<PAGE>
 
                                                                    Exhibit 10.2

                               Corporate Banking
                                       Services



                           Advice of Borrowing Terms
                                      for
                           Blue Wave Systems Limited



                                     From:
                      Leicester Corporate Business Centre


                               16 December 1998





                                    NatWest
<PAGE>
 
                           Advice of Borrowing Terms
                                        
Relationship Office: Leicester Corporate Business Centre  Date: 16 December 1998
 
                    Borrower(s)                  Registered Number:
             Blue Wave Systems Limited                1751065
                                        

We intend that the facilities listed in Part 1 of the attached Facility Schedule
(the "on-demand facilities") should remain available to the borrower(s) until 16
June 1999 and all facilities should be reviewed on or before that date.  The
facilities are, however, subject to the following:-

 .  the terms and conditions below,

 .  the specific conditions applicable to an individual facility as detailed in
   the Facility Schedule,

 .  the Security detailed in the attached Security Schedule, and

 .  the attached General Terms.

All amounts outstanding are repayable on demand which may be made by us at our
discretion at any time and the facilities may be withdrawn, reduced, made
subject to further conditions or otherwise varied by us giving notice in
writing.


Conditions:
The following conditions must be satisfied at all times while the facilities are
outstanding, but this will not affect our right to demand repayment at any time:
 .  Monthly management accounts to be provided to us within 28 days of the end of
   the month to which they relate
 .  Audited accounts to be provided to us within 180 days of the financial year
   end to which they relate.
 .  Month end overdraft utilisation to be covered 100% by a lending formula of
   the following in total;
1. 50% of month end eligible debtors 90 days or under. Eligible
   debtors are defined as those domiciled in Blue Wave Systems Ltd for UK and
   Export customers, excluding those to associated companies.
2. 50% of month end net finished stock. Net finished stock is defined as to
   total finished stock net of that not sold in the previous 6 months.
3. 30% of month end net WIP. Net WIP is defined as to total WIP less provision.
 .  Receipt of (Pounds)1,000,000 cash injection from Blue Wave Systems Inc. by
   10.1.99.



Other Fees and Costs
The following fees are due, in addition to the specific Arrangement Fee(s)
detailed in the Facility Schedule:

--------------------------------------------------------------------------------
   Fee Type            Amount      Account to be debited     Date to be debited
--------------------------------------------------------------------------------
Arrangement Fee     (Pounds)2,500         89286669                31.12.98
--------------------------------------------------------------------------------

                                       2
<PAGE>
 
A T Dunlop
Corporate Manager
For and on behalf of
National Westminster Bank Plc



Acceptance:
To signify your agreement to the terms and conditions outlined above please sign
and return the enclosed copy of this Advice of Borrowing Terms within 28 days.


                              Form of Acceptance
                              ------------------
                                        

I accept the facility/facilities on the above terms and conditions and confirm
that I have been authorised by the Board(s) of Directors of the Borrower(s) to
sign this Form of Acceptance on behalf of the Borrower(s).



By (name and title): .....................                Date 22 December 1998.

For and on behalf of: Blue Wave Systems Limited

                                       3
<PAGE>
 
                               Facility Schedule

Part 1 - Facilities Repayable on Demand:

                              ------------------
                              Composite Facility
--------------------------------------------------------------------------------
Name of Borrower(s):   Blue Wave Systems Limited
--------------------------------------------------------------------------------
                       
Limit:  Gross          (Pounds)1,000,000 plus      Total between sterling and 
                       excess                      currency borrowing as 
                       (Pounds)1,000,000 to        detailed below. 
                       10.1.99
------------------------------------------------
Limit:  Net            (Pounds)1,000,000 plus
                       excess
                       (Pounds)1,000,000 to 
                       10.1.99
--------------------------------------------------------------------------------

The following Facilities are included within the Composite Facility Limit
arrangement, together with any allocated sub-limit(s):

