<PAGE>   1





                                                                     EXHIBIT 2.1

                       CONSULTING AND SETTLEMENT AGREEMENT
                           AND FULL AND FINAL RELEASE



         This Consulting and Settlement Agreement and Full and Final Release
(the "Agreement") is entered into as of the 6th day of July, 1999, by and
between W. KIP SPEYER (hereinafter referred to as "Employee") and GALILEO
CORPORATION (hereinafter referred to as "Employer"). In consideration of the
mutual promises and covenants contained herein, the parties agree as follows:

         1.       The parties agree and acknowledge that Employee shall resign
and Employee's employment with Employer shall terminate as of September 30, 2001
(the "Resignation Date"). Further, as of July 6, 1999 (the "Change Date"),
Employee shall resign as Director, President, Chief Executive Officer and all
other offices or positions with Employer and its subsidiaries and cease to serve
as an executive officer of Employer and its subsidiaries. From the Change Date
through the Resignation Date, Employee shall continue as an employee of Employer
and serve as an internal consultant to Employer, without being a corporate
officer, and shall assist in various matters as directed by Employer's Chairman
and President from time to time. During such period, Employee shall report to
Gerhard R. Andlinger, the Chairman and President of Employer, or his successor
as either Chairman or President, as to his activities hereunder and shall pursue
only those activities and projects as assigned by said Chairman and President
from time to time. The parties acknowledge that the nature of this employment
relationship shall not require the presence of Employee at Employer's place of
business, except on a limited basis, and that Employee is not expected to devote
any particular portion of his time to the performance of his duties hereunder.
The parties agree that Employee shall be free to pursue other consulting and
business opportunities subject to the limitations contained in Section 6 and
that Employee's duties hereunder shall not require Employee to spend any
particular time in the performance of services hereunder, all of which, except
for (i) certain transitional consulting to be performed prior to July 15, 1999,
and (ii) Employee's assistance in litigation matters, as described below, shall
be subject to Employee's availability and own schedule, in his sole discretion.
Employee shall assist Employer with respect to any litigation involving Employer
arising out of actions prior to the Resignation Date (including the pending
shareholder litigation) and shall make himself reasonably available for
interviews and testimony when reasonably requested by Employer or its counsel
and Employer shall reimburse Employee for all expenses incurred in connection
with such assistance.

         2.       In lieu of compensation otherwise due to Employee under that
certain Employment Agreement dated as of November 16, 1998 between Employer and
Employee (the "1998 Agreement") and under agreements relating to the Options, as
hereinafter defined, Employer will provide Employee an employment separation and
consulting package as follows:

                  (a)      Severance compensation as follows;

                           (i) base compensation at the rate of $250,000 per
annum, continuing from the Change Date until September 30, 2000;

                           (ii) continuing base compensation at the rate of
$120,000 per annum, from October 1, 2000 through September 30, 2001; and




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                           (iii) bonus compensation of $50,000, payable on
October 29, 1999, provided that Leisegang Medical, Inc. achieves net sales of
$9.2 million for the fiscal year ending September 30, 1999.

         All such base compensation shall be payable in substantially equal
weekly installments (or on such other schedule as Employer shall establish for
paying compensation to its senior executives) beginning on the Change Date, but
effective as of July 1, 1999, and continuing on each subsequent Employer pay
date until the entire amount due has been paid to Employee (the period of time
beginning on the Change Date and ending on the date of payment of the last
installment of the severance compensation payable pursuant to this subparagraph
2(a) shall be hereinafter referred to as the "Severance Period"), subject to the
termination provisions hereof.

                  (b)      Payment on or before July 12, 1999 for all vacation
days accrued through June 30, 1999. No vacation days will be accrued from and
after July 1, 1999; and

                  (c)      Employer reimbursement for all ordinary and necessary
business expenses incurred by Employee prior to the Change Date in performing
duties under the 1998 Agreement as well as the automobile expenses for which
reimbursement is provided under this Agreement in accordance with the Employer's
terms and conditions regarding accountability as in effect on the Change Date.

                  All such payments shall be made consistent with Employer's
current payroll schedule and subject to federal income tax, Employee's
contributions to FICA, and other required withholdings for medical coverage,
etc. Employer shall continue to make the payments referred to in Sections 2(a)
through 2(c) above to Employee (or in the event of his incapacity or disability
to his written designee on file with Employer or if there is no such designee,
to his legal representative) notwithstanding the death, incapacity or disability
of Employee.

