Term Sheet for $10 Million Credit Facility between Optel, LLC and Digital Lightwave, Inc.

Summary

This term sheet outlines the main terms for a $10 million credit facility that Optel, LLC will provide to Digital Lightwave, Inc. The loan is secured by all of Digital Lightwave’s personal property assets and includes previously advanced loans. Advances must be at least $1 million each, with all amounts due by July 31, 2004. The funds are for general corporate purposes. The agreement includes standard conditions, representations, and covenants, and is subject to final documentation. Interest is 10% per year, increasing to 15% if there is a default.

EX-10.46 7 file006.txt TERM SHEET OPTEL, LLC To: Digital Lightwave, Inc. ("Borrower") From: Optel, LLC ("Lender") Date: April 15, 2003 TERM SHEET This Term Sheet (this "Term Sheet") sets forth the principal terms and conditions upon which Lender is prepared to make available a credit facility to Lender (the "Facility"). The final terms of the Facility shall be subject to execution and delivery by Borrower of the documents outlined below, including without limitation a loan and security agreement in form and substance satisfactory to Lender (the "Loan Agreement"). I. PARTIES: BORROWER: Digital Lightwave, Inc., a Delaware corporation. LENDER: Optel, LLC ("Optel"), a Delaware limited liability company. II. PRINCIPAL CREDIT TERMS: COMMITMENT: $10,000,000. In addition, the $1,960,000 aggregate principal amount of loans previously advanced by Lender to Borrower as evidenced by (i) that certain Secured Promissory Note, dated as of February 14, 2003 in the principal amount of $800,000, (ii) that certain Secured Promissory Note, dated as of February 26, 2003, in the principal amount of $650,000, (iii) that certain Secured Promissory Note, dated as of March 28, 2003, in the principal amount of $450,000, and (iv) that certain Secured Promissory Note, dated as of April 2, 2003, in the principal amount of $60,000 (collectively, the "Notes"), shall be amended and restated in order to be evidenced and secured by the Loan and Security Agreement. COMMITMENT PERIOD: April 15, 2003 to December 31, 2003 (the "Commitment Period"). All advances under the facility (the "Advances") are repayable in full on July 31, 2004, subject to acceleration upon a change of control, the voluntary or involuntary filing of a bankruptcy proceeding involving Borrower, or other Events of Default as outlined herein (the "Maturity Date"). ADVANCES: Each Advance shall be in a minimum amount of $1,000,000. Borrower shall request each Advance by delivering to Lender a written request in form and substance satisfactory to Lender and, other than for the initial Advance, at least five (5) business days prior to the date of the requested Advance,. CLOSING DATE: To be determined. INTEREST: Each Advance shall bear interest at ten percent (10%) per annum. Interest on each Advance shall accrue on a monthly basis and shall be capitalized and added to the outstanding principal amount of each such Advance. All accrued and unpaid interest will be repaid in full on the Maturity Date. DEFAULT INTEREST RATE: Upon the occurrence and during the continuation of any Event of Default (as defined below), the total outstanding Advances shall bear interest at a per annum rate equal to the fifteen percent (15%) per annum. INTEREST AND FEE CALCULATIONS: All interest and fees to be computed on the basis of a 365/366 day year for actual days elapsed. TERMS OF REPAYMENT: Borrower shall repay the principal amount of each Advance in full on the Maturity Date. OPTIONAL PREPAYMENTS: Borrower may, at its option, prepay the principal amount of any Advance in whole or in part upon five (5) business days' notice to Lender. Borrower shall not have the right to re-borrow any Advance to the extent it has been repaid. PURPOSE: The proceeds of each Advance shall be used by Borrower for its general corporate purposes, including operational and capital expenditures and repayment of existing indebtedness. DOCUMENTATION: The facility shall be evidenced by a Loan and Security Agreement between Borrower and Lender (the "Loan Agreement") and certain other documents, instruments and agreements described herein, including without limitation, a promissory note (collectively, the "Credit Documents"). SECURITY: The obligations of Borrower will be secured by a perfected first priority security interest in all personal property assets of Borrower. CONDITIONS PRECEDENT: Conditions customary for transactions