AutoCoded Document





Exhibit
10.10




DIGITAL
LIGHTWAVE, INC.




EIGHTH
AMENDED AND RESTATED SECURITY AGREEMENT



     This
Eighth Amended and Restated Security Agreement (this
“Agreement”) is made as of December 30, 2003, by and between
Digital Lightwave, Inc., a Delaware corporation (the “Debtor”),
in favor of both Optel Capital, LLC (“Optel Capital”) and
Optel, LLC (“Optel LLC”) (each of Optel Capital and Optel LLC,
a “Secured Party” and collectively the “Secured
Parties”).




RECITALS



     A.    
The Debtor and Optel, LLC entered into (i) that certain Secured Promissory Note
dated as of February 14, 2003 in the original principal amount of $800,000 upon
the terms and subject to the conditions set forth therein, and as the same may
be increased, amended, modified or extended from time to time, (ii) that certain
Secured Promissory Note dated as of February 26, 2003 in the original principal
amount of $650,000 upon the terms and subject to the conditions set forth
therein, and as the same may be increased, amended, modified or extended from
time to time, (iii) that certain Secured Promissory Note dated as of March 28,
2003 in the original principal amount of $450,000 upon the terms and subject to
the conditions set forth therein, and as the same may be increased, amended,
modified or extended from time to time, (iv) that certain Secured Promissory
Note dated as of April 2, 2003 in the original principal amount of $60,000 upon
the terms and subject to the conditions set forth therein, and as the same may
be increased, amended, modified or extended from time to time, (v) that certain
Secured Promissory Note dated as of April 29, 2003 in the original principal
amount of $500,000 upon the terms and subject to the conditions set forth
therein, and as the same may be increased, amended, modified or extended from
time to time, (vi) that certain Secured Promissory Note dated as of May 14, 2003
in the original principal amount of $400,000 upon the terms and subject to the
conditions set forth therein, and as the same may be increased, amended,
modified or extended from time to time, (vii) that certain Secured Promissory
Note dated as of May 19, 2003 in the original principal amount of $620,000 upon
the terms and subject to the conditions set forth therein, and as the same may
be increased, amended, modified or extended from time to time, (viii) that
certain Secured Promissory Note dated as of May 29, 2003 in the original
principal amount of $520,000 upon the terms and subject to the conditions set
forth therein, and as the same may be increased, amended, modified or extended
from time to time, (ix) that certain Secured Promissory Note dated as of the
June 12, 2003 in the original principal amount of $500,000 upon the terms and
subject to the conditions set forth therein, and as the same may be increased,
amended, modified or extended from time to time, (x) that certain Secured
Promissory Note dated as of June 26, 2003 in the original principal amount of
$2,000,000 upon the terms and subject to the conditions set forth therein, and
as the same may be increased, amended, modified or extended from time to time,
(xi) that certain Secured Promissory Note dated as of July 14, 2003 in the
original principal amount of $500,000 upon the terms and subject to the
conditions set forth therein, and as the same may be increased, amended,
modified or extended from time to time and (xii) that certain Secured Promissory
Note dated as of July 29, 2003 in the original principal amount of $500,000 upon
the terms and subject to the conditions set forth therein, and













as the same may
be increased, amended, modified or extended from time to time (collectively, the
“Assigned Notes”).



     B.    
Optel LLC and Debtor also entered into that certain Secured Promissory Note
dated as of July 22, 2003 in the original principal amount of $1,000,000 upon
the terms and subject to the conditions set forth therein, and as the same may
be increased, amended, modified or extended from time to time (the
“Optel LLC Note”).



     C.    
Pursuant to that certain Allonge dated as of the date hereof, Optel LLC assigned
all of its rights, title, interests, privileges and benefits (i) in the Assigned
Notes and (ii) pertaining to the Assigned Notes under that certain Thirteenth
Amended and Restated Security Agreement between Optel LLC and Debtor dated July
29, 2003.



     D.    
Optel Capital and Debtor have entered into (i) that certain Secured Promissory
Note dated as of August 14, 2003 in the original principal amount of $1,000,000
upon the terms and subject to the conditions set forth therein, and as the same
may be increased, amended, modified or extended from time to time (the
“August 14th Note”), (ii) that certain Secured Promissory Note
dated as of September 11, 2003 in the original principal amount of $350,000 upon
the terms and subject to the conditions set forth therein, and as the same may
be increased, amended, modified or extended from time to time (the
“September 11th Note”), (iii) that certain Secured Promissory
Note dated as of November 13, 2003 in the original principal amount of $500,000
upon the terms and subject to the conditions set forth therein, and as the same
may be increased, amended, modified or extended from time to time (the
“November 13th Note”), (iv) that certain Secured Promissory
Note dated as of November 24, 2003 in the original principal amount of $900,000
upon the terms and subject to the conditions set forth therein, and as the same
may be increased, amended, modified or extended from time to time (the
“November 24th Note”), (v) that certain Secured Promissory Note
dated as of December 10, 2003 in the original principal amount of $240,000 upon
the terms and subject to the conditions set forth therein, and as the same may
be increased, amended, modified or extended from time to time (the
“December 10th Note”), (vi) that certain Secured Promissory
Note dated as of December 12, 2003 in the original principal amount of $480,000
upon the terms and subject to the conditions set forth therein, and as the same
may be increased, amended, modified or extended from time to time (the
“December 12th Note”), (vii) that certain Secured Promissory
Note dated as of December 19, 2003 in the original principal amount of $500,000
upon the terms and subject to the conditions set forth therein, and as the same
may be increased, amended, modified or extended from time to time (the
“December 19th Note”) and (viii) that certain Secured
Promissory Note dated as of the date hereof in the original principal amount of
$165,000 upon the terms and subject to the conditions set forth therein, and as
the same may be increased, amended, modified or extended from time to time (the
“New Note” and collectively with the August 14th Note, the
September 11th Note, the November 13th Note, the November 24th Note, the
December 10th Note, the December 12th Note, the December 19th Note, the Assigned
Notes and the Optel LLC Note, the “Notes”).


     E.    The Secured Parties now desire to enter into this Agreement to reflect the respective rights
and duties of the Secured Parties with respect to the Collateral.