                  (e)      The following benefits currently available to
Employee shall continue from the date hereof through the expiration of the
Severance Period or the date on which Employee secures other employment or the
Employee's death, whichever occurs first:

                           (i) Entitlement to all Employer medical and dental
         insurance benefits in accordance with the same terms and conditions as
         in effect on the Change Date;

                           (ii) Entitlement to a leased car for personal and
         business use with an annual rental not exceeding $7,500 and
         reimbursement of all reasonable expenses in operating said leased car;

                           (iii) continued participation in Employer's 401(k)
         retirement plan for the balance of the current plan year (but not
         thereafter).

         Except for the benefits provided in this subparagraph 2(e), Employee
         shall not participate in any other benefit programs of Employer during
         the Severance Period.

                  (f)      Employee is currently the holder of the stock options
to purchase shares of Common Stock of Employer which are listed on Schedule A
attached hereto (the "Options"). As consideration for the benefits provided to
Employee hereunder, and at the time of execution of this







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<PAGE>   3




Agreement, Employee will forfeit and surrender to Employer all of the Options
with the exception of the 50,000 Options granted to Employee on December 31,
1998 and the 10,000 Options granted to Employee on August 20, 1998 (the 60,000
Options which Employee will retain following the execution of this Agreement
shall hereinafter be referred to as the "Retained Options"), as indicated on
Schedule A attached hereto. The parties agree that the Retained Options shall be
fully vested as of the date hereof, provided, however, that the exercise
provisions relating to the Retained Options shall be, and hereby are, modified
to provide that such Options must be exercised by Employee (or in the event of
Employee's disability, by his legal representative) on or prior to December 31,
2000 (or in the event of Employee's death, by his personal or legal
representative within six months after the date of death). Employer and Employee
shall promptly take such additional actions, if any, on its part as are
necessary to modify the exercise provisions of the Retained Options in
accordance with the terms of this subparagraph 2(f). Employee shall promptly
take such further actions, if any, on his part as are reasonably requested by
Employer to confirm the surrender, forfeiture and cancellation of all of the
Options other than the Retained Options. For purposes of provisions of the
Employer's 1991 Stock Option Plan which require that modification of the terms
of a particular Option be agreed to in a writing between Employer and Employee,
the parties agree that this subparagraph 2(f) shall constitute such a writing
between the parties.

         3.       Employer agrees that except for a Material Breach (as defined
below) no action will be taken through the Resignation Date to terminate this
Agreement, or Employee's employment hereunder or which would interfere with or
defeat or terminate the benefits derived and to be derived by Employee
hereunder, including but not limited to the vesting or exercisability of the
Options. Employee and Employer each acknowledge and agree that upon the
occurrence of any Material Breach (as defined below) by the Employee, the
Employee will not be entitled to any further salary continuation, or any other
monies, benefits or entitlements as described herein, and specifically in
Sections 2(a), (c), (d) and (e) above (in addition to any actions which may be
taken in connection with matters in Section 2(f)). For purposes of this
Agreement, the term "Material Breach" shall mean that there has been a breach by
Employee (and the Employer's Board of Directors has made a good faith
determination that such a breach has occurred) of the non-compete provisions of
Section 6 or Employee shall have sought to rescind or deny the acknowledgment
set forth in Section 4 or the release of Employer set forth in Section 5 hereof;
provided, however, in the event of any such alleged breach, the Employer will
provide the Employee with written notice of such alleged breach and provide
Employee reasonable opportunity (consisting of at least fifteen (15) business
days) to cure such alleged breach or explain or satisfactorily demonstrate to
Employer in its reasonable judgment that no such breach has occurred and if so
timely cured, explained or demonstrated as set forth above then no such Material
Breach shall be deemed to have occurred.

                  The parties agree and acknowledge that Employee would not be
entitled to all or part of this separation and consulting package but for this
Agreement and that Employee would not waive certain claims or release Employer
as provided herein but for this Agreement,

         4.       Employee specifically acknowledges the following:

                  (a)      The Employee has waived his right to at least
twenty-one (21) full days within which to consider this Agreement prior to the
execution of this Agreement.

                  (b)      Employee is advised that Employee has the right and
may consult with an attorney prior to executing this Agreement and acknowledges
the opportunity to consult an attorney.





