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EXHIBIT 2.2
EMPLOYEE AGREEMENT
AGREEMENT made as of the 6th day of July, 1999, by and between JOHN D. BARLOW,
JR. (the "Employee") having an address at 68 Rolling Meadow, E. Amherst, New
York 14051 and LEISEGANG MEDICAL, INC. (the "Company"), a Florida corporation
having an address at 6401 Congress Avenue, Boca Raton, Florida 33487. WHEREAS,
the Company is a wholly-owned subsidiary of Galileo Corporation ("Galileo"); and
WHEREAS, the parties desire to set forth the terms of the Employee's employment
with the Company. NOW, THEREFORE, for good and valuable consideration the
receipt and sufficiency of which are hereby acknowledged, and in consideration
of the mutual covenants and obligations herein contained, the parties hereto
agree as follows:
1. POSITION, RESPONSIBILITIES AND TITLE. During the Employee's
employment by the Company, the Employee agrees to serve as Chief Executive
Officer of the Company and, at the pleasure of the Board of Directors of Galileo
(the "Board"), shall serve as President and a Director of the Company, and as a
director and/or officer of other subsidiaries of Galileo (the "Affiliates") as
designated by the Chief Executive Officer of Galileo from time to time,
presently consisting of those positions listed on Exhibit A attached hereto. The
Employee shall comply with and perform such directions and duties in relation to
the business and affairs of the Company and the Affiliates as may from time to
time be requested by the Board or the Chief Executive Officer of Galileo and
shall use the Employee's best efforts to improve and extend the business of the
Company and the Affiliates. The Employee shall at all times report to, and the
Employee's activities shall at all times be subject to the direction and control
of, the Board and the Chief Executive Officer of Galileo. The Employee agrees to
devote the Employee's full business time, attention and services to the
competent discharge of such duties for the successful operation of the business
of the Company and the Affiliates.
2. COMPENSATION: SALARY, BONUSES, STOCK OPTIONS AND OTHER BENEFITS. During
the Employee's employment by the Company, the Company shall pay the Employee the
following compensation:
2.1. SALARY. The Company will pay to the Employee a salary at the
annual rate of $181,500 commencing as of the date hereof payable in conformity
with the Company's customary practices for executive compensation for officers
of the Company as such practices shall be established or modified from time to
time. Salary payments shall be subject to all applicable withholdings.
2.2. FRINGE BENEFITS. The Employee will be entitled to participate
on the same basis with all other officers and employees of the Company in the
Company's standard benefits package generally available for other officers and
employees of the Company, including group health, disability and life insurance
coverage consistent with that received by Employee in connection with Employee's
previous employment position with Ethox Corp. and an automobile allowance in the
amount of $550 per month. The Employee shall receive four (4) weeks of paid
vacation per year, which shall accrue in accordance with the Company's normal
vacation policies applicable to senior executives.
2.3 STOCK OPTIONS. The Board has approved the grant to Employee of
non-qualified stock options under Galileo's 1991 Stock Option Plan to purchase
35,000 shares of Galileo's Common
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Stock at an exercise price equal to the fair market value of Galileo's Common
Stock on the date of grant and subject to the terms and conditions as set forth
on the Nonstatutory Stock Option Certificate which is attached hereto as Exhibit
B.
2.4 SIGNING BONUS. On or before August 5, 1999, the Company shall
pay Employee a signing bonus in the amount of fifty thousand dollars ($50,000).
2.5 ANNUAL INCENTIVE CASH BONUS. During the term of this
Agreement, Employee shall have the opportunity to earn an annual incentive cash
bonus to be paid annually following the close of the Company's fiscal year. The
amount of the annual incentive cash bonus shall be determined by the Board, or
the Compensation Committee thereof, in the sole discretion of the Board or the
Compensation Committee, as the case may be. Notwithstanding the terms of this
Section 2.5, the Company does not anticipate an annual incentive cash bonus
being awarded to Employee for the Company's fiscal year ending September 30,
1999.
