EXHIBIT VII
MANAGEMENT ADVISORY
AND
CONSULTING AGREEMENT
AGREEMENT ("Agreement") made and entered into as of the 31st day of August,
1999, by and between GALILEO CORPORATION, a Delaware corporation having a place
of business at Xxxxxxxxxx Xxxxxxxx Xxxx, Xxxxx 00, Xxxxxxxxxx, XX 00000 (the
"Company"), and ANC MANAGEMENT CORP. ("Consultant").
W I T N E S S E T H:
WHEREAS, the Company is and has been engaged in a number of businesses,
primarily related to the manufacture, distribution and sale of products
utilizing certain optical technologies as applied in different industries (the
"Business"); and
WHEREAS, the Consultant is controlled by Xxxxxxx X. Xxxxxxxxx (the
"Principal"), who has extensive experience in the management, restructuring,
strategic planning repositioning, financing and operation of manufacturing
companies, as well as experience with certain optical technologies; and
WHEREAS, in addition to the Principal, the Consultant has a staff of
employees and representatives with significant financial advisory, strategic
planning, managerial and operational experience with companies similar to the
Company; and
WHEREAS, an affiliate of the Consultant has made a significant equity
investment in the Company, and the Consultant and such affiliate have a
substantial interest in the financial success of the Company; and
WHEREAS, the Company's prior President and CEO resigned his positions with
the Company effective July 6, 1999, the Principal has been named President and
CEO, and the Board has determined not to conduct a search for a new CEO at this
time; and
WHEREAS, the terms and conditions of this Agreement and the transactions
contemplated hereby have been approved by the disinterested directors of the
Company; and
WHEREAS, the Company desires to retain Consultant to provide consulting
services under the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. Engagement. Upon the terms and conditions contained in this Agreement,
the Company hereby retains Consultant, and Consultant hereby accepts the
engagement, and agrees to perform Consulting Services (as defined below) for the
Company.
2. Consulting Services. During the term of this Agreement, as defined in
paragraph 4 below (the "Term"), at the request of the Company, Consultant shall
perform the services described on Schedule 1 annexed hereto and shall give to
the Company the benefit of skill and advice of the Principal and other employees
and representatives of Consultant to perform the services described on Schedule
1 annexed hereto, and as to such other matters as the Board of Directors of the
Company ("Board") may from time to time reasonably request (the "Consulting
Services"). All services shall be provided at the request of the Company,
primarily through the Principal.
3. Compensation. the Consultant for any Consulting Services rendered under
this Agreement shall be paid in accordance with Schedule 2.
4. Term. The term of Consultant's engagement (the "Term") commenced as of
July 6, 1999 and shall continue until June ---- 30, 2002 unless sooner
terminated as provided in Section 8 below.
5. Independent Contractor; Duties.
(a) In the performance of the Consulting Services, Consultant shall be
deemed to be, and shall be, an independent contractor, and not a joint venturer,
partner, employee or agent with or of the Company. Without limiting the
generality of the foregoing, neither the Company nor Consultant shall have the
power to bind the other, contractually or otherwise; Consultant shall be
entitled only to the compensation and reimbursement set forth in paragraph 3 of
this Agreement and not to any other so-called "fringe benefits;" and Consultant
shall be solely responsible for all liabilities for any and all state and
federal taxes, withholding, FICA, FUTA, worker's compensation, or other payments
due in respect of the compensation paid to Consultant by the Company and paid by
Consultant to its employees. The Consultant shall file all tax returns and pay
all taxes required in such connection on or before the due date thereof.
(b) In connection with his services as President and CEO of the
Company, the Principal shall have such authority to act for and bind the Company
as shall be customarily within the scope of authority of the executives holding
such offices, subject to such limitations as may be imposed by the Board and
also subject to such additional power and authority as shall be authorized by
the Board. In discharging such positions, the Principal shall give due regard to
his duties and obligations as an officer and director of the Company.
(c) The Principal may be removed as President and CEO at any time by
the Board of Directors and, subject to the provisions of the Securities Purchase
Agreement dated as of December 22, 1998 by and between Andlinger Capital XIII
LLC and the Company, as a director by the shareholders of the Company, all as
provided in the Company's bylaws and the Delaware General Corporation Law, but
such removal shall not otherwise affect the duties and obligations of the
parties hereunder.