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<PAGE>   4

                  (c)      The Employee has seven (7) days following the
execution of this Agreement to revoke the Agreement and the Agreement will not
become effective or enforceable until after this seven-day period has expired.
To revoke the Agreement, the Employee must advise the Employer in writing of his
election to revoke it within the seven-day period. Such written notice must be
addressed and delivered to Gerhard R. Andlinger, the Chairman and President, by
facsimile at (914) 332-4977. In the event of revocation, the terms of the 1998
Agreement will control as to the benefits and compensation to which the Employee
is entitled. The parties acknowledge that this Agreement shall serve as
Employer's notice of termination of the 1998 Agreement as of the date of this
Agreement.

                  (d)      Employee recognizes that he is specifically
releasing, among other claims, any claims under the Age Discrimination in
Employment Act of 1967 and all amendments thereto.

                  (e)      Employee acknowledges that by executing this
Agreement, and in consideration of the severance compensation provided for in
subparagraph 2(a) hereof and the other consideration and benefits provided to
Employee hereunder, Employee is waiving any and all rights and claims to any
annual incentive cash bonus or any other type or form of bonus or incentive
compensation for the fiscal year ended September 30, 1999 (except as
specifically provided herein), or any prior or future fiscal year.

                  (f)      Employee is not waiving rights or claims that may
arise after the date of this Agreement except for the waiver of severance and
other compensation, including without limitation that due under the 1998
Agreement and rights to the Options other than the Retained Options.
Specifically, Employee shall be entitled to indemnification by Employer for any
and all liabilities, suits, claims and demands arising from or in any manner
relating to actions taken by Employee prior to the Change Date in his capacity
as an executive officer or director of Employer to the same extent and in
accordance with the same terms, conditions and limitations as apply to the
Employer's indemnification of its directors and officers from time to time.

         5.       Except for the rights, duties, and obligations of the parties
under this Agreement, each of the parties (and, in the case of the Employer, all
past and present subsidiaries and affiliates and their divisions and
departments, and their directors, officers, employees and agents, and their
predecessors, successors and assigns, or any of them) hereby unconditionally and
irrevocably releases and forever discharges the other party of and from and each
of the parties agrees not to sue and not to assert against the other party any
causes of action, claims and demands whatsoever, known or unknown at law, in
equity, or before any agency or commission of local, state or federal
governments, arising, alleged to have arisen or which might have been alleged to
have arisen or which may arise (i) in connection with Employee's employment with
Employer and the events and circumstances leading to this Agreement that
occurred prior to the date hereof, (ii) Employee's performance of the duties of
his employment with Employer that occurred prior to the date hereof or (iii)
under any law including, but not limited to, federal, state, or municipal
anti-discrimination laws such as The Americans With Disabilities Act, Title VII
of the Civil Rights Act of 1964, as amended in 1972 and 1991, and the Age
Discrimination In Employment Act of 1967, that such party on its own behalf and
on behalf of his heirs, executors, administrators or assigns, in the case of the
Employee, and its subsidiaries, affiliates, directors, officers, employees,
agents, successors or assigns, in the case of the Employer, ever had, now has or
hereafter can, shall or may have for or by reason or any cause whatsoever, to
the effective date of this Agreement.





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<PAGE>   5


         6.       For a period of two years following the Change Date, Employee
agrees he will not, without the prior written consent of the Chairman and
President of the Employer, directly or indirectly compete either as a principal,
owner, partner, shareholder, director, employee or consultant, with any of
Employer's lines of business existing as of the date hereof namely, (i) the
development, manufacture and marketing of women's health-related medical
products, and (ii) the optical filter and diamond point turning business.

         7.       Each of the parties agrees not to comment upon, discuss, or
disclose to any person any information concerning the terms, conditions and
provisions of this Agreement (except as may be required by legal process) except
that each party may make the statements regarding the other as provided in the
attached Exhibits 1 and 2. Notwithstanding the above, Employer or Employee may
disclose the terms, conditions and provisions of this Agreement to its bankers
pursuant to the terms of any of its loan or credit agreements, to its investment
bankers, counsel and accountants or as may be required to comply with the
requirements of its financing arrangements or federal securities laws. Employee
shall not make disparaging comments about the Employer which could reasonably be
anticipated to cause material harm to the Employer, and Employee agrees to not
comment or discuss, except in a positive manner, with any person or entity any
matters that arose in connection with Employee's employment or resignation from
employment with Employer. Employer shall use reasonable efforts to assure that
any public comments made by Employer concerning Employee are limited to the
substance of the attached letter plus the basic information concerning
Employee's date of employment, position and compensation.