                            ----------------------
                            Overdraft: - Base rate
--------------------------------------------------------------------------------
Account Number:             89286669
--------------------------------------------------------------------------------
Name of Borrower            Blue Wave Systems Limited
--------------------------------------------------------------------------------
Limit:                      (Pounds)1,000,000 plus excess (Pounds)1,000,000 to
                            10.1.99
--------------------------------------------------------------------------------
Purpose:                    To finance working capital
--------------------------------------------------------------------------------
Repayment:                  Fully fluctuating with excess repayment from Blue 
                            Wave Systems Inc
--------------------------------------------------------------------------------
1st Debit Interest Rate:    1.75% above the Bank's Base rate
--------------------------------------------------------------------------------
2nd Debit Interest Rate:    The Bank's unarranged borrowing rate on borrowing
                            over (Pounds)2,000,000, reducing to
                            (Pounds)1,000,000 upon excess repayment or in excess
                            of agreed facilities
--------------------------------------------------------------------------------
Interest Payable:           Quarterly
--------------------------------------------------------------------------------
Monitoring Fee:             (Pounds)1,250  per quarter will be debited on 
                            31.12.98 and quarterly thereafter
--------------------------------------------------------------------------------
Excess Fees:                We will be entitled to charge an excess fee at the
                            Bank's published rate for each day any agreed limit
                            is exceeded (see our "Services & Charges for
                            Business Customers" brochure for details).
--------------------------------------------------------------------------------


                             ---------------------
                             Overdraft: - Currency
--------------------------------------------------------------------------------
Account Number:             02559846            Currency:             US Dollars
--------------------------------------------------------------------------------
Name of Borrower            Blue Wave Systems Limited
--------------------------------------------------------------------------------
Limit:                      (Pounds)1,000,000 plus excess (Pounds)1,000,000 
                            until 10.1.99 ( sterling equivalent )
--------------------------------------------------------------------------------
Purpose:                    To finance working capital
--------------------------------------------------------------------------------
Repayment:                  Fully fluctuating with excess repayment from 
                            Blue Wave Systems Inc.
--------------------------------------------------------------------------------
1st Debit Interest Rate:    1.75% above the Bank's Currency Base rate.
--------------------------------------------------------------------------------
2nd Debit Interest Rate:    We will be entitled to charge the Bank's unarranged
                            borrowing rate for the relevant currency for
                            borrowing over $3,200,000 reducing to $1,600,000 
                            upon excess repayment or in excess of agreed
                            facilities
--------------------------------------------------------------------------------
Interest Payable:           Quarterly
--------------------------------------------------------------------------------
Excess Fees:                We will be entitled to charge an excess fee at the
                            Bank's published rate for each day any agreed limit
                            is exceeded.
--------------------------------------------------------------------------------

                                       4
<PAGE>
 
         ------------------------------------------------------------


Facilities not subject to a Composite Facility Limit:

                            ----------------------
                            Terminable Indemnities
--------------------------------------------------------------------------------
Name of Borrower:      Blue Wave Systems Limited
--------------------------------------------------------------------------------
Limit:                 (Pounds)100,000
--------------------------------------------------------------------------------
Type and Purpose:      Guarantee to H M Customs and Excise for the deferment of
                       import duty
--------------------------------------------------------------------------------
Basis of Expiry:       7 days notice
--------------------------------------------------------------------------------
Indemnity Fee:         1% p.a. payable quarterly in advance, to be debited to
                       account number 89286669 on pre-advised dates
--------------------------------------------------------------------------------


                            ----------------------
                            Terminable Indemnities
--------------------------------------------------------------------------------
Name of Borrower:      Blue Wave Systems Limited
--------------------------------------------------------------------------------
Limit:                 (Pounds)50,000
--------------------------------------------------------------------------------
Type and Purpose:      A T A Carnets
--------------------------------------------------------------------------------
Basis of Expiry:       31 months after issue or upon release by Chamber of
                       Commerce
--------------------------------------------------------------------------------
Indemnity Fee:         1% p.a., minimum (Pounds)75 p a each payable quarterly in
                       advance, to be debited to account number 89286669 on
                       31.12.98 and quarterly thereafter
--------------------------------------------------------------------------------


                              -------------------
                              Cheque Negotiations
--------------------------------------------------------------------------------
Name of Borrower:      Blue Wave Systems Limited
--------------------------------------------------------------------------------
Limit:                 (Pounds)20,000
--------------------------------------------------------------------------------
Purpose:               Negotiation of Foreign Cheques with Recourse
--------------------------------------------------------------------------------
Fees:                  Subject to separate tariff, calculated on sterling value
                       of cheque. Information available upon request or at the
                       time the service is provided
--------------------------------------------------------------------------------


