Document:

Settlement Agreement and Mutual Release

 Exhibit 10.1 
  
 SETTLEMENT AGREEMENT AND MUTUAL RELEASE 
  
 This Settlement Agreement And Mutual Release (this “Agreement”) is entered into by and between Jabil
Circuit, Inc. (“Jabil”), a Delaware corporation, and Digital Lightwave, Inc. (“Digital”), a Delaware corporation, and will be effective upon execution and delivery by Jabil and Digital as provided in this
Agreement. 
  
 RECITALS 
  
 A. WHEREAS, effective as of May 11, 2004, Digital and Jabil entered into a
Settlement Agreement (the “2004 Settlement”) relating to the claims between the parties under all of their agreements in effect as of the date thereof (collectively referred to as the “Parties’ Agreements”),
including under a Manufacturing Services Letter Agreement with an Effective Date of February 28, 2003 (the “Letter Agreement”); 
  
 B. WHEREAS, under the terms of the 2004 Settlement, Digital executed an Initial Purchase Order, a $2,227,500 Renewal Inventory Note, and a $3,011,404
Renewal A/R Note (each of which term is defined in the 2004 Settlement and collectively referred to in this Agreement as the “Digital Obligations”) in favor of Jabil; 
  
 C. WHEREAS, Digital has defaulted under the Digital Obligations, and Digital currently owes Jabil substantial sums; and

  
 D. WHEREAS, the parties desire to settle their respective
claims and differences, and in connection therewith Digital agrees to pay to Jabil $1,870,000 on or before August 31, 2005, in return for the exchange of mutual releases and other terms and conditions described in this Agreement. 
  
 TERMS AND CONDITIONS 
  
 NOW, THEREFORE, the parties hereby agree as follows: 
  
 1. Recitals. The parties acknowledge and agree that the Recitals are
true and correct and are incorporated by reference into these terms and conditions. 

 2. Payment by Digital. In consideration of the full release by Jabil as set forth herein, Digital
shall pay Jabil $1,870,000 (the “Digital Payment”) in immediately available funds on or before 5:00 p.m. Eastern Time on August 31, 2005. Digital shall make or cause to be made the Digital Payment by wire transfer to the account
specified by Jabil in accordance with the written wire transfer instructions provided by Jabil to Digital. The parties agree that the settlement and mutual release set forth in this Agreement is expressly conditioned upon the timely payment by
Digital and the receipt by Jabil of the Digital Payment. If this payment is not timely made, this Agreement will be of no further force and effect. The parties acknowledge and agree that payment of the Digital Payment shall constitute “full
payment of all monies due and owing under this Letter Agreement” as such phrase is used in Sections 7 and 8 of the Letter Agreement. Digital acknowledges and agrees that the Digital Payment represents a compromised amount on the part of Jabil
which shall be binding on the parties only if Jabil receives and is able to keep the full amount of the Digital Payment. Therefore, the parties further agree that if any portion of the Digital Payment is set aside for any reason (including if it is
determined to be a preference under 11 U.S.C. § 547), then Jabil is entitled to pursue Digital for the full amount due by Digital to Jabil and the releases given by the parties under this Agreement will be void and of no force or effect.

  
 3. Jabil’s Release of Digital. Subject to the
terms and conditions in this Agreement, Jabil for itself and its predecessors, successors, assigns, agents, and representatives, fully releases and forever discharges Digital, together with each of its officers, directors, stockholders, employees,
agents, representatives, predecessors, assigns and successors in interest, and Optel 
  

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 Capital, LLC, a Delaware limited liability company, from each action, cause of action, suit, debt, obligation, liability,
or other claim whatsoever of whatever nature and kind in law or in equity, whether known or unknown, arising since the beginning of time, whether arising from or related to the Digital Obligations, the Parties’ Agreements or otherwise
(collectively referred to as the “Digital Claims”), except for claims for indemnification under the terms of the Letter Agreement or any breach of confidentiality under the Parties’ Agreements. 
  
 4. Digital’s Release of Jabil. Subject to the terms and
conditions in this Agreement, Digital for itself and its predecessors, successors, assigns, agents, and representatives, releases and forever discharges Jabil, together with each of its officers, directors, stockholders, employees, agents,
representatives, predecessors, assigns and successors in interest, from each action, cause of action, suit, debt, obligation, liability, or other claim whatsoever of whatever nature and kind in law or in equity, whether known or unknown, arising
since the beginning of time, whether arising from or related to the Digital Obligations, the Parties’ Agreements or otherwise (collectively referred to as the “Jabil Claims”, and together with the Digital Claims, the
“Claims”), except for warranty claims made in accordance with, and subject to, the terms of the Letter Agreement or any breach of confidentiality under the Parties’ Agreements. 
  
 5. Certain Facts. Each of Jabil and Digital further acknowledges that
it may hereafter discover facts different from or in addition to those which it now knows or believes to be true with respect to the potential claims released pursuant to Sections 3 and 4 above and agrees that, in such event, this Agreement shall
nevertheless be and remain effective in all respects, notwithstanding such different or additional facts, or the discovery thereof. 
  