2.6 TRANSACTION BONUS. Employee shall be entitled to a transaction
bonus ("Transaction Bonus") in the event of the sale of the women's
health-related medical products business of the Company and the Affiliates
(hereinafter referred to as the "Leisegang Companies") during Employee's
employment with the Company and under certain conditions, as outlined below. The
Transaction Bonus shall be paid pursuant to the following terms:
(a) In the event of the consummation of a sale of the
Leisegang Companies during Employee's employment with the
Company as to which the Company has entered into a letter of
intent or binding agreement on or before November 6, 1999, the
Company shall pay Employee a Transaction Bonus in the amount of
$200,000, irrespective of the total amount of consideration paid
by the buyer in connection with such sale.
(b) In the event of the consummation of a sale of the
Leisegang Companies during Employee's employment with the
Company as to which the Company has not entered into a letter of
intent or binding agreement on or before November 6, 1999, the
Company shall pay Employee a Transaction Bonus in an amount
equal to the greater of (i) ten percent (10%) of the amount by
which the Net Proceeds (as defined below) of such sale exceed
$14.5 million or (ii) $200,000.
For purposes of calculating the Transaction Bonus to be paid
pursuant to this Section 2.6, "Net Proceeds" means the total cash consideration
received by the Company in connection with the sale of the Leisegang Companies,
less the amount of liabilities, debt or other obligations of the Leisegang
Companies which the Company is obligated to pay following the sale ("Leisegang
Liabilities"). For example, if the buyer pays $16,000,000 for the Leisegang
Companies and assumes all liabilities of the Leisegang Companies as part of the
transaction, the Net Proceeds for purposes of the Transaction Bonus will be
$16,000,000. On the other hand, if the buyer in such transaction buys only
assets, assumes no liabilities, pays $19,000,000 for the assets and the
Leisegang Liabilities are $6,000,000, the Net Proceeds for purposes of the
Transaction Bonus will be $13,000,000. In addition, the Company's legal and
accounting fees incurred in connection with such a sale shall not be deducted
from the consideration paid by the buyer in calculating the Net Proceeds under
this Section 2.6.
In the event Employee's employment with the Company is terminated by
the Company without Cause pursuant to Section 4.3 hereof prior to the
consummation of a sale of the Leisegang Companies
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for which Employee would otherwise be entitled to a Transaction Bonus, Employee
shall be paid a Transaction Bonus with respect to such sale in accordance with
the terms of this Section 2.6, provided (i) there is a letter of intent in
effect for such sale at the time of the Company's without-Cause termination of
Employee's employment with the Company and (ii) such sale is consummated within
three (3) months following the termination of Employee's employment with the
Company without Cause.
The Company and Employee acknowledge and agree that any Transaction
Bonus payable under this Section 2.6 shall be payable only from the proceeds of
a sale of the Leisegang Companies which are actually received in cash by the
Company, whether in the form of progress payments, partial payment or otherwise,
and that the Company's Transaction Bonus payment obligation to Employee
hereunder shall apply only to the extent that the Company receives payment in
cash of the Net Proceeds from the buyer.
Notwithstanding anything to the contrary contained elsewhere in this
Agreement, in the event the proceeds received by the Company in connection with
a sale of the Leisegang Companies consist of property or other non-cash
consideration, the Board or the Compensation Committee thereof shall make a good
faith determination as to the fair market value of such non-cash consideration
and the extent to which such valuation amount exceeds $14.5 million. In the
event of such a transaction involving the receipt of non-cash consideration, the
Employee shall be entitled to a Transaction Bonus based on the fair market value
of the non-cash consideration received by the Company, as determined by the
Board in good faith, whose determination as to the fair market value of the
non-cash consideration and the amount of the Transaction Bonus will be final and
binding. In addition, in the event the Company receives sales proceeds in the
form of progress payments, partial payments or some other type of installment
payments, the Transaction Bonus owed to Employee with respect to such
transaction shall also be paid in installments, the timing and amount of which
to be determined by the Board in its sole discretion, whose determination will
be final and binding.