                               ----------------
                               Forward Exchange
--------------------------------------------------------------------------------
Name of Borrower:      Blue Wave Systems Limited
--------------------------------------------------------------------------------
Notional Limit:        (Pounds)300,000 gross contracts of 12 months or under
                       where utilisation is calculated in accordance with the
                       Bank's Forward Exchange Matrix from time to time, a copy
                       of which is available from your Corporate Manager.
--------------------------------------------------------------------------------


                                ---------------
                                Settlement Risk
--------------------------------------------------------------------------------
Name of Borrower:      Blue Wave Systems Limited
--------------------------------------------------------------------------------
Limit/Frequency:       (Pounds) 275,000  per month
--------------------------------------------------------------------------------
Type and Purpose:      Payments made via BACS
--------------------------------------------------------------------------------

                                       5
<PAGE>
 
Part 2 - Facilities Subject to Separate Documentation:

The following facilities are made available on the terms of the separate
documentation between us.

    Name of Borrower        Facility and Purpose       Amount     Date Agreement
                                                      (Pounds)         Signed
--------------------------------------------------------------------------------
Blue Wave Systems Limited      Corporate Cards        315,000      November 1996
--------------------------------------------------------------------------------

                                       6
<PAGE>
 
                               Security Schedule
                                        
We rely on the security detailed below (and require additional security where
specified) to repay, on demand, all your current and future liabilities (both
actual and contingent) to us.  These liabilities include, without limitation,
those incurred by you under the facility(ies) specified in the Facility
Schedule.


Date Executed/New:          Security:                Given/to be given by:
--------------------------------------------------------------------------------
24.8.94                 Mortgage Debenture        Given by the Borrower
--------------------------------------------------------------------------------
11.11.98                Guarantee                 Given by Blue Wave Systems Inc
--------------------------------------------------------------------------------

                                       7
<PAGE>
 
                                 General Terms

--------------------------------------------------------------------------------
This section sets out in more detail the basis on which we make facilities
available to you. It covers issues such as how limits and interest are
calculated, how we can vary agreed terms and what we mean by "on demand".
--------------------------------------------------------------------------------

These General Terms apply to all on demand facilities in the Advice of Borrowing
Terms (the "AOBT"), but do not apply to those facilities which are subject to
separate documentation, unless such documentation expressly incorporates these
General Terms.  In cases where the expression "you" includes more than one
person (for example joint account holders) it shall be taken to refer to all or
any one or more of you, and your obligations shall be joint and several.

 .  Independent Advice. Unless we expressly agree in writing to do so we do not
   hold ourselves out as providing advice on or considering the general
   suitability of facilities for your particular circumstances (including tax)
   and neither we nor our employees shall be liable for any indications given as
   to such suitability. We make no warranties or representations about the
   advisability of any underlying transaction entered into by you. You should
   obtain independent professional advice on such matters, and upon any security
   or guarantee required by us.

 .  Acceptance. Any offer of a facility must be accepted within the time period
   specified in the AOBT. We may, at our option, treat any usage of any of these
   facilities as acceptance (without amendment) of the terms and conditions of
   the AOBT.

 .  Availability. Our normal practice is to review all credit facilities
   periodically. Any references in the AOBT to a review of, or availability
   until a future date are merely indicative of our current intention, and we
   may, at our discretion, review on demand facilities at an earlier date.
   Facilities which are not loans or overdrafts are offered on the basis that
   there is no commitment on our part to enter into any such facility with you.
   We may, at our absolute discretion, decide whether a utilisation may be made
   and any conditions subject to which utilisations may be made.

 .  Repayment. Notwithstanding any reference to review or availability or
   repayment term in the AOBT, all facilities are repayable on demand which we
   may make at our sole discretion at any time and may by notice be withdrawn
   reduced or made subject to (further) conditions or otherwise varied. You must
   ensure that we receive by way of repayment, the full amount of any
   indebtedness irrespective of any taxes, duties or charges, in immediately
   available funds in the currency in which the facility is outstanding at the
   branch or office where the facilities are provided.

 .  Variation and waiver. We may vary these General Terms by giving one month's
   written notice to you. If a change in any currency of the United Kingdom
   occurs (including introduction of the euro), the AOBT and these General Terms
   will be amended to the extent we specify to reflect the change in currency
   and put us in the same position, so far as possible, that we would have been
   in if no change in currency had occurred. If we refrain from exercising any
   of our rights this shall not preclude us from exercising any rights at a
   later date.

