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,
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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.
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(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.
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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:___________________________________
Xxxxx Xxxxxxxx
Chief Financial Officer
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Optel, LLC
-------------------------------------------------------------------------------
0000 Xxxxxxxx Xxxxxxxx XXXX, Xxxxx 000 Xxxxx, XX 00000 (T) 813-287-6337
(F) 000-000-0000
Via Email: xxxxxxx@xxxxxxxxx.xxx
April 15, 2003
Digital Lightwave, Inc.
00000 Xxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxx
Re: $10,000,000 CREDIT FACILITY
Dear Xxx:
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 (Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx 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: _______________________________
Xxxxx Xxxxxxxx
Chief Financial Officer
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