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AGREEMENT



     In
consideration of the purchase of the New Note by Optel Capital and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the Debtor hereby agrees with the Secured Parties as follows:




	1. 	 	Grant
of Security Interest.







                (a)    
To secure the Debtor’s full and timely performance of the Obligations, the
Debtor hereby grants to the Secured Party a continuing Lien on and security
interest (the “Security Interest”) in, all of the Debtor’s
right, title and interest in and to all of its personal property and
assets (both tangible and intangible), including, without limitation, the
following, whether now owned or hereafter acquired and wherever located: (a) all
Receivables; (b) all Equipment; (c) all Fixtures; (d) all General Intangibles;
(e) all Inventory; (f) all Investment Property; (g) all Deposit Accounts; (h)
all Cash; (i) all other Goods of the Debtor; (j) all Intellectual Property; and
(l) all Proceeds of each of the foregoing and all accessions to, and
replacements for, each of the foregoing (collectively, the
“Collateral”). The Security Interest shall be a first and prior
interest in all of the Collateral, provided, however, that the
Security Interest shall be subordinated with respect to any Collateral that is
subject to the Prior Security Interests (as defined below).



                
(b)    The following terms shall have the following meanings for purposes of this
Agreement:



                “Account”
means any “Account,” as such term is defined in the UCC now owned or
hereafter acquired by the Debtor or in which the Debtor now holds or hereafter
acquires any interest and, in any event, shall include, without limitation, all
accounts receivable, book debts, rights to payment and other forms of
obligations (other than forms of obligations evidenced by Chattel Paper,
Documents or Instruments) now owned or hereafter received or acquired by or
belonging or owing to the Debtor whether or not arising out of goods or software
sold or services rendered by the Debtor or from any other transaction, whether
or not the same involves the sale of goods or services by the Debtor and all of
the Debtor’s rights in, to and under all purchase orders or receipts now
owned or hereafter acquired by it for goods or services, and all of the
Debtor’s rights to any goods represented by any of the foregoing, and all
monies due or to become due to the Debtor under all purchase orders and
contracts for the sale of goods or the performance of services or both by the
Debtor or in connection with any other transaction (whether or not yet earned by
performance on the part of the Debtor), now in existence or hereafter occurring,
including, without limitation, the right to receive the proceeds of said
purchase orders and contracts, and all collateral security and guarantees of any
kind given by any Person with respect to any of the foregoing.



                “Cash”
means all cash, money, currency, and liquid funds, wherever held, in which the
Debtor now or hereafter acquires any right, title, or interest.





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                “Chattel
Paper” means any “Chattel paper,” as such term is defined in
the UCC, now owned or hereafter acquired by the Debtor or in which the Debtor
now holds or hereafter acquires any interest.



                “Commercial
Tort Claim” shall have the meaning given to that term in Section 2(e)
of this Agreement.



                “Credit
Documents” means this Agreement, the Notes and any UCC-1 Financing
Statement filed herewith.



                “Deposit
Accounts” means any “Deposit accounts,” as such term is
defined in the UCC, and includes any checking account, savings account, or
certificate of deposit, now owned or hereafter acquired by the Debtor or in
which the Debtor now holds or hereafter acquires any interest.



                “Documents”
means any “Documents,” as such term is defined in the UCC, now owned
or hereafter acquired by the Debtor or in which the Debtor now holds or
hereafter acquires any interest.



                “Electronic
Chattel Paper” means any “Electronic chattel paper,” as such
term is defined in the UCC, now owned or hereafter acquired by the Debtor or in
which the Debtor now holds or hereafter acquires any interest.



                “Equipment”
means any “Equipment,” as such term is defined in the UCC, now owned
or hereafter acquired by the Debtor or in which the Debtor now holds or
hereafter acquires any interest and any and all additions, upgrades,
substitutions and replacements of any of the foregoing, together with all
attachments, components, parts, equipment and accessories installed thereon or
affixed thereto, now owned or hereafter acquired by the Debtor or in which the
Debtor now holds or hereafter acquires interest.



                “Fixtures”
means any “Fixtures,” as such term is defined in the UCC, together
with all right, title and interest of the Debtor in and to all extensions,
improvements, betterments, accessions, renewals, substitutes, and replacements
of, and all additions and appurtenances to any of the foregoing property, and
all conversions of the security constituted thereby, immediately upon any
acquisition or release thereof or any such conversion, as the case may be, now
owned or hereafter acquired by the Debtor or in which the Debtor now holds or
hereafter acquires any interest.



                “General
Intangible” means any “General intangible,” as such term is
defined in the UCC, now owned or hereafter acquired by the Debtor or in which
the Debtor now holds or hereafter acquires any interest and, in any event, shall
include, without limitation, all right, title and interest that the Debtor may
now or hereafter have in or under any contracts, rights to payment, payment
intangibles, confidential information, interests in partnerships, limited
liability companies, corporations, joint ventures and other business
associations, permits, goodwill, claims in or under insurance policies,
including unearned premiums and premium adjustments, uncertificated securities,
deposit, checking and other bank accounts, but shall not include any
Intellectual Property (including the right to receive all proceeds and damages
therefrom), rights to receive tax refunds and other payments and rights of
indemnification.





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                “Goods”
means any “Goods,” as such term is defined in the UCC, now owned or
hereafter acquired by the Debtor or in which the Debtor now holds or hereafter
acquires any interest.



                “Instruments”
means any “Instrument,” as such term is defined in the UCC, now owned
or hereafter acquired by the Debtor or in which the Debtor now holds or
hereafter acquires any interest.



                “Intellectual
Property” means, collectively, all rights, priorities and privileges of
the Debtor relating to intellectual property, whether arising under United
States, multinational or foreign laws or otherwise, including copyrights,
copyright licenses, inventions, patents, patent licenses, trademarks, trademark
licenses and trade secrets (including customer lists), domain names, Web sites
and know-how, including, but not limited to, the patents, trademarks and
copyrights set forth on Schedule  2 .