(d) The Consultant may, with the approval of the Board of Directors,
engage third party professionals, consultants and other advisors to assist
Consultant in carrying out its duties or to provide services directly to the
Company, the costs of which shall be borne by the Company.
6. Assignment. This Agreement shall bind and inure to the benefit of only
Consultant, the Company and their respective successors and assigns.
Neither party may assign any of its rights or delegate any of its obligations
under this Agreement without the express written consent of the other party. Any
attempted assignment or delegation which does not comply with this paragraph
shall be void.
7. Confidential Information; Non-Competition.
(a) For purposes of this Agreement, "Confidential Information" means
all information, data and knowledge disclosed to the Consultant by the Company
concerning the organization, business, technology or finances of the Company or
of any third party that the Company is under an obligation to keep confidential,
including, but not limited to, trade secrets and other proprietary ideas or
confidential information respecting inventions (whether or not patentable),
patents, patent applications (under any divisions, continuations, in whole or in
part, patents issuing thereon and issues thereof), products, designs, sketches,
plans, calculations, prototypes, models, formulas, specifications, procedures,
discoveries, improvements, charts, diagrams, graphs, writings, methods,
know-how, techniques, systems, processes, hardware, software, firmware, code,
software programs, works of authorship, records, studies, trade practices,
customer lists, projects, plans and proposals, whether in written, electronic,
magnetic, optical or any other form.
"Affiliate" shall mean, with respect to an individual, the members of his or her
immediate family or any entity directly or indirectly controlled by such
individual; and with respect to an entity, any person or entity controlling,
controlled by or under common control with, such entity.
(b) From time to time the Company has disclosed to the Consultant, and
may continue to disclosure to Consultant, Confidential Information for the
purpose of obtaining management advisory and consulting services from the
Consultant. The Confidential Information includes, but is not limited to,
information relating to the Company's business strategy, financing sources and
structure, customer contacts and similar business information.
(c) All Confidential Information disclosed to the Consultant by the
Company shall remain the property of the Company.
(d) The Consultant shall use the Confidential Information only for the
purposes described in this Agreement and shall not use the Confidential
Information or assist others to use the Confidential Information for any other
purpose and shall not publish or otherwise disclose the Confidential Information
or any part thereof to any other person, firm or corporation; provided, however,
that the obligation not to disclose the Confidential Information
shall not apply to any of the following: (i) information that is already known
to Consultant; (ii) information that Consultant receives from a third party
without restriction or without breach of this Agreement; (iii) information that
is approved for release by written authorization by the Company; or (iv)
information that is or becomes publicly known other than through a knowing or
wrongful act of the Consultant.
(e) Each of Consultant and Principal severally agree that, so long as
this Agreement is in effect and for a period of one (1) year after the
expiration hereof or its termination for any reason, Consultant and Principal
will not, directly or indirectly, except as a passive investor in publicly-held
companies, engage in competition with the Company or any of its subsidiaries, or
own or control any interest in, or act as a director, officer or employee of, or
consultant to, any firm, corporation or institution directly or indirectly
engaged in competition with the Company or any of its subsidiaries.
8. Termination; Survival.
(a) This Agreement may be terminated at the election of the Board of
Directors at any time upon written notice for "cause". As used here "cause"
means (i) the Consultant's continued failure to render services to the Company
as provided herein, which failure continues for more than thirty (30) days after
written notice; (ii) willful misconduct or gross negligence in the performance
of its services hereunder; (iii) breach of any material fiduciary duty to the
Company; or (iv) breach of any material item of this Agreement which remains
uncured for a period of thirty (30) days after written notice.
(b) Upon the death or disability of the Principal or his resignation,
removal or other termination as President and CEO of the Company, this Agreement
may be terminated by the Company at any time upon no less than ninety (90) days
written notice.
(c) This Agreement may be terminated at the election of Consultant at
any time upon no less than ninety (90) days written notice.
(d) No termination of this Agreement by either party, regardless of the
circumstances or reasons, shall terminate, amend or in any way affect the
validity of the provisions of Section 7 hereof or any other agreement executed
by consultant relating to Confidential Information of the Company.
