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EXHIBIT 10.01
DIGITAL LIGHTWAVE, INC.
MEMORANDUM OF UNDERSTANDING
October 14, 1999
This memorandum of understanding ("Memorandum") is binding and sets
forth the agreement between Digital Lightwave, Inc. (the "Company") and Xx.
Xxxxx Xxxx, the majority stockholder of the Company ("BJZ"). Upon execution of
this Memorandum, the parties agree to immediately proceed to prepare and
execute additional agreements regarding the terms of this Memorandum; provided
however that if the parties hereto do not ever finalize such additional
agreements, this Memorandum shall be binding and control with respect to the
matters contained herein.
1) RETRACTION OF LETTERS TO THE OUTSIDE DIRECTORS OF THE COMPANY
BJZ hereby retracts, and agrees to execute a formal notice retracting, the
statements contained in his letters dated September 16, 1999 and September
20, 1999.
2) AGREEMENT NOT TO TAKE ADDITIONAL ACTION
For so long as he is a director of the Company, BJZ shall not take any
action in his capacity as a stockholder of the Company to (a) remove
current senior management of the Company (Messrs. Chastelet, Grant, Haider
and Xxxx); it being understood that BJZ may, in his capacity as a
director, remove senior management in accordance with paragraph 4(c) below
or (b) remove Messrs. Xxxxxxxx, Chastelet or Zwan from the Board from the
date hereof up to and including the date of the annual meeting in the year
2000.
3) AGREEMENT WITH RESPECT TO THE BOARD
a) BJZ and the Company shall enter into an agreement which provides that:
i) The size of the Company's board of directors (the "Board")
shall be increased from four members to five members and two
new, outside directors ("New Directors") shall be appointed to
the Board.
ii) Xxxxxxx Xxxxxxx shall resign from the Board upon the later to
occur of (i) the appointment of the New Directors to the Board
and (ii) the conclusion of his assignments on the two special
committees of the Board on which he serves.
iii) The New Directors shall be nominated for appointment to the
Board by any member of the current Board (Messrs. Hamilton,
Seifert, Zwan and Chastelet).
iv) BJZ agrees to vote his shares of common stock at the Company's
annual meeting in the year 2000 in favor of the election to the
Board of Messrs. Xxxxxxxx, Chastelet
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and Zwan and, if appointed to the Board prior to the annual
meeting in the year 2000, the New Directors.
v) The New Directors shall be appointed to the Board only with the
vote or consent of a majority of the directors serving as of
the date hereof; provided however that no director shall serve
without the affirmative vote or consent of BJZ in the Board
action to appoint the New Directors.
4) EMPLOYMENT AGREEMENTS
a) Upon the vote of a majority of the members of the Board serving as of
the date hereof and eligible to vote, the Company shall enter into an
agreement with respect to change of control, severance and non-compete
with Messrs. Chastelet, Grant, Haider and Xxxx.
b) The agreements referred to in paragraph 4(a) above shall be in the
form negotiated, in good faith and in accordance with current
negotiations, between counsel to the Company and counsel to BJZ.
c) The agreements referred to in paragraph 4(a) above shall contain a
provision providing for removal of Messrs. Chastelet, Grant, Haider
and Xxxx, as applicable, in accordance with the terms of their
respective agreements, upon the vote of a majority of the members of
the Board.
5) UNTERBERG PUBLIC OFFERING
a) The Company and BJZ agree to decide by November 1, 1999 whether to
proceed immediately on such date with the public offering of common
stock by the Company and, if BJZ so elects, BJZ, by converting the
proposed underwritten offering by X.X. Xxxxxxxxx Towbin ("Unterberg")
on file with the Securities and Exchange Commission as of the date
hereof, into an equity offering.
b) The terms and conditions of the public offering of common stock,
including the pricing, and other terms, shall be finally determined by
the Pricing Committee established by the Board for this purpose, which
is comprised of BJZ, Xx. Xxxxxxx Xxxxxxxx and Xx. Xxxxxxx Xxxxxxx.
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c) In connection with the offering, BJZ will agree to a standard six
month lock-up agreement with the Company and Unterberg with respect to
any public sale (including a sale under Rule 144) of his shares of
common stock, other than shares currently under option.
Executed on October 14, 1999.
DIGITAL LIGHTWAVE, INC.
By: /s/ Xxxxx Xxxxxxxxx /s/ Xx. Xxxxx X. Xxxx
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Xxxxx Xxxxxxxxx Xx. Xxxxx X. Xxxx
President and CEO
