on equity,
return on assets, net income and/or earnings per share.
7.4 Limitation on Grant of Performance Units per Participant. The maximum
number of Performance Units that may be granted to any Participant shall not
exceed 300,000 in any two-year period, subject to adjustment as provided in
Section 4.4 hereunder.
7.5 Payment of Performance Units in the Event of Death, Disability, or
Retirement. If, as of the date a Participant terminates his employment with
the Company because of his death, Permanent Disability or Retirement, the
Company has completed a Performance Period and attained the applicable
performance goals relating to such Performance Period, but the Committee has
not yet so certified, then any outstanding Performance Unit earned by virtue
of attaining such performance goals may be paid to the Participant or, in the
event of his death to his beneficiary, provided the Participant, or the
Participant's beneficiary in the event of the Participant's death,
simultaneously exercises or has previously exercised a Related Option.
7.6 Termination of Employment for Reasons Other than Death, Disability or
Retirement. In the event of the Participant's termination from employment by
reason other than death, Permanent Disability or Retirement, a Participant
shall forfeit any right to receive payment under a Performance Unit that
remains outstanding at the time of such termination of employment.
7.7 Restrictions on Performance Units.
(a) No payment shall be made under any Performance Unit unless (i) the
Committee has certified that the performance goal with respect to such
Performance Unit has been met, and (ii) the holder of such Performance Unit
has previously exercised or simultaneously exercises a Related Option.
(b) Except as provided in Section 7.5 hereof, if a Participant's
employment with the Company is terminated for any reason, all Performance
Units granted to such Participant shall terminate and be of no further
force or effect.
7.8 Form of Payment for Performance Units. The Company shall make payment
under a vested Performance Unit solely in cash.
ARTICLE 8. AMENDMENT AND TERMINATION
8.1 Amendment. The Committee from time to time and without further approval
of the shareholders, may amend the Plan in such respects as the Committee may
deem advisable; provided, however, that no amendment shall become effective
without prior approval of the shareholders which would (a) materially increase
the benefits accruing to Insider Participants; (b) materially increase the
number of securities which may be issued under the Plan to Insider
Participants; or (c) materially modify the requirements as to eligibility for
participation in the Plan to add a class of Insider Participants; provided,
further, that any increase in the number of shares available under the Plan
for grant as Incentive Stock Options and any change in the designation of the
group of Employees eligible to receive Incentive Stock Options under the Plan
shall be subject to shareholder approval in accordance with Section 422 of the
Code. No amendment shall, without the Participant's (or beneficiary's)
consent, alter or impair any of the rights or obligations under any Grant
previously made to him under the Plan.
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8.2 Termination. Unless terminated sooner, the Plan shall remain in effect
for ten (10) years ending on August 19, 2002, and subject to the provisions of
Section 2.2 hereof, thereafter for so long as Grants made under the Plan prior
to August 20, 2002, remain outstanding. The Board, without further approval of
the shareholders, may terminate the Plan at any time, but no termination
shall, without the Participant's (or beneficiary's) consent, alter or impair
any of the rights under any Grant previously made to him under the Plan.
ARTICLE 9. MISCELLANEOUS PROVISIONS
9.1 No Rights as Shareholder. No Participant shall have any rights as a
shareholder with respect to any shares of Common Stock subject to his Option
prior to the date of issuance to him of a certificate or certificates for such
shares. No Participant shall have any rights as a shareholder as a result of a
grant of Performance Units.
9.2 No Rights to Continued Employment. Neither the Plan nor any Grant made
under the Plan shall confer upon any Participant any right with respect to
continued employment by the Company, nor shall they interfere in any way with
the right of the Company, or the right of the Participant, to terminate the
employment of the Participant at any time.
9.3 Compliance With Other Laws and Regulations. The Plan, the making of
Grants, the exercise of Options and the payment under Performance Units, and
the obligation of the Company to sell and deliver shares hereunder, shall be
subject to all applicable federal and state laws, rules, and regulations and
to such approvals as may be required by any government or regulatory agency.
