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EXHIBIT 10.26
FORM OF EXECUTIVE SEVERANCE AGREEMENT
THIS EXECUTIVE SEVERANCE AGREEMENT dated as of
_________________, 200__ by and between Digital Lightwave, Inc. (the "Company"),
and _____________________ ("Executive");
W I T N E S S E T H:
WHEREAS, the Company desires to create a greater incentive for
Executive to remain in the employ of the Company, particularly in the event of a
Change in Control of the Company.
NOW, THEREFORE, in partial consideration of Executive's past
and future services to the Company and the mutual covenants contained herein,
the parties hereto hereby agree as follows:
V. INVOLUNTARY TERMINATION FOLLOWING A CHANGE IN CONTROL
A. Involuntary Termination. Subject to Section 2 below, Executive
shall be entitled to the compensation and benefits listed in
Paragraphs 1(b) and (c), in addition to compensation and
benefits to which Executive would otherwise be entitled as of
the date of termination, if Executive's employment with the
Company is terminated in an Involuntary Termination within one
(1) year following the occurrence of a Change in Control.
B. Compensation. Within ten (10) business days after an
Involuntary Termination (or , if later, the last day of any
period during which the release referred to in Paragraph 2 may
be revoked by Executive), the Company shall make a lump sum
cash payment to Executive, subject to any mandatory tax
withholding. The dollar amount of the lump sum cash payment
shall be determined in accordance with the following formula:
(i) if on the date of the Involuntary
Termination Executive has been in the Company's employ for at
least one (1) year, but less than three (3) years, then
Executive shall receive a lump sum cash payment equal to three
(3) months of the monthly rate of Executive's Base Salary;
(ii) if on the date of the Involuntary
Termination Executive has been in the Company's employ for at
least three (3) years, but less than five (5) years, then
Executive shall receive a lump sum cash payment equal to nine
(9) months of the monthly rate of Executive's Base Salary; and
(iii) if on the date of the Involuntary
Termination Executive has been in the Company's employ for at
least five (5) years, then Executive shall receive a lump sum
cash payment equal to the Executive's Base Salary.
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The compensation payable hereunder shall not be reduced or offset by any amounts
that Executive earns or could earn from any other sources following Executive's
Involuntary Termination. [However, except to the extent the Company expressly
agrees otherwise in writing, if the Company becomes obligated to pay Executive
any severance pay under a separate employment or severance agreement or
arrangement, the benefits payable hereunder shall be reduced by the amount of
benefits payable under such other agreement or arrangement.]
(c) Welfare Benefit Coverage. Executive (and, if applicable,
Executive's eligible dependents) may elect to continue coverage under the
Company's group medical/dental plan at Executive's own expense in accordance
with the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended
("COBRA") and, for purposes of determining the maximum period of COBRA coverage,
such maximum period will begin immediately upon Executive's Involuntary
Termination. [The Company may wish to consider continuation of coverage at the
Company's expense for a designated time period]
VI. FAILURE TO EXECUTE A RELEASE
All compensation under Paragraph 1(b) above is in
consideration for Executive's execution of a release of claims against the
Company, its affiliates and their employees and agents in the form attached as
Exhibit A hereto, which release Executive does not subsequently revoke or
attempt to revoke. If Executive doesn't properly execute such a release or if
Executive attempts to revoke such release, Executive will not be entitled to any
of the compensation provided under Paragraph 1(b).
VII. DEFINITIONS
a. Base Salary. "Base Salary" means the greater of the
annual rate of base salary in effect for Executive at
the time of Executive's Involuntary Termination or
the annual rate of base salary in effect for
Executive immediately before the Change in Control.
(b) Change in Control shall mean any of the following:
(i) any acquisition, directly or indirectly by any person
or related group of persons (other than the Company), of
beneficial ownership (within the meaning of Rule 13d-3 of the
0000 Xxx) of securities, after which acquisition, securities
possessing more than fifty percent (50%) of the total combined
voting power of the Company's outstanding securities are owned
by such person or group of persons, provided that this
provision shall not apply to an acquisition by any person or
related group of persons who, on the date hereof, directly or
indirectly beneficially owns securities possessing more than
fifty percent (50%) of the total combined voting power of the
Company's outstanding securities if such acquisition either:
(a) occurs on or before the date hereof, or
(b) occurs after the date hereof but before the first
day after the date
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hereof, if any, that such person or group of related persons'
beneficial ownership is less than 40% of the total combined
voting power of the Company's outstanding securities; or
(ii) a change in the composition of the Board over a period of
thirty-six (36) consecutive months or less such that a
majority of the Board members ceases, by reason of one or more
contested elections for Board membership, to be comprised of
individuals who either (A) have been Board members
continuously since the beginning of such period or (B) have
been elected or nominated for election as Board members during
such period by at least a majority of the Board members
described in clause (A) who were still in office at the time
the Board approved such election or nomination.