 6. Inventory. Jabil still possesses certain raw materials, parts, work-in-progress, and other leftover inventory (collectively, the
“Leftover Inventory”) obtained in connection with 
  

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 purchase orders issued by Digital to Jabil which are to be designated by Jabil in its sole and absolute discretion.
Digital may pick up the Leftover Inventory from Jabil during normal business hours, upon reasonable notice, as long as Digital does so at its own cost and expense and without disruption to Jabil on or before September 30, 2005. If Digital fails to
pick up the Leftover Inventory before September 30, 2005, Jabil may dispose of the Leftover Inventory in any way that Jabil deems appropriate and keep any proceeds from the disposition or charge Digital for all out-of-pocket costs and expenses of
disposing the Leftover Inventory. JABIL MAKES NO REPRESENTATION OR WARRANTY, EXPRESSED OR IMPLIED, REGARDING THE LEFTOVER INVENTORY, INCLUDING BUT NOT LIMITED TO THE IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE AND
INCLUDING ANY WARRANTY REGARDING THE AMOUNT OR CONDITION OF THE LEFTOVER INVENTORY. 
  
 7. Escrow Agreement. In anticipation of Digital making the Digital Payment timely, the parties agree to execute this Agreement and to deliver it to Holland & Knight LLP (“Escrow Agent”) as
counsel for Jabil to be held in escrow. If the Digital Payment is timely made, the Escrow Agent shall release and deliver this Agreement to the parties, and the Agreement will become effective and enforceable. If the Digital Payment is not timely
made, the Escrow Agent shall destroy this Agreement. Digital acknowledges that Escrow Agent is legal counsel for Jabil and represents Jabil with respect to any controversies between the parties, and Digital consents to Escrow Agent representing
Jabil in any controversy or litigation between the parties over this Agreement or any other matter. 
  
 8. Waiver of Actual or Potential Conflict. Each of Jabil and Digital acknowledges that Fowler White Boggs Banker P.A. (“Fowler
White”), counsel for Digital in connection with 
  

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 the matters contemplated by this Agreement, has in the past and may continue to perform legal services for Jabil or its
affiliates in matters unrelated to the transactions described in this Agreement. Accordingly, each party to this Agreement hereby: (a) acknowledges that it has had an opportunity to ask for information relevant to this disclosure; (b) acknowledges
that Fowler White has represented Digital in the transactions contemplated by this Agreement and has not represented Jabil in connection with such transactions; and (c) gives its informed consent to Fowler White’s representation of Jabil or its
affiliates in such unrelated matters and to Fowler White’s representation of Digital in connection with this Agreement and the transactions contemplated hereby. The parties further acknowledge that, in the event of any dispute with respect to
the transactions contemplated by this Agreement, Fowler White may continue to represent Digital in such dispute. 
  
 9. Covenant Not to Sue and Attorneys’ Fees. Each party covenants and agrees not to sue or make any demand based on any Claim released under
this Agreement. In the event that it should become necessary for any party either: (a) to enforce the terms of this Agreement or (b) to defend against any Claim released in this Agreement, the prevailing party shall be entitled to receive from the
other party its costs, expenses, and reasonable attorneys’ fees (including attorneys’ fees, costs, and expenses incurred relating to appellate proceedings or bankruptcy proceedings). 
  
 10. Miscellaneous. The parties further agree that (a) this Agreement
shall be construed in accordance with, and all disputes hereunder shall be governed by the laws of the state of Florida; (b) this Agreement may be executed in one or more counterparts, each of which shall be deemed an original; (c) this Agreement
sets forth the entire agreement among the parties and supersedes all prior agreements and understandings among the parties; and (d) this 
  

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 Agreement shall be binding upon all successors and assigns of each party, and each party agrees to execute and deliver
(without further consideration) such other documents or take such other actions as may be necessary to more effectively consummate the parties’ agreements and understandings as described in this Agreement, including without limitation, such
documents, instruments and agreements as may be necessary to evidence the cancellation by Jabil of any promissory note, security agreement, guaranty or similar agreement executed by Digital or any other person or entity in connection with the 2004
Settlement. 
  
 [Signatures on following page.]

  

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 IN WITNESS WHEREOF, the parties hereto, intending to be legally bound, have executed this
Agreement as of the date first above-written. 
  

			
	DIGITAL LIGHTWAVE, INC.
		
	By:	 	 /s/ ROBERT F. HUSSEY

	 	 	Robert F. Hussey
	 	 	Interim President and
	 	 	Chief Executive Officer
	
	JABIL CIRCUIT, INC.
		
	By:	 	 /s/ FORBES ALEXANDER

	 	 	Forbes Alexander
	 	 	Chief Financial Officer

  
  

 7Secured Promissory Note

 Exhibit 10.2 
  
 THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS
OF ANY STATE, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN
OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE APPLICABLE SECURITIES LAWS OF ANY STATE. 
  