The Company shall not be required to issue or deliver any certificates for
shares of Common Stock under the Plan prior to (a) the obtaining of any
approval or ruling from the Securities and Exchange Commission, the Internal
Revenue Service or any other governmental agency which the Company, in its
sole discretion, shall determine to be necessary or advisable, (b) the listing
of such shares on any stock exchange on which the Common Stock may then be
listed, and (c) the completion of any registration or qualification of such
shares under any federal or state law, or any rule or regulation of any
government body which the Company shall, in its sole discretion, determine to
be necessary or advisable.
9.4 No Right to Options or Performance Units. The making of any Grant
pursuant to this Plan shall be entirely in the discretion of the Committee.
The adoption of this Plan shall not be deemed to give any person any right to
a Grant, except to the extent and upon such terms and conditions as may be
determined by the Committee.
9.5 Withholding. It shall be a condition of a Participant's right to
exercise Options granted hereunder and/or to receive payment under a
Performance Unit that the Participant shall pay, consent to the withholding by
the Company of, or make other provision satisfactory to the Company for the
payment of, any federal, state or other taxes which the Company is obligated
to withhold or collect with respect to such exercise or otherwise with respect
to such Options or as relates to such Performance Units.
9.6 Nontransferability of Grants; Restrictions on Transferability of
Shares. Options granted under the Plan shall not be transferable other than by
will or by the laws of descent and distribution. Notwithstanding the
foregoing, in the event Rule 16b-3 under the Exchange Act is revised in a
manner that would permit transfer of Options without affecting the exemption
of the Option under such Rule, the Committee, in its sole and absolute
discretion may grant Options that can be transferred by gift to or for the
benefit of family members of the Participants or that can be transferred
without consideration to a trust established by the Participant for his
beneficiaries, provided, however, that Options granted in conjunction with
Performance Units shall not be transferable under any circumstances other than
by will or by the laws of descent and distribution. Performance Units granted
under the Plan shall not be transferable under any circumstances.
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The designation of a beneficiary shall not constitute a transfer. During the
lifetime of the Participant, an Option shall be exercisable only by such
Participant or, if the Participant is legally incompetent, by the
Participant's guardian or legal representative, or, if transferred pursuant to
a transfer permitted above, by the transferee of such Participant. During the
lifetime of the Participant, a vested Performance Unit shall be payable only
to such Participant or, if the Participant is legally incompetent, to the
Participant's guardian or legal representative.
The Committee may also impose such restrictions on the transfer of any
shares of Common Stock acquired pursuant to the exercise of an Option under
the Plan as it may deem advisable, including, without limitation, restrictions
pursuant to the federal securities laws or any blue sky or other state
securities laws, or under the requirements of any stock exchange upon which
such shares of Common Stock are then listed.
9.7 Investment Representation. Each Option shall provide that, upon demand
by the Committee, the Participant (or his beneficiary, guardian, legal
representative or transferee, as applicable) shall deliver to the Committee at
the time an Option, or any portion of an Option, is exercised, such written
representations with respect to the shares to be acquired upon such exercise
as the Committee may deem necessary to satisfy the requirements of federal or
state securities law. Delivery of such representations as may be requested by
the Committee pursuant to this Section 9.7 shall be a condition precedent to
the right of the Participant (or such other person) to purchase any shares of
Common Stock under this Plan.
9.8 Designation of Beneficiary. Each Participant may, from time to time,
designate any beneficiary or beneficiaries to whom any benefit under the Plan
is to be paid or transferred in case of his death prior to the distribution of
all benefits due the Participant under this Plan. Such beneficiary shall be
entitled to exercise any Option that is or becomes vested upon the death of
the Participant and shall be entitled to payment under any Performance Unit
that is or becomes vested and payable notwithstanding the death of the
Participant. Each designation shall revoke all prior designations, shall be in
the form prescribed by the Committee, and will be effective only when filed by
the Participant with the Committee. In the absence of any such designation at
the time of the Participant's death, all outstanding Grants made to the
Participant under this Plan that have not previously been transferred as
permitted in Section 9.6 above shall be transferred, and all benefits due the
Participant under this Plan shall be distributed, to his estate. With respect
to all outstanding Grants to the Participant under this Plan that have
previously been transferred as permitted in Section 9.6 above, all benefits
due the transferee under this Plan shall be distributed to such transferee.