 .  Limits. The limits specified in the AOBT or the Facility Schedule for each
   facility and/or each account (including any Group or Composite Facility
   limits) must not at any time be exceeded. In addition, the aggregate
   utilisation of any Composite and/or Group Limit specified for any group of
   accounts and/or facilities must not be exceeded notwithstanding the total of
   any individual or sub limits allocated. If we have agreed that there will be
   a gross limit for one or more facilities, this means that the aggregate
   utilisation of those facilities must not at any time exceed the gross limit.
   If we have agreed that there will be a net limit for one or more facilities,
   this means that the aggregate utilisation of those facilities, less the
   aggregate amount of the cleared credit balances on the accounts specified by
   us in the AOBT, will not exceed the net limit (if no accounts are specified
   we may determine which accounts are utilised for this purpose). We are not
   obliged to allow or continue to allow any borrowing in excess of agreed
   facilities. Any reference to a particular account will include any successor
   account.

 .  Interest. All interest rates are variable. Interest is payable monthly or
   quarterly (as detailed in the AOBT) on our usual charging days and on final
   repayment of the indebtedness. Interest accrues on the daily cleared debit
   balance on the account(s) concerned at the annual rate or rates shown in the
   AOBT (both before and after demand and/or judgement). It is calculated on the
   basis of a 365 day year for sterling (and either a 365 or 360 day year for
   currencies other than sterling or on such other basis as we may from time to
   time specify) and the actual number of days elapsed and is compounded monthly
   or quarterly. Our variable unarranged borrowing rate for the relevant
   currency will apply to any indebtedness from time to time (i) in excess of
   agreed facilities or (ii) outstanding after the expiry date of agreed
   facilities or, in respect of (i) only, such other interest rate as we may
   specify.

 .  Changes to interest. We may alter the basis on which interest is calculated
   including the size of the interest margin charged over our Base Rate or other
   published rate and/or the amount of any regular repayments of facilities
   which are repayable on demand by providing you with one month's written
   notice. As a change in our Base Rate or other variable rate is not an
   alteration of the basis upon which interest is calculated, no written notice
   need be given of such a change. Changes in our Base Rate or other published
   rates take effect when made. Details of current rates are available from any
   branch or office, and are published in selected national newspapers. Omission
   to publish details of any change in a newspaper shall not stop the change
   from taking effect. For a currency account, written notice of changes to the
   relevant Currency Base Rate will normally be given, although failure to do so
   will not stop the change taking effect when made.

 .  Fees. Fees quoted exclude charges for money transmission or similar services
   which are either advised (i) separately, or (ii) at the time a facility is
   used. All costs, charges and expenses incurred or suffered by us, including
   legal costs and our internal management costs, arising at any time in
   connection with any facility or with any related security or guarantee are
   payable by you on demand.

 .  Uncovered Payments. An "uncovered payment" is a payment where the cleared
   credit balance or agreed credit facility is insufficient to meet that payment
   and all other payments requested, disregarding uncleared credits to that
   account. We do not accept any obligation to make uncovered payments to third
   parties unless we have agreed to do so in writing. We need not make any
   uncovered payment which is in excess of any settlement risk limit.

 .  Set Off. We may, without notice, set-off against any credit balances on any
   of your account(s) (in any currency), your liability in respect of any
   facilities (including any uncovered payment) and may combine accounts. We are
   authorised to use all or any such credit balances to buy such other
   currencies as may be necessary in order to exercise any rights of set-off to
   which we may be entitled.

 .  Appropriation and Lien. Where more than one debt is owing to us we may use
   the whole or any part of any repayment to reduce or discharge the principal
   amount of your indebtedness as we may select, to meet any accrued interest or
   to discharge any other liabilities to us. We shall

                                       8
<PAGE>
 
   have a lien over securities of any kind and other items deposited by or on
   your behalf with us (including, without limitation, cheques given to us for
   collection).

 .  Security. Unless the AOBT expressly provides otherwise, any mortgage, charge
   or debenture must be a first legal mortgage, charge or debenture over the
   unencumbered title of the property in question. You may not grant (or allow
   to be created) without our prior written consent any other security interest
   in the property in question or part with possession of it. We may, at our
   sole discretion, require from time to time additional valuations (at your
   expense) by such valuer as we may approve, of any or all of the assets held
   by us as security.

