082196
EMPLOYMENT AGREEMENT
This agreement dated September 4, 1996 is between Sage Laboratories,
Inc. (the " Company"), a Massachusetts corporation and Louis J. Lanzillo,
Jr. (the "Executive"). This agreement relates to the employment of the
Executive by the Company for the period and on the terms hereinafter set
forth.
The parties agree as follows:
1. Employment. The Company will employ the Executive and the Executive
will serve the Company as its President and Chief Operating officer. Executive
shall have duties and responsibilities as are customarily commensurate with such
position and shall perform such other executive duties for the Company as the
Company acting through its Chief Executive Officer and Board of Directors may
from time to time direct. A copy of Executive's initial job description is
attached hereto as Exhibit A. Executive shall report to the Company's Chief
Executive Officer. The Company shall nominate Executive for election by the
Company's shareholders as a member of the Company's Board of Directors at each
meeting of shareholders occurring during the term of this agreement at which
directors are elected Executive will devote substantially his entire business
time, energies and attention to his work for the Company and will not, without
the prior written consent of the Company, render any material services to any
third person, firm or corporation. Executive has advised the Company that he
serves on several boards of directors and is the Chairman and Chief Executive
Officer of Summit Staffing Group, LLP and represents that such activities are
not inconsistent with his commitment to the Company hereunder.
2. Term. The term of this agreement shall commence as of the date
hereof and continue through September 1999, subject to earlier
termination in accordance with paragraph 4.;
3. Compensation and Benefits.
A. The Company shall pay the Executive an annual base salary during the term
hereof at the rate of $150,000 payable in equal monthly installments or more
frequently in accordance with the Company's usual policy. Salary for a portion
of any period shall be pro rated.
B. Executive shall participate in the Company's current executive bonus plan
under which he shall be eligible for a bonus of not less than 50% of base salary
to the extent consistent with the criteria and provisions of the Company's bonus
plan; provided, however, that for the fiscal year ending June 30,1997, the
Company shall pay Executive a bonus of not less than $40,000, if Executive is
employed by the Company hereunder as of the end of such fiscal year. Amounts
payable under paragraph 3.A. and this paragraph 3.B. may be increased at the
discretion of the Board of Directors of the Company based on their assessment in
their absolute discretion of the attainment by Executive of corporate and
personal goals and objectives established with respect to Executive's
performance from time to time in advance by the Board. The Company is granting
Executive incentive stock options to acquire 100,000 shares of the Company's
common stock in the form of Exhibit B attached hereto.
C. The Company is granting Executive incentive stock options to acquire 100,000
shares of the Company's common stock in the form of Exhibit B attached hereto.
D. The Executive will be eligible to participate in all fringe benefit programs
of the Company which are in effect for its executive personnel from time to time
and certain additional fringe benefits all of which are summarized on Exhibit C
attached hereto.
E. At the end of each twelve month period that Executive is continuously
employed hereunder an amount equal to four month's base salary and an amount
sufficient to pay for four months of the benefits to which Executive is then
entitled under COBRA shall accrue, subject to a maximum total of 12 months' base
pay and 12 months' COBRA benefits.
4. Termination.
A. Death. This agreement shall terminate upon Executive's death. Upon
such termination, the Company shall pay to Executive's estate (or as
the Executive or his estate shall direct) (i) the Executive's base
salary through the end of the calendar month in which the Executive's
death occurs and (ii) the Executive's bonus for the fiscal year in
which the Executive's death occurs, pro rated for the portion of such
year through the Date of Termination (as defined in paragraph 4F), and
the Company will use its reasonable efforts to assist in the prompt
processing of claims under applicable employee benefits plans. The
amount of the Executive's base salary due pursuant to this paragraph
4A shall be paid in a lump sum promptly after the Date of Termination
and the amount of Executive's bonus due pursuant to this paragraph 4A
shall be paid in a lump sum promptly after the end of the fiscal year
to which it relates in accordance with the Company's bonus plan.