         8.       In the event that either party breaches any of the covenants
contained in this Agreement the non-breaching party may institute legal
proceedings against the breaching party. The prevailing party in any such
litigation shall be entitled to injunctive relief and any other remedies
available at law. In addition, the prevailing party shall be entitled to receive
repayment of all its expenses, including reasonable attorney's fees, incurred in
the prosecution of such actions, Both the Employer and the Employee acknowledge
and agree that the proper place of venue of any litigation which may arise due
to any breach hereto or any attempt to enforce this Agreement shall be in Palm
Beach County, Florida. In the event of a final order by any court that Employee
has breached the non-disparagement prohibitions of this Agreement, the Employer
is entitled to recover from the Employee any payments paid to Employee by
Employer after the first date on which such disparaging comments are determined
by the Court to have been made.

         9.       Employee agrees to return all of Employer's property in
Employee's possession on the Change Date. Employee may retain the personal
computer and related peripherals which Employee has been using, but such
equipment shall only be delivered after Employer has removed from such equipment
all data and information related to Employer or constituting the proprietary or
confidential information of Employer. Employee may retain and remove all office
furniture and furnishings which were purchased by Employee, and Employer shall
make arrangements for Employee's access to the premises outside of regular
business hours to effect such removal.

         10.      Employer and Employee shall use their best efforts to amend
the terms of the existing Stockholders' Agreement, dated as of December 22,
1998, among Andlinger Capital XIII, LLC, John F. Blais Jr. and Employee so that
Employee shall be permitted to "Transfer" (as defined in such Agreement) up to
50,000 shares of Employer's Common Stock in any fiscal quarter of Employer.







                                      -23-
<PAGE>   6



         11.      This Agreement constitutes the complete understanding between
the parties. Employee especially acknowledges and declares that no other
contract, promise or inducement has been made to Employee. In this regard, the
parties agree that this Agreement terminates and supersedes the 1998 Agreement
and, accordingly, each party's rights and obligations under the 1998 Agreement
are terminated upon the execution of, and replaced by the terms of, this
Agreement. This Agreement may not be amended except in a writing signed by each
of the parties.

         12.      The parties acknowledge that they have entered into this
Agreement voluntarily and on their own free will and that they understand fully
all the terms of the Agreement.

         13.      This Agreement may be executed in several counterparts, each
of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.

         14.      This Agreement has been executed and delivered in, and shall
be governed in all respects, whether as to validity, construction, capacity,
performance, or otherwise, by the laws of the Commonwealth of Massachusetts,
without regard to its conflict of law provisions.



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         In testimony whereof, the parties hereto set their hands and seals the
day and year first written above.
                                           EMPLOYEE

/s/ Charles T. Ball                        /s/ W. Kip Speyer
--------------------------------           -----------------------------------
Witness                                    W. Kip Speyer


                                           GALILEO CORPORATION



/s/ Stephen A. Magida                      By: /s/ Gerhard R. Andlinger
--------------------------------           -----------------------------------
Witness                                        Gerhard R. Andlinger
                                               Chairman and President



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<PAGE>   8


                                   Schedule A
               Stock Options Held by W. Kip Speyer at July 6, 1999


<TABLE>
<CAPTION>

      Date of Grant       Number of       Type of Option    Exercise Price     Plan or Agreement under
                       Share Granted                                           which Option was Granted

<S>                       <C>                   <C>            <C>                 <C>
          8/6/96          20,000*               ISO            $ 21.50                1991 SOP

         3/10/97          20,000*               ISO            $  7.25                1991 SOP

         8/20/98          10,000                ISO            $  4.875               1991 SOP

        12/31/98          50,000                NQSO           $  3.875               1991 SOP

         2/23/99          50,000*               NQSO           $  5.25                1991 SOP

         2/23/99         100,000*               NQSO           $  5.25             Outside 1991 SOP

--------------------------------------------------------------------------------------------------------------

          TOTAL          250,000


</TABLE>

*  To be Surrendered and Forfeited Pursuant to this Agreement





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