9.9 Headings. Any headings preceding the text of the sections of this Plan
are inserted for convenience of reference only, and shall neither constitute a
part of this Plan nor affect its meaning, construction, or effect.
9.10 Governing Law. All rights under this Plan shall be governed by and
construed in accordance with the internal laws (and not the laws relating to
the conflict of laws) of the State of Connecticut.
9.11 Compliance with Rule 16b-3. With respect to Insider Participants,
transactions under this Plan are intended to comply with all applicable
conditions of Rule 16b-3 or its successors. To the extent any provision of the
Plan or action by the Committee fails to so comply, it shall be deemed null
and void, to the extent permitted by law and deemed advisable by the
Committee. The Company elects to rely on the exemption contained in Rule 16b-3
as in effect prior to May 1, 1991 ("Old Rule 16b-3"), until such date after
which the Company can no longer rely on Old Rule 16b-3 or the Company, by
Board resolution, elects to rely on any new rules issued under Section 16(b)
of the Exchange Act relating to employee benefit plans.
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9.12 Pronouns. The use of the masculine gender shall be extended to include
the feminine gender wherever appropriate.
Plan As Amended and Restated Plan As Amended and Restated
Approved by Board: Approved by Shareholders:
April 28, 1995 , 1995
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GERBER SCIENTIFIC, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OCTOBER 13, 1995
The undersigned shareholder(s) of Gerber Scientific, Inc. hereby
appoints(s) H. Joseph Gerber and Stanley Simon, and each of them, with full and
individual power of substitution, proxies and attorneys, and hereby authorize(s)
them to represent and to vote all shares of Common Stock of Gerber Scientific,
Inc. which the undersigned shareholder(s) is/are entitled to vote at the Annual
Meeting of Gerber Scientific, Inc., to be held at the Sheraton Hotel at Bradley
International Airport, Windsor Locks, Connecticut, on October 13, 1995 at 2:30
p.m., Eastern Daylight Saving Time, and at any adjournment thereof, with all
powers which the undersigned shareholder(s) would possess if personally present,
upon the foregoing matters and upon such other business as may properly come
before the Annual Meeting or any adjournment thereof.
(To be signed, dated, and voted on reverse side)
--------------------------------------------------------------------------------
*FOLD AND DETACH HERE*
<PAGE>
This proxy, when properly executed, will be voted in the manner directed herein
by the undersigned. If no direction is made, this proxy will be VOTED FOR:
1. Election of the Class II Directors: George M. Gentile and David J. Gerber
FOR all nominees WITHHOLD (Instruction: To withhold authority to
listed above (except AUTHORITY vote for any individual nominee, write
as stated to the to vote for all that nominee's name on the line provided
contrary herein.) nominees below.)
listed below.
----------------------------------------
[_] [_]
2. Approval of the Gerber Scientific, Inc.
1992 Employee Stock Plan, as Amended and
Restated as of April 28, 1995.
FOR AGAINST ABSTAIN The undersigned shareholder(s) hereby
acknowledge(s) receipt of Notice of
[_] [_] [_] Annual Meeting of Shareholders and the
Proxy Statement, each dated August 28,
1995.
Dated: ___________________________, 1995
Signed: ________________________________
________________________________________
Please date and sign exactly as name(s)
appear(s) on Proxy. Joint owners should
both sign. Executor(s), Administrators,
Trustees, etc. should so indicate when
+ signing. Corporations should show full
+ corporate name and title of signing
+ officer. Partnerships should sign full
++++++ partnership name and be signed by an
authorized person.
-----------------------------------------------
*PLEASE MARK INSIDE BLUE BOXES SO THAT DATA
PROCESSING EQUIPMENT WILL RECORD YOUR VOTES*
-----------------------------------------------
--------------------------------------------------------------------------------
*FOLD AND DETACH HERE*