(iii) a merger, consolidation or other reorganization approved
by the Company's stockholders, unless securities representing
more than fifty percent (50%) of the total combined voting
power of the voting securities of the successor Company are
immediately thereafter beneficially owned, directly or
indirectly and in substantially the same proportion, by the
persons who beneficially owned the Company's outstanding
voting securities immediately prior to such transaction, or
(iv) the sale, transfer or other disposition of all or
substantially all of the Company's assets in complete
liquidation or dissolution of the Company.
(c) Involuntary Termination shall mean the termination of
Executive's employment which occurs by reason of:
(i) Executive's involuntary dismissal or
discharge by the Company for reasons other
than Misconduct, or
(ii) Executive's voluntary resignation following
(A) a change in his or her position with the
Company which materially reduces his or her
duties and responsibilities or the level of
management to which he or she reports, (B) a
reduction in his or her level of
compensation (including base salary, fringe
benefits and target bonus under any
corporate-performance based bonus or
incentive programs) by more than fifteen
percent (15%) or (C) a relocation of
Executive's place of employment by more than
fifty (50) miles, provided and only if such
change, reduction or relocation is effected
by the Company without Executive's consent.
(d) Misconduct shall mean the commission of any act of fraud or
embezzlement or material act of dishonesty by the Executive,
any unauthorized use or disclosure by such person of
confidential information or trade secrets of the Company, or
any other intentional misconduct by such person adversely
affecting the business or affairs of the Company in a material
manner. The foregoing definition shall not in any way preclude
or restrict the right of the Company to discharge or dismiss
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any executive or other person in the service of the Company
for any other acts or omissions, but such other acts or
omissions shall not be deemed, for purposes of this Agreement
to constitute grounds for termination for Misconduct.
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VIII. MISCELLANEOUS.
A. Captions. The captions in this Agreement are not part of the
provisions hereof, are merely for the purpose of reference and
shall have no force or effect.
B. Governing Law. This Agreement is made in, and shall be
governed by and construed in accordance with the laws of, the
State of Florida, to the extent not preempted by the Employee
Retirement Income Security Act of 1974, as amended. This
Agreement, to the extent that it provides for severance
benefits, together with similar agreements with other
executives of the Company, is intended, for purposes of ERISA,
to qualify as an employee welfare benefit plan for a select
group of management or highly compensated employees.
C. Amendment or Modification. This Agreement contains the entire
agreement of the parties with respect to the subject matter
hereof and no amendment or modification shall be effective
unless made in writing executed by an authorized officer of
the Company and Executive.
D. Successors and Beneficiaries. This Agreement shall be binding
on and inure to the benefit of the successors, assigns, heirs,
devisees and personal representatives of the parties,
including any successor to the Company by merger or
combination and any purchaser of all or substantially all of
the assets of the Company. Should Executive die before receipt
of all benefits to which Executive becomes entitled under this
Agreement, the payment of such benefits will be made, on the
due date or dates hereunder had Executive survived, to the
executors or administrators of Executive's estate.
E. Notices. All notices given hereunder shall be in writing and
shall be sent by registered or certified mail or delivered by
hand and, if intended for the Company, shall be addressed to
it (if sent by mail) or delivered to it (if delivered by hand)
at its principal office for the attention of the Secretary of
the Company or at such other address and for the attention of
such other person of which the Company shall have given notice
to Executive in the manner herein provided; and if intended
for Executive, shall be delivered personally or shall be
addressed (if sent by mail) at the then current residence
address as reflected in the personnel records of the Company,
or at such other address or to such designee of which
Executive shall have given notice to the Company in the manner
herein provided. Each such notice shall be deemed to be given
on the date received at the address of the addressee or, if
delivered personally, on the date so delivered.
F. Distributions. The benefits to which Executive may become
entitled under this Agreement will be paid, when due, from the
general assets of the Company. Executive's right (or the right
of the executors or administrators of Executive's estate) to
receive any such payments will at all times be that of a
general creditor of the Company and will have no priority over
the claims of other general creditors of the Company. The
benefits provided under this Agreement are intended to be
unfunded for purposes of the Employee Retirement Income
Security Act of 1974.
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G. Rights and Remedies. All rights and remedies provided pursuant
to this Agreement or by law will be cumulative, and no such
right or remedy will be exclusive of any other. A party may
pursue any one or more rights or remedies hereunder or may
seek damages or specific performance in the event of another
party's breach hereunder or may pursue any other remedy by law
or equity, whether or not stated in this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
DIGITAL LIGHTWAVE, INC.
BY
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EXECUTIVE:
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(SIGNATURE)
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(PRINT NAME)
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