 SECURED PROMISSORY NOTE 
  

			
	$1,870,000.00	 	August 31, 2005
	 	 	Clearwater, Florida

  
 For value received,
Digital Lightwave, Inc., a Delaware corporation (the “Company”), promises to pay to Optel Capital, LLC, a Delaware limited liability company (the “Holder”), or its registered assigns, the principal sum of One
Million Eight Hundred Seventy Thousand ($1,870,000.00). Interest shall accrue from the date of this Note on the unpaid principal amount at a rate equal to 10.0% per annum, compounded annually. The interest rate shall be computed on the basis of the
actual number of days elapsed and a year of 360 days. This Note is subject to the following terms and conditions. 
  
 1. Maturity. 
  
 (a) Principal and any accrued but unpaid interest under this Note shall be due and payable upon demand by the Holder at any time after September 30, 2005.

  
 (b) Notwithstanding the foregoing, the entire unpaid principal
sum of this Note, together with accrued and unpaid interest thereon, shall become immediately due and payable upon demand by the Holder at any time on or following the occurrence of any of the following events: 
  
 (i) the sale of all or substantially all of the Company’s assets, or
any merger or consolidation of the Company with or into another corporation; other than a merger or consolidation in which the holders of more than 50% of the shares of capital stock of the Company outstanding immediately prior to such transaction
continue to hold (either by the voting securities remaining outstanding or by their being converted into voting securities of the surviving entity) more than 50% of the total voting power represented by the voting securities of the Company, or such
surviving entity, outstanding immediately after such transaction; 
  
 (ii) the inability of the Company to pay its debts as they become due; 

 (iii) the dissolution, termination of existence, or appointment of a receiver, trustee or custodian, for
all or any material part of the property of, assignment for the benefit of creditors by, or the commencement of any proceeding by the Company under any reorganization, bankruptcy, arrangement, dissolution or liquidation law or statute of any
jurisdiction, now or in the future in effect; 
  
 (iv) the
execution by the Company of a general assignment for the benefit of creditors; 
  
 (v) the commencement of any proceeding against the Company under any reorganization, bankruptcy, arrangement, dissolution or liquidation law or statute of any jurisdiction, now or in the future in effect, which is not
cured by the dismissal thereof within ninety (90) days after the date commenced; or 
  
 (vi) the appointment of a receiver or trustee to take possession of the property or assets of the Company. 
  
 2. Payment; Prepayment. All payments shall be made in lawful money of the United States of America at such place as the Holder hereof may
from time to time designate in writing to the Company. Payment shall be credited first to the accrued interest then due and payable and the remainder applied to principal. Prepayment of this Note may be made at any time without penalty. 

 
 3. Transfer; Successors and Assigns. The terms and
conditions of this Note shall inure to the benefit of and be binding upon the respective successors and assigns of the parties. This Note may be transferred only upon surrender of the original Note for registration of transfer, duly endorsed,
or accompanied by a duly executed written instrument of transfer in form satisfactory to the Company. Thereupon, a new note for the same principal amount and accrued interest will be issued to, and registered in the name of, the transferee. Interest
and principal are payable only to the registered holder of this Note. 
  
 4. Governing Law. This Note 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 Florida,
without giving effect to principles of conflicts of law. 
  
 5.
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. 
  
 6. Amendments and Waivers. Any term of
this Note may be amended only with the written consent of the Company and the Holder. Any amendment or waiver effected in accordance with this Section 6 shall be binding upon the Company, each Holder and each transferee of this Note.

  

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 7. Officers and Directors Not Liable. In no event shall any officer or director of the
Company be liable for any amounts due or payable pursuant to this Note. 
  
 8. Security Interest. This Note is secured by all of the assets of the Company in accordance with the Twenty Second Amended and Restated Security Agreement by and between the Company and the Holder dated as of September 16,
2004 (the “Security Agreement”). In case of an Event of Default (as defined in the Security Agreement), the Holder shall have the rights set forth in the Security Agreement. 
  
 9. Counterparts. This Note may be executed in any number of
counterparts, each of which will be deemed to be an original and all of which together will constitute a single agreement. 
  
 10. Action to Collect on Note. If action is instituted to collect on this Note, the Company promises to pay all costs and expenses,
including reasonable attorney’s fees, incurred in connection with such action. 
  
 11. Loss of Note. Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Note or any Note exchanged for it, and indemnity satisfactory to the
Company (in case of loss, theft or destruction) or surrender and cancellation of such Note (in the case of mutilation), the Company will make and deliver in lieu of such Note a new Note of like tenor. 
  
 [Remainder of this page intentionally left blank.] 
  

 -3- 

 This Note was entered into as of the date set forth above. 
  

			
	COMPANY:
	
	DIGITAL LIGHTWAVE, INC.
		
	By:	 	  

	 	 	Robert F. Hussey
	 	 	Interim President and Chief Executive Officer

  

			
	AGREED TO AND ACCEPTED:
	
	OPTEL CAPITAL, LLC
		
	By:	 	  

	Name:	 	  

	 	 	            (print)
	Title:

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