of this type in light of Borrower's current financial condition, including, but not limited to the following: (1) With respect to the initial Advance (unless waived), Lender shall have received the following, each in form and substance satisfactory to Lender: (a) The executed Credit Documents. (b) Such articles, bylaws, operating agreements, resolutions, shareholder approvals, good standing certificates and other organizational documents as Lender shall reasonably request to evidence the good standing of Borrower and the authority of Borrower to execute, deliver and perform the Credit Documents. (c) Such financial statements, audits, appraisals, cash flow projections, pro forma balance sheets, 2 business plans and other financial information, projections and plans for Borrower as Lender may reasonably request. (d) UCC financing statements (appropriately completed and executed) for filing in such jurisdictions as Lender may request to perfect the liens granted to Lender pursuant to the Loan Agreement. (e) Such other documents, instruments and agreements (including stock certificates and stock powers) as Lender may request to establish and perfect the liens granted to Lender under the Loan Agreement. (f) Such other instruments, agreements, certificates and other documents as Lender may request. (g) Favorable written opinion from counsel for Borrower, dated the Closing Date, addressed to Lender, covering such legal matters as Lender may reasonably request and otherwise in form and substance satisfactory to Lender. (2) Each Advance shall be conditioned upon no default under the Loan Agreement, no material adverse change in light of Borrower's current financial condition and all representations and warranties being accurate. REPRESENTATIONS AND WARRANTIES: Representations and warranties customary for transactions of this type, including without limitation, representations as to organization and good standing, legal authority, corporate approval, enforceability of Credit Documents, compliance with laws and other agreements, trade names and styles, patents and other rights, location of business, title to assets, maintenance of collateral, litigation, financial statements and condition, taxes and pension contributions, no material adverse change and accuracy of information. Optel acknowledges that due to Borrower's current financial condition it currently could not give unqualified representations regarding certain of the representations proposed above and that this fact shall be addressed in the Loan Agreement. COVENANTS: Customary for a transaction of this type, including but not limited to the following: (1) Reporting: (a) Within 90 days after each year-end, financial statements of Borrower audited by an independent public accounting firm acceptable to Lender. (b) Within 30 days after each month-end, monthly unaudited financial statements of Borrower. 3 (c) Within 60 days prior to the commencement of each fiscal year, a budget and business plan for Borrower for such fiscal year. (d) Contemporaneously with the delivery of the monthly and year-end financial statements, a compliance certificate of the Borrower which states that (i) no Event of Default has occurred and is continuing and (ii) Borrower is in compliance with each of the covenants set forth in the Credit Documents. (e) Other reporting customary for a transaction of this type and additional reporting appropriate in the reasonable judgment of Lender for this transaction. (2) Other covenants in light of Borrower's current financial condition customary for transactions of this type and additional covenants appropriate in the reasonable judgment of Lender for this transaction, including, without limitation, covenants obligating Borrower to maintain accurate books and records, permit inspections and audits, maintain insurance, pay taxes when due, use Advances as agreed, maintain business and assets and comply with laws and contracts; and covenants which limit mergers and acquisitions, asset acquisitions and dispositions outside ordinary course of business, transactions outside ordinary course of business, loans and other investments outside ordinary course of business, additional indebtedness, liens, dividends and redemptions, increases in management compensation or dissolutions. DEFAULT: Events of Default customary for transactions of this type in light of Borrower's current financial condition. INDEMNIFICATION: Borrower shall indemnify Lender (on an after-tax basis) for all taxes and other liabilities arising from the transaction except to the extent arising from the gross negligence or willful misconduct of such persons. RISK TRANSFER PROVISIONS: The documentation shall include rights of assignment and participation. Borrower shall covenant and agree to assist Lender with respect to any such assignments or participations GOVERNING LAW: New York OTHER TERMS: This Term Sheet is not intended to be all inclusive. If and when executed, the Credit Documents will contain other terms and conditions. 