B. Disability. This agreement may be terminated by the Company by
written notice to Executive for "Disability" as defined in this
paragraph 4B. Disability means the Executive's inability to fully
perform his duties hereunder for 90 consecutive days or an aggregate
of 150 days during any period of twelve consecutive months by reason
of a physical or mental illness or injury. If the Company terminates
this agreement for Disability, the Company shall pay Executive his
base salary through the Date of Termination promptly after the Date of
Termination, and the Company will use its reasonable efforts to assist
in the prompt processing of claims under applicable employee benefit
plans.
C. Cause. This agreement may be terminated by the Company by written
notice to Executive for "Cause" as defined in this paragraph 4C. Cause
means (i) the Commission by Executive, in connection with his
employment hereunder, of an act of dishonesty or moral turpitude of a
material nature, (ii) Executive's willful and prolonged absence from
work (other than as a result of Disability) in circumstances that
constitute a substantial abdication of Executive's responsibilities to
the Company after written notice thereof has been given by the
Company's board of directors to Executive or (iii) Executive's
conviction of a felony. If the Company
terminates this agreement for Cause, the Company shall pay the
Executive his base salary through the Date of Termination promptly
after the Date of Termination.
D. Good Reason Following a Change in Control. This agreement may be
terminated by Executive for Good Reason (as defined in Exhibit D
hereto) at any time following a Change in Control (as defined in
Exhibit E hereto). If the Executive terminates this agreement for Good
Reason following a Change in Control, the Company shall pay Executive
the greater of (i) the sum of (x) the Executive's base salary
through September 1999 and (y) Executive's bonus for the fiscal year
in which the Date of Termination occurs, prorated for the portion of
such year through the Date of Termination, or (ii) the aggregate
amount accrued pursuant to paragraph 3E. If clause (i) applies, the
amount of Executive's base salary due pursuant to clause (i) shall be
paid in a lump sum immediately after the Date of Termination and the
amount of the Executive's bonus due pursuant to clause (i) shall be
paid in a lump sum promptly after the end of the fiscal year to which
it relates in accordance with the Company's bonus plan. If clause (ii)
applies, the amount due pursuant to clause (ii) shall be paid in a
lump sum promptly after the Date of Termination.
E. Other. If the Company terminates this agreement for other than
death, Disability or Cause, which the Company may by written notice to
Executive at any time, the Company shall pay Executive the greater of
(i) the sum of (x) Executive's base salary through September, 1999 and
(y) Executive's bonus for the fiscal year in which the Date of
Termination occurs, prorated for the portion of such year through the
Date of Termination, or (ii) the aggregate amount accrued pursuant to
paragraph 3E. If clause (i) applies, the amount of Executive's base
salary due pursuant to clause (i) shall be paid in a lump sum promptly
after the Date of Termination and the amount of Executive's bonus due
pursuant to clause (i) shall be paid in a lump sum promptly after the
end of the fiscal year to which it relates in accordance with the
Company's bonus plan. If clause (ii) applies, the amount due pursuant
to clause (ii) shall be paid in a lump sum
promptly after the Date of Termination. If Executive terminates this
agreement for other than Good Reason following a Change in Control,
which the Executive may by written notice to the Company at any time,
the Company shall pay Executive his base salary through the Date of
Termination promptly after the Date of Termination.
F. Date and Effect of Termination. The Date of Termination of this
agreement shall be, (i) in the case of paragraph 4A, the date of
Executive's death or (ii) in the case of a termination of this
agreement pursuant to paragraphs 4B, 4C, 4D or 4E, the date specified
in the Company's notice to Executive or Executive's notice to the
Company, as the case may be, of such termination. Upon any termination
of this agreement pursuant to this paragraph 4, Executive shall not be
entitled to any further payments or benefits of any nature pursuant to
this agreement, or as a result of such termination or election, except
as specifically provided for in this agreement. Paragraphs 6 and 7 (and
to the extent applicable thereto, paragraph 8) shall survive any
termination of this agreement pursuant to this paragraph 4.