 .  Environment. You represent and warrant (both now and in the future) that you
   have and will comply in all material respects with any applicable
   environmental law, regulation or code of practice ("environmental law") and
   with the terms and conditions of any applicable environmental licences or
   other consents or approvals required by environmental law ("environmental
   licences").

 .  Information. You must provide us with any information which we may at any
   time reasonably require, and must inform us of any material change of facts
   or circumstances. You authorise us to disclose to your auditors any such
   information concerning your accounts with us as they may from time to time
   require.

 .  Currency Accounts. If in our opinion deposits in a currency are unavailable
   to us at any time to fund a currency drawing then we will not make a drawing
   available in that currency. All payments (including interest) required to be
   made by you under a facility in a currency other than sterling must be made
   in the currency of the drawing (The "Agreed Currency") and by credit to our
   account with such banking office as we may require.

   Any amount payable by you which is received by us in a currency other than
   the Agreed Currency, will be calculated by converting (at the prevailing spot
   rate of exchange on such date and in such market as we shall determine as
   being most appropriate) the Currency so received into the Agreed Currency. If
   the amount received is less than the relevant amount of the Agreed Currency
   then you will indemnify us for the deficiency and for any losses we may
   sustain as a result. You will in addition pay the costs of such conversion.
   All payments shall be deemed to have been made on such date as we shall
   determine in accordance with our normal practice from time to time.

 .  Currency Equivalents. The Sterling/Currency Equivalent of any amount
   denominated in another currency shall be calculated by reference to the
   Bank's then current spot rate of exchange for the purchase of the relevant
   currency with the currency in which the facility is denominated. We may
   calculate the aggregate Sterling/Currency Equivalents of all drawings
   outstanding/proposed at any time to determine compliance or otherwise with
   the relevant facility limit.

 .  Contingent Liabilities. You will, on demand, pay to us an amount equal to the
   full face value of any contingent or future liabilities incurred by us at
   your request (such as letters of credit, bonds or guarantees). We may hold
   any such payment in our own name and may use it to meet such liabilities. You
   must in any event indemnify us against such liabilities and we will require
   you to execute a formal counter-indemnity in our standard form.

 .  Negotiations. You agree that all foreign cheques submitted to us for
   negotiation and/or collection will be dealt with on the basis that you have
   good title to all cheques and that you agree to indemnify us against all
   liabilities claims losses costs and expenses including exchange fluctuations
   and agents' charges which may be imposed upon, asserted against or incurred
   by us in any way relating to or arising out of the negotiation and/or
   collection of cheques on your behalf. If the cheque is subsequently returned
   unpaid you authorise us to debit your account with the amount credited to
   your account plus any losses, costs, expenses or charges which we may have
   incurred.

 .  Forward Exchange. Where we make a forward exchange facility available to you,
   you confirm and understand that no forward purchase or sale of foreign
   currency shall be made for investment purposes (see paragraph 8 of Schedule 1
   of the Financial Services Act 1986) without our prior written consent.

 .  General.
   a)  Whenever facilities are subject to Part V of the Consumer Credit Act 1974
       additional documents and procedures may be necessary before facilities
       can be drawn.

   b)  If we consider that any proposed payment or use of a facility might be
       made for an unlawful purpose, then we may refuse to make such a payment
       or allow such use.

   c)  We may give written notice or make demand by post or by hand or by
       facsimile machine or by other form of electronic communication. A notice
       or demand may be addressed to you at your Registered Office or address or
       the place of business last known to us and shall be deemed to have been
       received when transmitted or (if posted) on the business day after
       posting. We may use the facsimile number or electronic address last known
       to us.

   d)  The relationship between us, these General Terms and the AOBT are
       governed by English law and the English courts shall have jurisdiction in
       respect thereof. However when we consider it appropriate we may take
       proceedings against you in any other court of competent jurisdiction
       (whether concurrently or not with any other proceedings). These terms are
       in addition to the usual terms which apply to the relationship between a
       bank and its customer and to the operation of bank accounts (whether in
       credit or debit) and to the terms of your mandate with us and to all
       other consistent terms which may be implied by law.

   e)  You must maintain a current account with us throughout the life of any
       facilities and we may charge to your current account all amounts,
       including interest, due in respect of any facility.

 

                                       9