9. Indemnification.
(a) In the event that the Consultant is a party or is threatened to be
made a party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, based on acts or
omissions under or relating to this Agreement, the Company shall indemnify the
Consultant against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by the Consultant in
connection with such action, suit or proceeding if the Consultant acted in good
faith and in a manner the Consultant reasonably believed to be in, or not
opposed to, the best interests of the Company, and, with respect to any criminal
action or proceeding, had no
reasonable cause to believe the Consultant's conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the Consultant did not act in good faith and
in a manner which the Consultant reasonably believed to be in or not opposed to
the best interests of the Company, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that the Consultant's conduct was
unlawful.
(b) To the extent that the Consultant has been successful on the merits
or otherwise in defense of any action, suit or proceeding referred to in
subsection (a) of this section, or in defense of any claim, issue or matter
therein, the Consultant shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred in connection therewith.
(c) Expenses (including attorneys' fees) incurred by the Consultant in
defending any civil, criminal, administrative or investigative action, suit or
proceeding may be paid by the Company in advance of the final disposition of
such action, suit or proceeding upon receipt of an undertaking by or on behalf
of the Consultant to repay such amount if it shall ultimately be determined that
the Consultant is not entitled to be indemnified by the Company as authorized in
this section. Such expenses (including attorneys' fees) incurred by the
Consultant may be so paid upon such terms and conditions, if any, as the Company
reasonably deems appropriate consistent with this Agreement.
(d) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to the Consultant notwithstanding the
termination of this Agreement and shall inure to the benefit of the successors
of the Consultant.
10. No Conflicts. Consultant represents and warrants to the Company that
performance of Consultant's obligations under this Agreement does not and will
not violate any written or oral contract, agreement, or court order by which
Consultant is bound and Consultant covenants not to create such a violation
during the Term of this Agreement including, without limitation, such violation
created by using any information belonging to any third party, that would be
characterized as Confidential Information if such information belonged to the
Company.
11. Severability. Should any provision of this Agreement be held by a court
of competent jurisdiction to be unenforceable, or enforceable only if modified,
such holding shall not affect the validity of the remainder of this Agreement,
which shall continue to be binding upon the parties hereto. The parties further
agree that any such court is expressly authorized to modify any such
unenforceable provision of this Agreement in lieu of severing the unenforceable
provisions from this Agreement in its entirety, whether by rewriting the
offending provision, adding additional language to this Agreement or making such
other modifications as the court deems warranted to carry out the agreement of
the parties. The parties expressly agree that this Agreement as so modified by
the court shall be binding upon and enforceable against each of them.
12. Standards of Conduct. Consultant agrees to adhere at all times to
Company policies and to conduct its services in compliance with applicable laws,
rules and regulations and use all reasonable efforts to maintain the highest
standards of business ethics.
13. Exclusivity. Consultant shall not, during the Term of this Agreement,
perform services related to the same subject matter as those performed under
this Agreement for any other individual, firm, association or organization which
directly or indirectly competes with the Company without prior written
notification to and consent by the Company. In those cases where a potential
conflict appears to exist, a mutually agreeable resolution shall be made before
such conflicting services are furnished or performed.
14. General Provisions.
(a) Waiver of any provision of this Agreement, in whole or in part, in
any one instance shall not constitute a waiver of any other provision in the
same instance, nor any waiver of the same provision in another instance, but
each provision shall continue in full force and effect with respect to any other
then-existing or subsequent breach.
(b) Any notice required or permitted hereunder shall be in writing and
shall be sufficiently given if personally delivered, delivered by facsimile
telephone transmission, delivered by express delivery service (such as Federal
Express), or mailed first class U.S. mail, postage prepaid, addressed as
follows:
If to the Company:
Galileo Corporation
Sturbridge Business Park
XX Xxx 000
Xxxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx
Fax No.: 0-000-000-0000
with a copy to:
Xxxxxxx & Xxxxxx
000 Xxxxx Xxxx Xxx
Xxxx Xxxxx, XX 00000
Attention: Xxxxxxxx X. Xxxx
Fax No.: 000-000-0000
If to Consultant:
ANC Management Corp.