5. Expenses. The Executive is authorized to incur reasonable expenses for
promoting the business of the Company in accordance with the normal policy of
the Company in effect from time to time. The Company will reimburse the
Executive for all such expenses upon the presentation by the Executive, from
time to time, of an itemized account of such expenditures.
6. Disclosure of Information. The Executive agrees to receive confidential
and proprietary information of the Company in confidence, and not to disclose
such information to others, except pursuant to the performance of his duties for
the Company, unless and until such information has become public knowledge or
has come into the possession of such others by legal and equitable means.
7. Covenant Not to Compete. The Executive covenants and that for a period
of two years following the effective date of termination of his employment with
the Company (irrespective of by whom or for what reason) he will not without the
express written consent of the Company, consult or accept employment with, or
render services to, any organization engaged in competition with the Company
with respect to matters worked on by him provided that the Company shall not
unreasonably withhold said consent upon receiving written assurances
satisfactory to the Company from said organization that his employment by it
will not involve any activity which is competitive with the Company with respect
to said matters and that no confidential information of the Company as to any
matter will be disclosed by him to his subsequent employer.
8. Miscellaneous. This agreement shall be binding on and inure to the
benefit of the Company and its successors and assigns. This agreement shall be
binding upon Executive, and shall inure to the benefit of his successors,
personal representatives and heirs, but shall not be assignable by the
Executive.
All notices or other communication permitted or required under this
agreement shall be in writing and shall be deemed to have been duly given if
delivered by hand or mailed (certified or registered mail, postage prepaid,
return receipt requested) the Executive or the Company at the respective
addresses set forth below their signatures, or such other address as may be
furnished in writing by Executive or the Company to the other.
If any provision of this agreement is held by a court of competent
jurisdiction to be invalid, void or unenforceable, the remaining provisions
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated. This agreement contains the entire agreement of the parties and
supersedes all prior agreements relating to the subject matter hereof, and may
be changed only by an agreement in writing signed by the party against whom
enforcement of such change is sought. This agreement shall be governed by the
substantive laws of the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the parties have executed this agreement under seal the day
and year first written above.
SAGE LABORATORIES, INC.
By: /s/ Carl A. Marguerite
-----------------------
Carl A. Marguerite
President
11 Huron Drive
Natick, MA. 01760-1338
/s/ Louis J. Lanzillo, Jr.
--------------------------
Louis J. Lanzillo, Jr.
SAGE LABORATORIES, INC.
Incentive Stock Option
Sage Laboratories, Inc. (hereinafter called the Company), a Massachusetts
corporation, as an incentive and inducement to Louis J. Lanzillo,
Jr.(hereinafter called the Optionee), who is presently an employee of the
Company, to devote his best efforts to the affairs of the Company, which
incentive and inducement the Board of Directors of the Company has determined to
be a sufficient consideration for the grant of this Option, hereby grants to the
Optionee the right and option (herein called the Option) to purchase from the
Company up to 100,000 shares of its common stock, $.10 par value. This Option is
granted under, and is subject to the provisions of, the Company's Stock Option
Plan dated September 2, 1987, as amended, and shall be exercisable only on the
following terms and conditions:
1. The price to be paid for each share upon exercise of the whole or any
part of this Option shall be $15.00, which is not less than the fair market
value of a common share of the Company on the granting date or, if the Optionee
owns on the granting date stock representing more than ten percent of the total
combined voting power of all classes of stock of the Company or of its parent or
subsidiary corporation, is not less than 110 percent of the fair market value of
a common share of the Company on the granting date.
2. Except as otherwise provided herein, this Option may be exercised at
any time on or after the date hereof as follows:
33 1/3% exercisable immediately;
66 2/3% exercisable September 3, 1997 and
100% exercisable September 3, 1998.