2.7 MOVING EXPENSES. In the event the Employee relocates to the
Boca Raton, Florida area in connection with his employment with the Company, the
Company shall reimburse the Employee for the Employee's reasonable costs and
expenses of movement of the Employee's household goods and effects from E.
Amherst, New York to the Boca Raton, Florida area, provided that the Employee
shall submit to the Company satisfactory documentation or support of such
reasonable moving expenses.
3. ERM. The term of the Employee's employment with the Company shall
commence July 6, 1999 and shall continue until July 6, 2000, unless earlier
terminated as hereinafter provided. Thereafter, the term of the Employee's
employment with the Company shall be renewed for successive additional
twelve-month periods, subject to earlier termination as provided herein.
4. EMPLOYMENT TERMINATION. The Employee's employment under this Agreement
may be earlier terminated as follows:
4.1. TERMINATION FOR CAUSE. At the election of the Company, the
Employee's employment with the Company may be terminated for "Cause" immediately
upon written notice by the Company to the Employee. For the purposes of this
Agreement, "Cause" for termination shall be deemed to exist upon (i) the
continuing failure of Employee to render services to the Company in accordance
with the Employee's assigned duties consistent with this Agreement, and such
failure of
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performance continues for a period of more than 30 days after notice thereof has
been provided to the Employee by the Board of Directors or the Company; (ii)
willful misconduct or gross negligence of the Employee in the performance of his
duties and services to the Company or any of its subsidiaries; (iii) the
conviction of the Employee of a felony, whether or not committed in the course
of performing services for the Company or any of its subsidiaries; (iv)
disloyalty, deliberate dishonesty, breach of fiduciary duty or breach of the
terms of this Agreement; (v) the commission by the Employee in the course of
performing any services for the Company or any of its subsidiaries of
embezzlement, theft or any other fraudulent act; (vi) the commission by the
Employee of an act in deliberate disregard of the rules or policies of the
Company which results in loss, damage or injury to the Company or any of its
subsidiaries or adversely affects the business activities, reputation, goodwill
or image of the Company or any of its subsidiaries; (vii) the unauthorized
disclosure by Employee of any trade secret or confidential information of the
Company or any of its subsidiaries; (viii) the commission by Employee of an act
which constitutes unfair competition with the Company or any of its subsidiaries
or which induces any employee or customer of the Company to breach a contract
with the Company or any of its subsidiaries or (ix) the material breach by the
Employee of any agreement to which the Company and the Employee are parties.
4.2. DEATH OR DISABILITY. The Employee's employment with the
Company shall terminate upon the Employee's death or, at the election of the
Company by written notice to the Employee, upon the Disability of the Employee.
As used in this Agreement, the term "Disability" shall mean the inability or
failure of the Employee to perform the essential functions of the position with
or without reasonable accommodation as a result of a mental or physical
disability for a period of ninety (90) or more days (whether or not consecutive)
during any twelve (12) months, all as determined in good faith by a majority of
the disinterested members of the Board of Directors of the Company.
4.3. TERMINATION WITHOUT CAUSE. The Company may terminate the
Employee's employment with the Company at any time for any reason by written
notice to the Employee.
5. EFFECT OF TERMINATION.
5.1. TERMINATION FOR CAUSE. In the event of a termination for
"Cause" under Section 4.1, the Employee shall be entitled to no severance or
other termination benefits, or any other benefits (except for any health
insurance benefits as required by applicable law).
5.2. TERMINATION FOR DEATH OR DISABILITY. If the Employee's
employment is terminated by death or Disability pursuant to Section 4.2, the
Company shall pay to the Employee or the Employee's estate the compensation
which would otherwise be payable to the Employee up to the day as of which the
Employee's employment is terminated.
5.3. TERMINATION WITHOUT CAUSE. In the event Employee's employment
is terminated by the Company without Cause pursuant to Section 4.3, the Company
shall continue to pay to the Employee the base salary then payable to the
Employee for a period of one year after the last day of the Employee's
employment by the Company. All payments are expressly conditioned upon the
Employee's compliance with the terms of any other agreement to which the Company
and the Employee are parties on the last day of the Employee's employment by the
Company.
6. NOTICES. All notices required or permitted under this Agreement shall
be in writing and shall be deemed effective upon personal delivery or upon
deposit with any reliable overnight courier
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service, transfer by electronic facsimile transmission, or upon deposit by first
class mail, postage prepaid addressed as follows:
IF TO EMPLOYEE, ADDRESSED TO:
----------------------------
John D. Barlow, Jr.
c/o Leisegang Medical, Inc.
6401 Congress Avenue
Boca Raton, FL 33487
IF TO THE COMPANY, ADDRESSED TO:
-------------------------------
Leisegang Medical, Inc.
c/o Galileo Corporation
Galileo Park
P.O. Box 550
Sturbridge, MA 01566
Attention: President
WITH A COPY TO:
--------------
Edwards & Angell, LLP
250 Royal Palm Way, Suite 300
Palm Beach, FL 33480
Attention: Jonathan E. Cole, Esq.
Facsimile: (561) 655-8719
7. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties and supersedes all prior agreements and understandings,
whether written or oral, relating to the subject matter of this Agreement.
8. WAIVER AND MODIFICATION. This Agreement may be amended or modified only
by a written instrument executed by both the Company and the Employee. No waiver
by either party of any breach by the other or any provision hereof shall be
deemed to be a waiver of any later or other breach thereof or as a waiver of any
other provision of this Agreement.
9. GOVERNING LAW. This Agreement shall be construed, interpreted and
enforced in accordance with the laws of the State of Florida.
10. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure
to the benefit of both parties and their respective successors and assigns,
including any corporation with which or into which the Company may be merged or
which may succeed to its assets or business; provided, however, that the
obligations of the Employee are personal and shall not be assigned or delegated
by the Employee.
11. Miscellaneous.
11.1. WAIVERS. No delay or omission by the Company in exercising any
right under this Agreement shall operate as a waiver of that or any other right.
A waiver or consent given by the Company on any one occasion shall be effective
only in that instance and shall not be construed as a bar or waiver of any right
on any other occasion.
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11.2. CAPTIONS. The captions of the sections of this Agreement are
for convenience of reference only and in no way define, limit or affect the
scope or substance of any section of this Agreement.
11.3. SEVERABILITY. In the case any provision of this Agreement
shall be invalid, illegal or otherwise unenforceable, the validity, legality and
enforceability of the remaining provisions shall in no way be affected or
impaired thereby.
11.4. GENDER AND NUMBER. The gender and number used in this
Agreement are used as reference terms only and shall apply with the same effect
whether the parties are of the masculine, neuter or feminine gender, corporate
or other form, and the singular shall likewise include the plural.
11.5 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
EXPRESSLY AND KNOWINGLY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER MATTER PERTAINING TO OR
ARISING DURING THE EMPLOYMENT OF THE EMPLOYEE BY THE COMPANY.
11.6 NO CONFLICT. The Employee hereby represents and warrants that
the Employee is not a party to or bound by any agreement or understanding of any
type with any other person or entity that in any way restricts the Employee's
involvement with the Company and its subsidiaries as an employee, stockholder or
otherwise.
11.7 COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, and each of which together
shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written as an instrument under seal.
LEISEGANG MEDICAL, INC. EMPLOYEE:
By: /s/ Thomas J. Mathews /s/ John D. Barlow
-------------------------------- -----------------------------
Title: TREASURER Name: JOHN D. BARLOW, JR.
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EXHIBIT A
ENTITY POSITIONS
- ------ ---------
Leisegang Medical, Inc. Chairman of Board
President & CEO
Leisegang GmbH Advisory Board Member
Galenica Inc. (Canada) Chairman of Board
Galenica, Inc. (U.S.) Chairman of Board
President
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EXHIBIT B
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35,000 Shares
GALILEO CORPORATION
1991 Stock Option Plan
NONSTATUTORY STOCK OPTION CERTIFICATE
-------------------------------------
Galileo Corporation, Inc. (the "Company"), a Delaware corporation,
hereby grants to the person named below an option (the "Option") to purchase
shares of Common Stock, $.01 par value of the Company (the "Common Stock")
subject to the following terms and conditions and those attached to this
certificate:
Name of Optionholder: John D. Barlow, Jr.
Address: 68 Rolling Meadow
E. Amherst, New York 14051
Social Security No. ###-##-####
Number of Shares: 35,000
Option Price: $7.438
Date of Grant: July 1, 1999
Exercisability Schedule: On or after July 1, 2000 as to 8,750 shares
On or after July 1, 2001 as to 8,750 additional shares.
On or after July 1, 2002 as to 8,750 additional shares
On or after July 1, 2003 as to 8,750 additional shares
Expiration Date: July 1, 2009
Notwithstanding the foregoing, in the event of a Change in Control of
the Company (as defined in Section 3 of the attached terms and conditions), this
Option shall become exercisable as to all shares without regard to any deferred
exercise period.
This Option shall not be treated as an Incentive Stock Option under
section 422 of the Internal Revenue Code of 1986, as amended (the "Code").
By acceptance of this Option, the Optionholder agrees to the terms and
conditions hereof.
GALILEO CORPORATION
By: /s/ Josef W. Rokus
--------------------------------
Vice President
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NONSTATUTORY STOCK OPTION TERMS AND CONDITIONS
1. PLAN INCORPORATED BY REFERENCE. This Option is issued under and
subject to the terms of the Plan and may be amended as provided in the Plan.
Capitalized terms used and not otherwise defined in this certificate have the
meanings given to them in the Plan. This certificate does not set forth all of
the terms and conditions of the Plan, which are incorporated herein by
reference. The Committee administers the Plan and its determinations regarding
the operation of the Plan are final and binding. Copies of the Plan may be
obtained upon written request without charge from the Company.
2. OPTION PRICE. The price to be paid for each share of Common Stock
issued upon exercise of the whole or any part of this Option is the Option Price
set forth on the first page of this certificate.
3. EXERCISABILITY SCHEDULE. This Option may be exercised at any time
and from time to time for the number of shares and in accordance with the
exercisability schedule set forth on the first page of this certificate;
provided, however, that in the event of a Change in Control of the Company, this
Option shall become exercisable as to all shares without regard to any deferred
exercise period. For this purpose, "Change in Control" means 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 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, a Change in
Control shall be deemed to have occurred if:
(a) 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 shareholders 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
40% or more of the combined voting power of the Company's then outstanding
securities;
(b) during any period of 24 consecutive months (not including any
period prior to the date of this Option), individuals who at the beginning of
such period constitute the Board of Directors of the Company and any new
director (other than a director designated by a person who has entered into an
agreement with the Company to effect a transaction described in subsections (a),
(c) or (d) of this Section 3) whose election by the Board of Directors of the
Company or nomination for election by the shareholders of the Company was
approved by a vote of at least two-thirds of the directors then still in office
who either were directors at the beginning of such period or whose election or
nomination for election was previously so approved cease for any reason to
constitute a majority thereof;
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(c) the shareholders 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 defined above) acquires 40% or more of the combined voting power of the
Company's then outstanding securities; or
(d) the shareholders 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.
(e) the Company sells its women's health-related medical products
business.
This Option may be exercised only for the purchase of whole shares and
may not be exercised as to any shares after the Expiration Date.
4. METHOD OF EXERCISE. To exercise this Option, the Optionholder must
deliver written notice of exercise to the Company specifying the number of
shares with respect to which the Option is being exercised accompanied by
payment of the Option Price for such shares in cash, by certified check or in
such other form, including shares of Common Stock valued at their Fair Market
Value on the date of delivery, as the Committee may approve. Promptly following
such notice, the Company will deliver to the Optionholder a certificate
representing the number of shares for which the Option is being exercised.
5. RIGHTS AS A STOCKHOLDER OR EMPLOYEE. The Optionholder has no rights
in shares as to which the Option has not been exercised and payment made as
provided above. The Optionholder has no rights to continued employment by the
Company or its Affiliates by virtue of the grant of this Option.
6. RECAPITALIZATION, MERGERS, ETC. As provided in the Plan, in the
event of corporate transactions affecting the Company's outstanding Common
Stock, the Committee will equitably adjust the number and kind of shares subject
to this Option and the exercise price hereunder or make provision for a cash
payment. If such transaction involves a consolidation or merger of the Company
with another entity, the sale or exchange of all or substantially all of the
assets of the Company or a reorganization or liquidation of the Company, then in
lieu of the foregoing, the Committee may upon written notice to the Optionholder
provide that this Option shall terminate on a date not less than 20 days after
the date of such notice unless theretofore exercised. In connection with such
notice, the Committee may in its discretion accelerate or waive any deferred
exercise period.
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7. OPTION NOT TRANSFERABLE. Except as otherwise permitted by the
Committee, this Option is not transferable by the Optionholder otherwise than by
will or the laws of descent and distribution, and is exercisable during the
Optionholder's lifetime only by the Optionholder. The naming of a Designated
Beneficiary does not constitute a transfer.
8. EXERCISE OF OPTION AFTER TERMINATION OF EMPLOYMENT. If the
Optionholder's status as an employee or consultant of the Company or an
Affiliate (as defined in Rule 144 under the Securities Act of 1933, as amended)
is terminated for any reason other than by disability, death, or a Change of
Control due to the sale of the Company's women's health-related medical products
business as described in subsection 3(e) above (hereinafter referred to as a
"Leisegang Companies Sale") the Optionholder may exercise the rights which were
available to the Optionholder at the time of such termination only within three
months from the date of termination. If such status is terminated as a result of
disability or a Leisegang Companies Sale, such rights may be exercised only
within twelve months from the date of termination. Upon the death of the
Optionholder, his or her Designated Beneficiary shall in lieu of any other
rights hereunder have the right, at any time within twelve months after the date
of death, to exercise in whole or in part any rights that were available to the
Optionholder at the time of death. Notwithstanding the foregoing, no rights
under this Option may be exercised after the Expiration Date.
9. COMPLIANCE WITH SECURITIES LAWS. As a condition to the
Optionholder's right to purchase shares of Common Stock hereunder, the Company
may, in its discretion, require that (a) the shares of Common 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 or automated
quotation system on which the Company's Common Stock may then be listed or
quoted, (b) either (i) a registration statement under the Securities Act of 1933
with respect to the shares shall be in effect, or (ii) in the opinion of counsel
for the Company, the proposed purchase shall be exempt from registration under
that Act and the Optionholder shall have made such undertakings and agreements
with the Company as the Company may reasonably require, and (c) such other
actions, if any, as counsel for the Company shall consider 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 Optionholder, or both. The certificates
representing the shares purchased under this Option may contain such legends as
counsel for the Company considers necessary to comply with any applicable law.
10. PAYMENT OF TAXES. The Optionholder must pay to the Company, or make
provision satisfactory to the Company for payment of, any taxes required by law
to be withheld with respect to the exercise of this Option. The Committee may,
in its discretion, require any other Federal or state taxes imposed on the sale
of the shares to be paid by the Optionholder. In the Committee's discretion,
such tax obligations may be paid in whole or in part in shares of Common Stock,
including shares retained from the exercise of this Option, valued at their Fair
Market Value on the date of delivery. The Company and its Affiliates may, to the
extent permitted by law, deduct any such tax obligations from any payment of any
kind otherwise due to the Optionholder.
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