                “Inventory”
means any “Inventory,” as such term is defined in the UCC, now owned
or hereafter acquired by the Debtor or in which the Debtor now holds or
hereafter acquires any interest, and, in any event, shall include, without
limitation, all inventory, goods and other personal property that are held by or
on behalf of the Debtor for sale or lease or are furnished or are to be
furnished under a contract of service or that constitute raw materials, work in
process or materials used or consumed or to be used or consumed in the
Debtor’s business, or the processing, packaging, promotion, delivery or
shipping of the same, and all finished goods, whether or not the same is in
transit or in the constructive, actual or exclusive possession of the Debtor or
is held by others for the Debtor’s account, including, without limitation,
all goods covered by purchase orders and contracts with suppliers and all goods
billed and held by suppliers and all such property that may be in the possession
or custody of any carriers, forwarding agents, truckers, warehousemen, vendors,
selling agents or other Persons.



                “Investment
Property” means any “Investment property,” as such term is
defined in the UCC, and includes certificated securities, uncertificated
securities, money market funds and U.S. Treasury bills or notes, now owned or
hereafter acquired by the Debtor or in which the Debtor now holds or hereafter
acquires any interest.



                “Letter
of Credit Right” means any “Letter of credit right,” as such
term is defined in the UCC, now owned or hereafter acquired by the Debtor or in
which the Debtor now holds or hereafter acquires any interest, including any
right to payment or performance under any letter of credit.



                “Lien”
means any mortgage, deed of trust, pledge, hypothecation, assignment for
security, security interest, encumbrance, levy, lien or charge of any kind,
whether voluntarily incurred or arising by operation of law or otherwise,
against any property, any conditional sale or other title retention agreement,
any lease in the nature of a security interest, and the filing of any financing
statement (other than a precautionary financing statement with respect to a
lease that is not in the nature of a security interest) under the UCC or
comparable law of any jurisdiction.



                “Obligations”
shall mean and include all loans, advances, debts, liabilities and obligations,
however arising, owed by the Debtor to the Secured Party of every kind and





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description
(whether or not evidenced by any note or instrument and whether or  not for the payment
of money), direct or indirect, absolute or contingent, due  or to become due, now
existing or hereafter arising pursuant to the terms of the  Notes, or any of the other
Credit Documents or otherwise, including without  limitation all interest, fees, charges,
expenses, attorneys’ fees and  accountants’ fees chargeable to the Debtor or
payable by the Debtor  thereunder. 



                “Permitted
Liens” shall mean (a) Liens for taxes or other governmental charges not
at the time delinquent or thereafter payable without penalty or being contested
in good faith, provided that adequate reserves for the payment thereof have been
established in accordance with generally accepted accounting principals, (b)
Liens of carriers, warehousemen, mechanics, materialmen, vendors, and landlords
and other similar Liens imposed by law incurred in the ordinary course of
business for sums not overdue more than 45 days or being contested in good
faith, provided that adequate reserves for the payment thereof have been
established in accordance with generally accepted accounting principals, (c)
deposits under workers’ compensation, unemployment insurance and social
security laws or to secure the performance of bids, tenders, contracts (other
than for the repayment of borrowed money) or leases, or to secure statutory
obligations of surety or appeal bonds or to secure indemnity, performance or
other similar bonds in the ordinary course of business, (d) zoning restrictions,
easements, rights-of-way, title irregularities and other similar encumbrances,
which alone or in the aggregate are not substantial in amount and do not
materially detract from the value of the property subject thereto or interfere
with the ordinary conduct of the business of the Debtor, (e) banker’s Liens
and similar Liens (including set-off rights) in respect of bank deposits, (f)
Liens in favor of customs and revenue authorities arising as a matter of law to
secure payment of customs duties and in connection with the importation of goods
in the ordinary course of the Debtor’s business, (g) Liens on the property
or assets of any subsidiary of the Debtor in favor of the Debtor, (h) purchase
money Liens that will be discharged upon the Debtor’s payment of the
purchase price for the applicable property, to the extent such Liens relate
solely to the property so purchased and (j) the security interests set forth on
Schedule 1 (the “Prior Security Interests”);
provided, however, that except for the Prior Security Interests, that in each
case, such Lien is not senior or prior to the Security Interest created
hereunder.



                “Person”
means any individual, sole proprietorship, partnership, joint venture, trust,
unincorporated organization, association, corporation, limited liability
company, institution, public benefit corporation, other entity or government
(whether federal, state, county, city, municipal, local, foreign, or otherwise,
including any instrumentality, division, agency, body or department thereof).



                “Proceeds”
means “Proceeds,” as such term is defined in the UCC and, in any
event, shall include, without limitation, (a) any and all Accounts, Chattel
Paper, Instruments, cash or other forms of money or currency or other proceeds
payable to the Debtor from time to time in respect of the Collateral, (b) any
and all proceeds of any insurance, indemnity, warranty or guaranty payable to
the Debtor from time to time with respect to any of the Collateral, (c) any and
all payments (in any form whatsoever) made or due and payable to the Debtor from
time to time in connection with any requisition, confiscation, condemnation,
seizure or forfeiture of all or any part of the Collateral by any governmental
authority (or any Person acting under color of governmental authority), (d) the
proceeds, damages, or recovery based on any claim of the





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Debtor against
third  parties (i) for past, present or future infringement of any copyright,
patent or patent license or (ii) for past, present or future infringement or  dilution of
any trademark or trademark license or for injury to the goodwill  associated with any
trademark, trademark registration or trademark licensed  under any trademark license and
(e) any and all other amounts from time to time  paid or payable under or in connection
with any of the Collateral. 



                “Receivables”
means all of the Debtor’s Accounts, Instruments, Documents, Chattel Paper,
Supporting Obligations, and letters of credit and Letter of Credit Rights.



                “Supporting
Obligation” means any “Supporting obligation,” as such term
is defined in the UCC, now owned or hereafter acquired by the Debtor or in which
the Debtor now holds or hereafter acquires any interest.



                “UCC”
means the Uniform Commercial Code as the same may, from time to time, be in
effect in the State of Florida; provided, that in the event that, by
reason of mandatory provisions of law, any or all of the attachment, perfection
or priority of, or remedies with respect to, Secured Party’s Lien on any
Collateral is governed by the Uniform Commercial Code as enacted and in effect
in a jurisdiction other than the State of Florida, the term “UCC”
shall mean the Uniform Commercial Code as enacted and in effect, from time to
time, in such other jurisdiction solely for purposes of the provisions thereof
relating to such attachment, perfection, priority or remedies and for purposes
of definitions related to such provisions.



                Unless
otherwise defined herein, all capitalized terms used herein and defined in the
Notes shall have the respective meaning given to those terms in the Notes, and
terms that are defined in the UCC and used herein shall have the meanings given
to them in the UCC.



	2. 	 	 Agreement
Among the Secured Parties.







                
(a)    Payment Pro Rata.    Payment to the Secured Parties under the Notes
shall be made in proportion to the principal and accrued interest then
outstanding on any such date of payment to each, until such obligations are paid
or retired in full.



                
(b)    Sharing of Payments.    If any Secured Party shall at any time
receive any payment of principal, interest or other charge arising under any of
the Notes, or upon any other obligation of Debtor or any sums by virtue of
counterclaim, offset, or other lien that may be exercised, or from any security,
other than payments made on the same date to all Secured Parties, such Secured
Party shall share such payment or payments ratably with the other Secured
Parties as to maintain as near as possible the unpaid balance of the Notes pro
rata according to the Secured Parties’ aggregate proportionate interests.



                
(c)    Sharing of Collateral.    Upon the occurrence of any Event of Default
(as defined herein), and if the Secured Parties proceed to exercise any rights
with respect to the Collateral, the Secured Parties shall share the Collateral
and the proceeds of such Collateral ratably in proportion to the principal and
accrued interest then outstanding under the Notes, without priority of one over
the other.



                
(d)    Appointment of Agent.    The Secured Parties agree that Secured
Parties holding a majority in interest of the principal amount of Notes
outstanding may act together as





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the agent of
all Secured Parties to execute and  deliver in their names such instruments, documents,
statements and amendments  thereto as may be necessary or appropriate to perfect or
continue the perfection  of the security interest granted in this Agreement. 



                (e)    
Enforcement.    Enforcement of the Secured Parties’ rights
hereunder shall be taken by Secured Parties holding a majority in interest of
the principal amount of Notes outstanding acting together as the agent for all
of the Secured Parties. The action of such percentage taken in accordance with
the preceding sentence, shall in each case bind all the Secured Parties. Each of
the Secured Parties agrees that any Secured Parties acting under Sections 2(d)
and 2(e) shall not be liable for any acts taken in good faith in enforcing the
rights of the Secured Parties hereunder.



	3. 	 	 Representations and Warranties. The Debtor hereby represents and
warrants to the Secured Party that:







                
(a)    Ownership of Collateral.    The Debtor is the legal and beneficial
owner of the Collateral (or, in the case of after-acquired Collateral, at the
time the Debtor acquires rights in the Collateral, will be the legal and
beneficial owner thereof). Except for the Security Interest granted to the
Secured Party pursuant to this Agreement, the Debtor has rights in or the power
to transfer the Collateral free and clear of any adverse Lien, security interest
or encumbrance except as created by this Security Interest, except for Permitted
Liens. Except for the financing statements listed in
Schedule 3, no financing statements covering any Collateral
or any proceeds thereof are on file in any public office (other than filings
listing the Secured Party as the secured party).



                
(b)    Valid Security Interest.    The Security Interest granted pursuant to
this Agreement will constitute a valid and continuing first priority, perfected
security interest in favor of the Secured Party in the Collateral for which
perfection is governed by the UCC or filing with the United States Copyright
Office or United States Patent and Trademark Office. Such Security Interest will
be prior to all other Liens on the Collateral, except for Permitted Liens.



                
(c)    Organization and Good Standing.    The Debtor has been duly
incorporated, and is validly existing and in good standing, under the laws of
the State of Delaware.



                
(d)    Location, State of Organization and Name of the Debtor.    The
Debtor’s state of organization is Delaware and the Debtor’s exact
legal name as it appears in the official filings in the State of Delaware is as
set forth in the first paragraph of this Agreement. The Debtor has only one
jurisdiction of organization.



                
(e)    Location of Equipment and Inventory.    All Equipment and Inventory
are (i) located at the locations indicated on Schedule 4
(ii) in transit to such locations or (iii) in transit to a third party
purchaser which will become obligated on a Receivable to the Debtor upon
receipt. Except for Equipment and Inventory referred to in clauses (ii) and
(iii) of the preceding sentence, the Debtor has exclusive possession and control
of the Inventory and Equipment.




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(g)    Delivery of Items.    Schedule 5 lists all
Instruments (other than checks received in the ordinary course of business),
letter-of-credit rights, Electronic Chattel paper and Chattel Paper of the
Debtor as of the date hereof. The Debtor has delivered to the Secured Party,
together with all necessary stock powers, endorsements, assignments and other
necessary instruments of transfer, the originals of all Receivables consisting
of instruments and Chattel Paper and the originals of all certificated
securities owned directly by the Debtor.



                
(h)    Receivables.    Each Receivable is genuine and enforceable
against the party obligated to pay the same (an “Account
Debtor”) free from any right of rescission, defense, setoff or
discount.



                
(i)    Insurance.    Each insurance policy maintained by the Debtor is
validly existing and is in full force and effect. The Debtor is not in default
in any material respect under the provisions of any insurance policy, and there
are no facts which, with the giving of notice or passage of time (or both),
would result in such a default under any material provision of any such
insurance policy. Set forth in Schedule 6 is a complete and
accurate list of the insurance of the Debtor in effect on the date of this
Agreement covering fire, public liability, property damage and worker’s
compensation, showing as of such date, (i) the type of insurance carried,
(ii) the name of the insurance carrier, and (iii) the amount of each
type of insurance carried.



                
(j)    This Agreement is effective to create a valid and continuing Lien upon the
Collateral. All action by the Debtor necessary to protect and perfect such Lien
on each item of the Collateral has been duly taken.



	4. 	 	 Covenants.    The Debtor covenants and agrees with the Secured Party
that, from and after the date of this Agreement until the Obligations are paid
in full:







                
(a)    Other Liens.    Except for the Security Interest and Permitted Liens,
the Debtor has rights in or the power to transfer the Collateral and its title
and will be able to do so hereafter free from any adverse Lien, security
interest or encumbrance, and the Debtor will defend the Collateral against the
claims and demands of all persons at any time claiming the same or any interest
therein.



                
(b)    Further Documentation.    At any time and from time to time, upon the
written request of the Secured Party, and at the sole expense of the Debtor, the
Debtor will promptly and duly authenticate and deliver such further instruments
and documents and take such further action as the Secured Party may reasonably
request for the purpose of obtaining or preserving the full benefits of
this Agreement and of the rights and powers herein granted including, without
limitation, filing any financing or continuation statements under the UCC in
effect with respect to the Liens created hereby. The Debtor also hereby
authorizes the Secured Party to file any such financing, amendment or
continuation statement without the authentication of the Debtor to the extent
permitted by applicable law. A reproduction of this Agreement shall be
sufficient as a financing statement (or as an exhibit to a financing statement
on form UCC-1) for filing in any jurisdiction.



                
(c)    Indemnification.    The Debtor agrees to defend, indemnify and hold
harmless the Secured Party against any and all liabilities, costs and expenses
(including, without





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limitation,
legal fees and expenses)  (“Liabilities”): (i) with respect to, or
resulting from,  any delay in paying, any and all excise, sales or other taxes which may
be  payable or determined to be payable with respect to any of the Collateral,  (ii) with
respect to, or resulting from, any delay in complying with any  law, rule, regulation or
order of any governmental authority applicable to any  of the Collateral or (iii) in
connection with any of the transactions  contemplated by this Agreement. 



                
(d)    Maintenance of Records.    The Debtor will keep and maintain at its
own expense complete and satisfactory, in all material respects, records
of the Collateral.



                
(e)    Inspection Rights.    The Secured Party shall have full access during
normal business hours, and upon prior notice, to all the books, correspondence
and other records of the Debtor relating to the Collateral. The Secured Party or
its representatives may examine such records and make photocopies or otherwise
take extracts from such records. The Debtor agrees to render to the Secured
Party, at the Debtor’s expense, such clerical and other assistance as the
Secured Party may request with regard to the exercise of its rights pursuant to
this paragraph.



                
(f)    Compliance with Laws, etc.    The Debtor (i) will comply with
all laws, rules, regulations and orders of any governmental authority applicable
to any part of the Collateral or to the operation of the Debtor’s
business, the failure of which to comply with will have a material
adverse effect on the Debtor, and (ii) shall not use or permit any Collateral to
be used in violation of any provision of any Credit Document, any law,
rule or obligation or order of any governmental authority, or any policy of
insurance covering the Collateral; provided,
however, that in each case, the Debtor may contest any such
law, rule, regulation or order; in any reasonable manner which does not, in the
reasonable opinion of the Secured Party, adversely affect the Secured
Party’s rights or the priority of its Liens on the Collateral.



                
(g)    Payment of Obligations.    The Debtor will pay promptly when due all
taxes, assessments and governmental charges or levies imposed upon the
Collateral or with respect to any its income or profits derived from the
Collateral, as well as all claims of any kind (including, without limitation,
claims for labor, materials and supplies) against or with respect to the
Collateral.



                
(h)    Limitation on Liens on Collateral.    The Debtor will not create,
incur or permit to exist, will defend the Collateral against, and will take such
other action as is necessary to remove, any Lien or claim on or to the
Collateral, other than the Security Interest and Permitted Liens, and will
defend the right, title and interest of the Secured Party in and to any of the
Collateral against the claims and demands of all other persons.



                
(i)    Limitations on Dispositions of Collateral.    The Debtor will not
sell, transfer, lease, or otherwise dispose of any of the Collateral, or
attempt, offer or contract to do so other than dispositions of Inventory in the
ordinary course of the Debtor’s business; provided,
however that the Debtor will be allowed to grant licenses to
its products and related documentation in the ordinary course of business and to
establish or provide for escrows of related intellectual property in connection
therewith.





-10-













                
(j)    Further Identification of Collateral.    The Debtor will furnish to
the Secured Party from time to time statements and schedules further identifying
and describing the Collateral and such other reports in connection with the
Collateral as the Secured Party may request, all in detail acceptable to the
Secured Party.



                
(k)    Notice of Change of State of Incorporation.    Without 30 days’
prior written notice to the Debtor shall not (i) change the Debtor’s
name, state of incorporation or organization, organizational identification
number or place of business (or, if the Debtor has more than one place of
business, its chief executive office), or the office in which the Debtor’s
records relating to Receivables are kept, or (ii) keep Collateral
consisting of Chattel Paper and documents at any location other than its chief
executive office.



                
(l)    Future Commercial Tort Claims.    The Debtor will promptly give
notice to the Secured Party upon the initiation of any Commercial Tort Claim.
The Debtor hereby authorizes the Secured Party to amend this Agreement (without
any further action or consent from the Debtor) to include any such Commercial
Tort Claim as Collateral hereunder.



                
(m)    Deposit Accounts.    For each deposit account maintained by
the Debtor, the Debtor shall, along with the bank or other depository
institution at which such deposit account is maintained (the “Depositary
Bank”), execute and deliver to the Secured Party a Deposit Account
Control Agreement in form and substance reasonably satisfactory to the Secured
Party. If requested by the Secured Party, the Debtor shall also obtain a blocked
account, lockbox or similar agreement with all or certain Depository Banks.
Without ten days prior written notice to the Secured Party, the Debtor shall not
establish any deposit account not set forth on
Schedule 6.



                
(n)    Collection of Receivables.    The Debtor shall collect, enforce and
receive delivery of the Receivables in accordance with past practice.



                
(q)    Insurance.    The Debtor shall (i) maintain and keep in
force insurance of the types and in amounts customarily carried from time to
time during the term of this Agreement in its lines of business, including fire,
public liability, property damage and worker’s compensation, such insurance
to be carried with companies and in amounts satisfactory to the Secured Party,
(ii) deliver to the Secured Party from time to time, as the Secured Party
may request, schedules setting forth all insurance then in effect, and
(iii) deliver to the Secured Party copies of each policy of insurance which
replaces, or evidences the renewal of, each existing policy of insurance at
least 15 days prior to the expiration of such policy. The Secured Party shall be
named as additional insured or additional loss payee, as appropriate, on all
liability and property insurance of the Debtor and such policies shall contain
such additional endorsements as shall be required by the Secured Party.



                
(r)    Mortgagee Waivers.    The Debtor shall use its best efforts to obtain
waivers or subordinations of Liens from landlords and mortgagees, and the Debtor
shall, in all instances, obtain signed acknowledgements of the Secured
Party’s Liens from bailees having possession of any of the Debtor’s
Collateral that they hold such Collateral for the benefit of the Secured Party
pursuant to Section 9313(c) of the UCC.





-11-














                
(s)    Letters of Credit.    If the Debtor is or becomes the beneficiary of
a letter of credit, the Debtor shall promptly, and in any event within two
business days after becoming a beneficiary, notify the Secured Party thereof and
enter into a tri-party agreement with the Secured Party and the issuer or
confirmation bank with respect to such Letter of Credit Rights assigning such
Letter of Credit Rights to the Secured Party and directing all payments
thereunder to the Secured Party, all in form and substance satisfactory to the
Secured Party.



                
(t)    Electronic Chattel Paper.    The Debtor shall take all steps
reasonably necessary to grant the Secured Party control of all Electronic
Chattel Paper in accordance with the UCC and all “transferable
records” as defined in each of the Uniform Electronic Transactions Act and
the Electronic Signatures in Global and National Commerce Act.



                
(u)    Intellectual Property Matters.    The Debtor shall notify the
Secured Party immediately if it knows or has reason to know (i) that any
application or registration relating to any of its Intellectual Property that is
material to the operation of its business may become abandoned or dedicated, or
(ii) of any adverse determination or development (including the institution of,
or any such determination or development in, any proceeding in the United States
Patent and Trademark Office, the United States Copyright Office or any court)
regarding the Debtor’s ownership of any Intellectual Property that is
material to the operation of its business, its right to register the same, or to
keep and maintain the same.



                
(v)    Intellectual Property Applications.    In no event shall the Debtor,
either itself or through any agent, employee, licensee or designee, file an
application for the registration of any patent, trademark or copyright with the
United States Patent and Trademark Office, the United States Copyright Office or
any similar office or agency without giving the Secured Party prior written
notice thereof, and, upon request of the Secured Party, the Debtor shall execute
and deliver any and all security documents as the Secured Party may request to
evidence the Secured Party’s Lien on such Intellectual Property and the
general intangibles of the Debtor relating thereto or represented thereby. The
Debtor hereby authorizes the Secured Party to amend this Agreement (without any
further action or consent from the Debtor) to include any such patent, trademark
or copyright as Collateral hereunder.



                
(w)    Intellectual Property Abandonment.    The Debtor shall take all
actions reasonably necessary or requested by the Secured Party to maintain and
pursue each application, to obtain the relevant registration and to maintain the
registration of its Intellectual Property, including the filing of applications
for renewal, affidavits of use, affidavits of noncontestability and opposition
and interference and cancellation proceedings.



                
(x)    Protection of Intellectual Property.    In the event that any of the Debtor's
Intellectual Property is infringed upon, or misappropriated or diluted by a third party, the Debtor shall notify
the Secured Party promptly after the Debtor learns thereof.  The Debtor shall, unless the Secured Party shall
determine that such Intellectual Property is in no way material to the conduct of its business or operations,
promptly sue for, and seek recovery of any and all damages resulting from such infringement, misappropriation or
dilution, and shall take such other actions as the Secured Party shall deem necessary under the circumstances to
protect such Intellectual Property.





-12-













                
(y)    Chattel Paper.    The Debtor shall type, print or stamp conspicuously
on the face of all original copies of all Collateral consisting of Chattel Paper
and Documents not in the possession of the Secured Party having a value in
excess of $100,000 a legend satisfactory to the Secured Party indicating
that such Chattel Paper is subject to the security interest granted hereby.



                
(z)    Limitation on Filing of Financing Statements.    The Debtor
acknowledges that it is not authorized to file any financing statement or
amendment or termination statement with respect to any financing statement
without the prior written consent of the Secured Party and agrees that it will
not do so without the prior written consent of the Secured Party, subject to the
Debtor’s rights under Section 9509(d)(2) of the UCC.




	5. 	 	 Event of Default; the Secured Party’s Appointment as
Attorney-in-Fact.







                
(a)    Event of Default.    For purposes of this Agreement, the occurrence
of any one of the following events (each, an “Event of
Default”) shall constitute a default hereunder and under the Notes or
any of the other Credit Documents:



                       
(i)      The Debtor's failure to pay or discharge the Obligations in full in accordance
with the terms of the Notes or any of the other Credit Documents;


                       
(ii)     A breach of any representation or warranty made by the Debtor under this
Agreement, the Notes or any of the other Credit Documents as of the date thereof or any
other document or instrument entered into between the Debtor and the Secured
Party in connection herewith.


                       
(iii)    The Debtor's failure to observe or perform any other covenant, obligation,
condition or agreement contained in this Agreement, the Notes or any of the other Credit
Documents and such failure shall continue for 10 days after the earlier of (i)
the Debtor’s written acknowledgement of such failure and (ii) written
notice by the Secured Party to the Debtor of such failure.


                       
(iv)    The insolvency of the Debtor, the commission of any act of bankruptcy by the
Debtor, the execution by the Debtor of a general assignment for the benefit of
creditors, the filing by or against the Debtor of a petition in bankruptcy or
any petition for relief under the federal bankruptcy act or the continuation of
such petition without dismissal for a period of 90 days or more, or the
appointment of a receiver or trustee to take possession of the property or
assets of the Debtor.



                       
(v)     A default shall occur under the Notes or any of the other Credit Documents, or
any other agreement entered into between the Debtor and the Secured Party in
connection herewith.



                
(b)    Powers.    The Debtor hereby appoints the Secured Party and any
officer or agent of the Secured Party, with full power of substitution, as its
attorney-in-fact with full irrevocable power and authority in the place of the
Debtor and in the name of the Debtor or its own name, from time to time in the
Secured Party’s discretion so long as an Event of Default has occurred and
is continuing, for the purpose of carrying out the terms of this Agreement, to
take





-13-














any appropriate
action and to authenticate any instrument which may be  necessary or desirable to
accomplish the purposes of this Agreement. Without  limiting the foregoing, so long as an
Event of Default has occurred and is  continuing, the Secured Party shall have the right,
without notice to, or the  consent of, the Debtor, to do any of the following on the
Debtor’s behalf:



                       
(i)      to pay or discharge any taxes or Liens levied or placed on or threatened
against the Collateral;



                       
(ii)     to direct any party liable for any payment under any of the Collateral to make
payment of any and all amounts due or to become due thereunder directly to the Secured Party or as the Secured
Party directs;



                       
(iii)     to ask for or demand, collect, and receive payment of and receipt for, any
payments due or to become due at any time in respect of or arising out of any Collateral;



                       
(iv)     to commence and prosecute any suits, actions or proceedings at law or in
equity in any court of competent jurisdiction to enforce any right in respect of any Collateral;



                       
(v)      to defend any suit, action or proceeding brought against the Debtor with
respect to any Collateral;



                       
(vi)     to settle, compromise or adjust any suit, action or proceeding described in
subsection (v) above and to give such discharges or releases in connection therewith as the Secured Party may
deem appropriate;



                       
(vii)     to assign any patent right included in the Collateral of the Debtor (along
with the goodwill of the business to which any such patent right pertains),
throughout the world for such term or terms, on such conditions, and in such
manner, as the Secured Party shall in its sole discretion determine; and



                       
(viii)    generally, to sell, transfer, pledge and make any agreement with respect to or
otherwise deal with any of the Collateral and to take, at the Secured Party’s option
and the Debtor’s expense, any actions which the Secured Party deems
necessary to protect, preserve or realize upon the Collateral and the Secured
Party’s Liens on the Collateral and to carry out the intent of this
Agreement, in each case to the same extent as if the Secured Party were the
absolute owner of the Collateral for all purposes.



                The
Debtor hereby ratifies whatever actions the Secured Party shall lawfully do or
cause to be done in accordance with this Section 5. This power of attorney shall
be a power coupled with an interest and shall be irrevocable.



                
(c)    No Duty on the Secured Party’s Part.    The powers conferred on
the Secured Party by this Section 5 are solely to protect the Secured
Party’s interests in the Collateral and shall not impose any duty upon it
to exercise any such powers. The Secured Party shall be accountable only for
amounts that it actually receives as a result of the exercise of such powers,
and neither the Secured Party nor any of its officers, directors, employees or
agents shall, in the





-14-













absence of
willful misconduct or gross negligence, be  responsible to the Debtor for any act or
failure to act pursuant to this Section  5. 



     6.           
Performance by the Secured Party of the Debtor’s Obligations.    
If the Debtor fails to perform or comply with any of its agreements or covenants
contained in this Agreement and the Secured Party performs or complies, or
otherwise causes performance or compliance, with such agreement or covenant in
accordance with the terms of this Agreement, then the expenses of the Secured
Party incurred in connection with such performance or compliance shall be
payable by the Debtor to the Secured Party on demand and shall constitute
Obligations secured by this Agreement.



     7.           
Remedies.    If an Event of Default has occurred and is continuing,
the Secured Party may exercise, in addition to all other rights and remedies
granted to it in this Agreement and in any other instrument or agreement
relating to the Obligations, all rights and remedies of a secured party under
the UCC. Without limiting the foregoing, the Secured Party, without demand of
performance or other demand, presentment, protest, advertisement or notice of
any kind (except any notice required by law) to or upon the Debtor or any other
person (all of which demands, defenses, advertisements and notices are hereby
waived), may in such circumstances collect, receive, appropriate and realize
upon any or all of the Collateral, and/or may sell, lease, assign, give an
option or options to purchase, or otherwise dispose of and deliver any or all of
the Collateral (or contract to do any of the foregoing), in one or more parcels
at a public or private sale or sales, at any exchange, broker’s board or
office of the Secured Party or elsewhere upon such terms and conditions as the
Secured Party may deem advisable, for cash or on credit or for future delivery
without assumption of any credit risk. The Secured Party shall have the right
upon any such public sale or sales and, to the extent permitted by law, upon any
such private sale or sales, to purchase all or any part of the Collateral so
sold, free of any right or equity of redemption in the Debtor, which right or
equity is hereby waived or released. The Secured Party shall apply the net
proceeds of any such collection, recovery, receipt, appropriation, realization
or sale, after deducting all reasonable expenses incurred therein or in
connection with the care or safekeeping of any of the Collateral or in any way
relating to the Collateral or the rights of the Secured Party under this
Agreement (including, without limitation, reasonable attorneys’ fees and
expenses) to the payment in whole or in part of the Obligations, in such order
as the Secured Party may elect, and only after such application and after the
payment by the Secured Party of any other amount required by any provision of
law, need the Secured Party account for the surplus, if any, to the Debtor. To
the extent permitted by applicable law, the Debtor waives all claims, damages
and demands it may acquire against the Secured Party arising out of the exercise
by the Secured Party of any of its rights hereunder. If any notice of a proposed
sale or other disposition of Collateral shall be required by law, such notice
shall be deemed reasonable and proper if given at least ten days before such
sale or other disposition. The Debtor shall remain liable for any deficiency if
the proceeds of any sale or other disposition of the Collateral are insufficient
to pay the Obligations and the fees and disbursements of any attorneys employed
by the Secured Party to collect such deficiency.



     8.           
Limitation on Duties Regarding Preservation of Collateral.    The
Secured Party’s sole duty with respect to the custody, safekeeping and
preservation of the Collateral, under Section 9207 of the UCC or otherwise,
shall be to deal with it in the same manner as the Secured Party deals with
similar property for its own account. Neither the Secured Party nor any





-15-












of its
directors, officers, employees or agents shall be liable for failure to demand,  collect
or realize upon all or any part of the Collateral or for any delay in  doing so or shall
be under any obligation to sell or otherwise dispose of any  Collateral upon the request
of the Debtor or otherwise. 



     9.           
Powers Coupled with an Interest.    All authorizations and agencies
contained in this Agreement with respect to the Collateral are irrevocable and
are powers coupled with an interest.



     10.         
No Waiver; Cumulative Remedies.    The Secured Party shall not by any
act (except by a written instrument pursuant to Section 12(a) hereof),
delay, indulgence, omission or otherwise be deemed to have waived any right or
remedy hereunder or to have acquiesced in any default under the Notes or any of
the other Credit Documents or in any breach of any of the terms and conditions
of this Agreement. No failure to exercise, nor any delay in exercising, on the
part of the Secured Party, any right, power or privilege hereunder shall operate
as a waiver thereof. No single or partial exercise of any right, power or
privilege hereunder shall preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. A waiver by the Secured Party
of any right or remedy under this Agreement on any one occasion shall not be
construed as a bar to any right or remedy which the Secured Party would
otherwise have on any subsequent occasion. The rights and remedies provided in
this Agreement are cumulative, may be exercised singly or concurrently and are
not exclusive of any rights or remedies provided by law.



     11.         
Termination of Security Interest.    Upon satisfaction of the
Debtor’s obligations pursuant to the Notes, the security interest granted
herein shall terminate and all rights to the Collateral shall revert to the
Debtor. Upon any such termination, the Secured Party shall authenticate and
deliver to the Debtor such documents as the Debtor may reasonably request to
evidence such termination.



     12.         Miscellaneous.



                 
(a)    Amendments and Waivers.    Any term of this Agreement may be amended with the written
consent of the Debtor and of Secured Parties holding a majority in interest of
the principal amount of Notes outstanding. Notwithstanding the foregoing or any
other provision of this Agreement, no amendment or waiver that adversely affects
a Secured Party in a manner different from all of the Secured Parties may be
effected without the written consent of such Secured Party. Any amendment or
waiver effected in accordance with this Section 12(a) shall be binding upon
the parties and their respective successors and assigns.



                 
(b)    Transfer; Successors and Assigns.    The terms and
conditions of this Agreement shall be binding upon the Debtor and its successors
and assigns, as well as all persons who become bound as a debtor to this
Agreement and inure to the benefit of the Secured Party and its successors and
assigns. Nothing in this Agreement, express or implied, is intended to confer
upon any party other than the parties hereto or their respective successors and
assigns any rights, remedies, obligations or liabilities under or by reason
of this Agreement, except as expressly provided in this Agreement.





-16-













                 
(c)    Governing Law.    This Agreement and all acts and transactions
pursuant hereto and the rights and obligations of the parties hereto shall be
governed, construed and interpreted in accordance with the laws of the State of
California, without giving effect to principles of conflicts of law.



                 
(d)    Counterparts.    This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.



                 
(e)    Titles and Subtitles.    The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.



                 (f)
    Notices.    Any notice required or permitted by this Agreement shall
be in writing and shall be deemed sufficient upon receipt, when delivered
personally or by courier, overnight delivery service or confirmed facsimile, or
48 hours after being deposited in the U.S. mail as certified or registered mail
with postage prepaid, if such notice is addressed to the party to be notified at
such party’s address or facsimile number as set forth below or as
subsequently modified by written notice.



                 
(h)    Payments Free of Taxes, Etc.    All payments made by the
Debtor under this Agreement shall be made by the Debtor free and clear of and
without deduction for any and all present and future taxes, levies, charges,
deductions and withholdings. In addition, the Debtor shall pay upon demand any
stamp or other taxes, levies or charges of any jurisdiction with respect to the
execution, delivery, registration, performance and enforcement of this
Agreement. Upon request by the Secured Party, the Debtor shall furnish evidence
satisfactory to the Secured Party that all requisite authorizations and
approvals by, and notices to and filings with, governmental authorities and
regulatory bodies have been obtained and made and that all requisite taxes,
levies and charges have been paid.



                 
(i)    Severability.    If one or more provisions of this Agreement are held
to be unenforceable under applicable law, the parties agree to renegotiate such
provision in good faith, in order to maintain the economic position enjoyed by
each party as close as possible to that under the provision rendered
unenforceable. In the event that the parties cannot reach a mutually agreeable
and enforceable replacement for such provision, then (i) such provision
shall be excluded from this Agreement, (ii) the balance of the Agreement
shall be interpreted as if such provision were so excluded and (iii) the
balance of the Agreement shall be enforceable in accordance with its terms.



                 
(j)    Entire Agreement.    This Agreement, and the documents referred to
herein constitute the entire agreement between the parties hereto pertaining to
the subject matter hereof, and any and all other written or oral agreements
existing between the parties hereto concerning such subject matter are expressly
canceled.



                 
(k)    Amendment and Restatement.    Effective upon execution of this
Agreement by Debtor, Optel LLC, and Optel Capital, the Seventh Amended and
Restated





-17-













Security
Agreement by and among Debtor, Optel LLC, and Optel Capital  dated as of December 19,
2003, is hereby amended and restated in its entirety to  read as set forth in this
Agreement. 



[Signature
Page Follows] 





-18-













     The
Debtor and the Secured Party have caused this Agreement to be duly executed and
delivered as of the date first above written.


			
	 	 	 	 	 	 
	 	 	DEBTOR:	 	 
	 	 	 	 	 
	 	 	DIGITAL LIGHTWAVE, INC.	 
	 	 	 	 	 
	 	 	By:	/s/ James R. Green
	 	 
	 	 	Name:	 James R. Green
	 	 
	 	 	Title:	CEO
	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	SECURED PARTY:	 	 
	 	 	 	 	 
	 	 	OPTEL CAPITAL, LLC	 
	 	 	 	 	 
	 	 	By:	/s/ Chris Phillips
	 	 
	 	 	Name:	 Chris Phillips
	 	 
	 	 	Title:	CFO
	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	SECURED PARTY:	 	 
	 	 	 	 	 
	 	 	OPTEL, LLC	 
	 	 	 	 	 
	 	 	By:	 /s/ Chris Phillips
	 	 
	 	 	Name:	Chris Phillips
	 	 
	 	 	Title:	CFO