Notwithstanding the foregoing, in the event there occurs a "change in
control" of the Company, as defined in that certain employment contract between
the Company and the Optionee dated September 4, 1996, then from and after such
date this Option shall be 100% exercisable. This Option may not be exercised,
however, as to shares after the expiration of seven years from the granting
date.
3. This Option may be exercised at any time and from time to time, subject
to the limitations set forth elsewhere herein, up to the aggregate number of
shares specified herein, but in no event for the purchase of other than full
shares. Notice of exercise shall be delivered to the Company specifying the
number of shares with respect to which the Option is being exercised and
specifying a date not later than fifteen days after the date of the delivery of
such notice as the date on which the Optionee will take up and pay for such
shares. On the date specified in such notice, the Company will deliver to the
Optionee a certificate for the number of shares with respect to which the Option
is being exercised, against payment therefore in cash or by certified check, or
with the consent of the Company, in whole or in part in common stock of the
Company valued at fair market value, in which case the certificates for such
shares shall be delivered to the Company duly endorsed for transfer, free and
clear of all liens, encumbrances, charges or adverse claims and in which case
Optionee shall pay all state and federal taxes imposed upon the transfer of such
shares.
4. The Optionee shall not be deemed, for any purpose, to have any rights
whatever in respect of shares as to which the Option shall not have been
exercised and payment made as aforesaid.
5. If any change is made in the Company's common stock resulting in
the change of such stock into, or the right to exchange such stock for, a larger
or smaller number of shares or for other stock or property, the Optionee shall
be entitled to receive such shares or such other stock or property in lieu of
the common shares purchasable under this Option without any change in the option
price upon the exercise of this Option as a whole, and a proportionate amount
thereof upon any partial exercise of this Option. The Optionee shall also be
similarly entitled to receive upon the exercise of this Option, in whole or in
part, the equivalent of any and all stock dividends (whether in common stock or
preferred stock of the Company) declared and paid after the granting date of
this Option to the holders of the Company's common shares which he would have
received if on the record date for determination of the stockholders entitled to
receive such dividend or dividends he had been the holder of record of the
shares purchased on such exercise.
6. This Option is not transferable by the Optionee otherwise than by will
or the laws of descent and distribution, or pursuant to a qualified domestic
relations order as defined in the Internal Revenue Code of 1986 or Title I of
the Employment Retirement Income Security Act, or the rules thereunder; and is
exercisable, during the Optionee's lifetime, only by him.
7. If the Optionee's employment with the Company, or a parent or
subsidiary corporation of the Company, or a corporation or a parent or
subsidiary corporation of such corporation issuing or assuming a stock option in
a transaction to which Section 425(a) of the Code applies, is terminated
otherwise than by his death, he may exercise the rights which he had hereunder
at the time of such termination only as follows:
(a) If the Optionee has retired, he may exercise such rights at any time
within three months from the date of his retirement; and
(b) If the optionee's employment has been terminated for any other reason,
he may exercise such right at any time within 60 days from such termination.
Upon the death of the Optionee, those entitled to do so by the Optionee's will
or the laws of descent and distribution shall have the right, at any time within
twelve months after the date of death, to exercise in whole or in part any
rights which were available to the Optionee at the time of his death.
Notwithstanding the foregoing provisions of this Section 7, the exercise
of this Option is subject to the limitations set forth elsewhere herein.
8. It shall be a condition to the Optionee's right to purchase stock
hereunder that the Optionee shall notify the Company in writing within 30 days
of the disposition of one or more shares of stock which were transferred to him
pursuant to his exercise of this Option if such disposition occurs within two
years from the granting date or within one year after the transfer of such
shares to him. The Company may, in its discretion, require that (i) the shares
of stock reserved for issue upon the exercise of this Option shall have been
duly listed, upon official notice of issuance, upon any national securities
exchange on which the Company's common stock may then be listed, and that either
(ii) a Registration Statement under the Securities Act of 1933, as amended, with
respect to said shares shall have become effective, or (iii) the Optionee shall
have represented in form and substance satisfactory to the Company that it is
his intention to purchase for investment the shares at the time being purchased
under this Option, and such other steps, if any, as counsel for the Company
shall deem necessary to comply with any law applicable to the issue of such
shares by the Company shall have been taken by the Company or the Optionee, or
both.