000 Xxxxx Xxxxxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxxx
Fax No.: 0-000-000-0000
with a copy to:
Xxxxxxx X. Xxxxxx
000 Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Fax No.: 0-000-000-0000
(or to such other address as any party shall specify by written notice so
given), and shall be deemed to have been delivered as of the date so delivered
or three (3) days after mailing for domestic mail and seven (7) days for
international mail.
(c) This Agreement: (i) may be executed in any number of counterparts,
each of which, when executed by both parties to this Agreement shall be deemed
to be an original, and all of which counterparts together shall constitute one
and the same instrument; (ii) shall be governed by and construed under the laws
of Massachusetts applicable to contracts made, accepted, and performed wholly
within Massachusetts, without application of principles of conflicts of law;
(iii) may be amended, modified, or terminated, and any right under this
Agreement may be waived in whole or in part, only by a writing signed by both
parties; (iv) contains headings only for convenience, which headings do not form
part, and shall not be used in construction, of this Agreement; (v) shall bind
and inure to the benefit of the parties and their respective legal
representatives, successors and permitted assigns; and (vi) is not intended to
inure to the benefit of any third-party beneficiaries.
(d) This Agreement, together with Schedules 1 and 2 constitute the
entire agreement of the parties with respect to its subject matter, superseding
all prior oral and written communications, proposals, negotiations,
representations, understandings, courses of dealing, agreements, contracts, and
the like between the parties in such respect;
(e) The obligations imposed by this Agreement are unique. Breach of any
of such obligations would injure the parties to this Agreement; such injury is
likely to be difficult to measure; and monetary damages, even if ascertainable,
are likely to be inadequate compensation for such injury. Therefore, the parties
to this Agreement acknowledge and agree that protection of the respective
interests in this Agreement would require equitable relief, including specific
performance and injunctive relief, in addition to any other remedy or remedies
that the parties may have at law or under this Agreement, including, without
limitation, entitlement to reimbursement by the breaching party or parties of
the legal fees and expenses of the injured party or parties prevailing in any
such suit.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
COMPANY:
GALILEO CORPORATION
By: /s/ Xxxxxx X. Xxxxxxx
-------------------------------------
Xxxxxx X. Xxxxxxx,
Vice President and CFO
CONSULTANT:
ANC MANAGEMENT CORP.
By: /s/ Xxxxxxx X. Xxxxxxxxx
-------------------------------------
Xxxxxxx X. Xxxxxxxxx, Chairman
The undersigned Xxxxxxx X. Xxxxxxxxx, in his individual capacity, agrees to the
provisions of Section 7 hereof.
Dated as of August 31, 1999 /s/ Xxxxxxx X. Xxxxxxxxx
-------------------------------------
Xxxxxxx X. Xxxxxxxxx
SCHEDULE 1
Scope of Services
1. Management Services.
a. Consultation and advice with respect to the overall management and
operation of the Company and its business, including advisory services with
respect to production, marketing and sales, finance, administration and
personnel matters.
b. Provision of the Principal as President and CEO of the Company, to
perform the duties customarily performed by such officer in similar companies.
2. Strategic Services.
a. Consultation and advice with respect to the development,
implementation and monitoring of a strategic plan for the Company and
participation in the deliberations of the Board relating to the strategic plan.
b. Consultation and advice with respect to strategic transactions and
analysis with respect there.
[Note: Financial advisory, structuring, analytical and negotiating services and
related fees (if any) with respect to specific strategic transactions will be
separately negotiated and agreed to outside of this Agreement.]
SCHEDULE 2
Compensation/Expenses
Compensation:
A. Consultant shall be entitled to cash compensation at the rate of $250,000
per annum, payable in equal monthly installments on the last day of each
month.
B. In addition, Consultant shall receive non-qualified options pursuant to the
Company's 1991 Stock Option Plan to purchase 100,000 shares of the Company's
Common Stock, $.01 par value per share, at an exercise price of $11.4375 per
share, exercisable at any time until June 30, 2009. Such options shall be
governed by a mutually agreeable Non-Qualified Stock Option Agreement.
Expenses:
The Company shall reimburse the Consultant, from time to time upon request
accompanied by appropriate documentation, all out-of-pocket expenses (including
an automobile allowance at the IRS rate then in effect) reasonably incurred by
Consultant in providing consulting services.