4 BY ACKNOWLEDGING THIS TERM SHEET BELOW, BORROWER HAS EXPRESSED ITS ACCEPTANCE OF THE TERMS AND CONDITIONS FOR THE FACILITY SET FORTH ABOVE. IF BORROWER DOES NOT ACKNOWLEDGE AND RETURN THIS TERM SHEET TO LENDER BY APRIL 15, 2003, LENDER WILL CONSIDER THAT BORROWER DOES NOT ACCEPT THE TERMS SET FORTH ABOVE AND THIS TERM SHEET SHALL AUTOMATICALLY TERMINATE AND SHALL BE OF NO FURTHER FORCE OR EFFECT. ACKNOWLEDGED: BORROWER: DIGITAL LIGHTWAVE, INC. By:__________________________________ Name:_____________________________ Title:____________________________ LENDER: OPTEL, LLC By:___________________________________ Chris Phillips Chief Financial Officer 5 Optel, LLC - ------------------------------------------------------------------------------- 6200 Courtney Campbell CSWY, Suite 740 Tampa, FL 33607 (T) 813 ###-###-#### (F) 813 ###-###-#### Via Email: ***@*** April 15, 2003 Digital Lightwave, Inc. 15550 Lightwave Drive Clearwater, FL 33760 Attn: Robert Hussey Re: $10,000,000 CREDIT FACILITY Dear Bob: Optel, LLC ("Optel") is pleased to offer to Digital Lightwave, Inc. (the "Company") the credit facility described in Attachment A hereto (the "Facility"). This letter and Attachment A outline the principal terms and conditions upon which Optel is prepared to make available the Facility to the Company. The final terms and conditions of the Facility shall be subject to the execution and delivery by the parties of the Loan Agreement and the other Credit Documents described in Attachment A, each in form and substance satisfactory to Optel. In consideration of Optel's commitment, the Company agrees to indemnify and hold harmless each of Optel and its officers, directors, employees, agents, advisors and affiliates for all claims, damages, losses, liabilities and expenses (including, without limitation, reasonable fees and disbursements of counsel) incurred by any of them in connection with this commitment letter, the Facility, the use by the Company of the Facility or the proceeds thereof, the collateral for the Facility, the Credit Documents, any related document, instrument or agreement or any transaction contemplated hereby or thereby whether or not such transactions are consummated, except for the portion of such claims, damages, losses, liabilities and expenses caused by such party's gross negligence or willful misconduct. If the commitment herein and in Attachment A are satisfactory, please indicate the Company's acceptance by having an authorized officer of the Company countersign Attachment A and delivering the executed copy to Optel no later than April 15, 2003. Upon the acceptance of the commitment offer set forth in this letter, Optel will instruct its counsel (Orrick, Herrington & Sutcliffe LLP) to commence documentation. If the Company accepts this offer, Optel's commitment shall continue until April 25, 2003, on which date such commitment shall expire unless the Loan Agreement and the related Credit Documents have been executed by Optel and the Company. This letter shall be governed by and construed in accordance with the laws of the State of Delaware without regard to conflicts of law principles. Optel's commitment is personal to the Company and may not be transferred or assigned to any other party without the prior written consent of Optel and any such purported transfer shall be void. Except as otherwise required by law, neither this letter nor any part hereof may, without the prior written consent of Optel, be disclosed or exhibited to any other party except the Company's accountants, attorneys and other advisors, and then, in each case, only in connection with the transactions contemplated hereby and on a confidential basis. This letter may not be amended or any provision hereof waived or modified except by an instrument in writing signed by Optel. We look forward to working with you on this transaction. Please let us know if you have any questions. Very truly yours, OPTEL, LLC By: _______________________________ Chris Phillips Chief Financial Officer 2