9. Any exercise of this Option is conditioned upon the payment, if the
Company so requests, by the Optionee or by his heirs by will or by the laws of
descent and distribution, of all state and federal taxes imposed upon the
exercise of this Option and the issue to the Optionee of the shares covered
hereby.
IN WITNESS WHEREOF, Sage Laboratories, Inc. has caused this Option to be
executed on its behalf and its corporate seal to be hereunto affixed as of
September 4, 1996.
SAGE LABORATORIES, INC.
By /s/ Carl A. Marguerite
-----------------------
Carl A. Marguerite
CEO
EXHIBIT C
Health Insurance. The Company will pay for Executive's costs under COBRA
until Executive is eligible to participate in the Company's health plan.
Life insurance. $60,000 group; $940,000 individual term.
Disability. Company plan providing short and long term disability. The Company
shall supplement its short term plan so as to fund any differential between the
amounts payable under such plan and Executive's base pay.
Medical reimbursement. $1000 annual allowance under current Company
policy.
Profit sharing. Participation in plan in accordance with its terms.
Vacation. 4 weeks per year to be accrued according to Company policy (10
days of fiscal 1997 vacation to be advanced).
Car Allowance. Lease of Company car within current guidelines for CEO;
Company to pay for repairs, maintenance, insurance, gas and oil; car
phone expense paid for Company business only.
Tax Returns. $1500 annual allowance for tax return preparation in
accordance with Company guidelines.
Professional fees. Reimbursement for up to $1000 annually.
Attorney's fees. One time allowance for attorney's fees in connection with
entering into this agreement of up to $5000.
EXHIBIT D
"Good Reason" shall mean that the Executive has determined in good faith
that (1) the Company has failed to assign to him on a consistent basis executive
duties performable at the location at which he worked before the change in
control which are commensurate with the level of executive duties performed by
him immediately prior to such change in control, (2) he is prevented by the
Company from continuing to fulfill his responsibilities at a level commensurate
with that prior to the change in control, (3) his salary in effect immediately
prior to the change in control is reduced by the Company, (4) the Company has
failed to continue in effect any health, welfare, retirement, vacation and other
fringe benefit plans of the Company in which the Executive participated at the
time of the change in control (or plans providing substantially equivalent
benefits) other than as a result of the normal expiration of any such plan in
accordance with its terms as in effect at the time of the change in control, or
the Company shall have taken or failed to take any action which would adversely
affect the Executive's continued participation in or the benefits receivable by
the Executive under any such plan as in effect at the time of the change in
control, or (5) the Company shall have failed to obtain, at the Executive's
request, an assent to the Company's performance of its obligations under this
Agreement from any person that succeeds to or has the practical ability to
control (either immediately or with the passage of time), directly or
indirectly, the Company's business.
EXHIBIT E
"Change in Control" shall mean a change in control of the Company of a
nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), whether or not the Company is in fact
required to comply therewith; provided, that, without Limitation, such a change
in control shall be deemed to have occurred if
(i) any "person" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act), other than the Company, any trustee or other fiduciary holding
securities under an employee benefit plan of the Company or a corporation owned,
directly or indirectly, by the stockholders of the Company in substantially the
same proportions as their ownership of stock of the Company is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing 50% or more of the
combined voting power of the Company's then outstanding securities;
(ii) the stockholders of the Company approve a merger or consolidation of
the Company with any other corporation, other than (i) a merger or consolidation
which would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity) at least 50% of the combined voting securities of the Company or such
surviving entity outstanding immediately after such merger or consolidation or
(ii) a merger or consolidation effected to implement a recapitalization of the
Company (or similar transaction) in which no "person" (as hereinabove defined)
acquires 50% or more of the combined voting power of the Company's then
outstanding securities; or
(iii) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets.