Document:

Exhibit 10.31

 

August 1, 2002

 

Mr. Alex Braverman

Vice President of Finance

NMS Communications Corporation

100 Crossing Boulevard

Framingham, MA  01702

 

Dear Alex,

 

It is my pleasure to extend a

proposal for the restatement and modification of the existing line of credit

from Silicon Valley East (“Bank”) to NMS Communications Corporation

(“Borrower”).  Please note that the

following is for discussion purposes only and does not represent a commitment

to lend.

 

[NOTE: Two possible

approaches are detailed below, and where relevant, are listed as 1. and 2.

If not delineated under a particular term, that term

is identical for both options.]

 

Borrower (s) :

NMS

Communications Corporation / NMS Communications Security Corporation

 

Facility:

$10,000,000

Working Capital Line of Credit (WCL), the full amount of which can be used for

letters of credit, foreign exchange transactions and cash management services:

1.               Facility

available for cash borrowings in two parts:

•                  Initial

$5,000,000 will not be on a formula basis.

•                  Remaining

$5,000,000 will fall under a borrowing base as outlined below.

 

2.               Entire

Facility available without reference to Borrowing Base.

 

Purpose:

Support

short-term working capital requirements.

 

Interest Rate:

Prime,

floating (currently 4.75%).  0.75% per

annum L/C fee on face amount of L/Cs issued under the Facility.

 

Commitment Fee:

0.25% flat

upfront on the entire Facility amount.

 

Unused

Fee:

0.25% p.a.,

payable quarterly in arrears on the average unused portion of the Facility for

the preceding quarter.  NOTE: This fee becomes 0.15% p.a. if

the transaction is closed and booked within 30 days of receiving documentation.

 

 

Maturity:

364 days from

closing.

 

Repayment:

Interest-only payments due monthly, principal due at maturity.

 

Borrowing Base:

1.               The

following borrowing formula applies only to usage of the Facility above

$5,000,000:

•                  75% against all

eligible domestic accounts within 90 days from invoice.  Advance rate subject to change pending the

results of an A/R audit to be conducted by an agent of the Bank prior to the

closing of the Facility.  The cost of

the exam will be borne by the Borrower.

2.               None;

100% of the Facility can be borrowed without condition or advance rate.

 

CONDITIONS PERTAINING TO THE CREDIT

FACILITIES.

 

Security:

1.               Perfected

first security interest in all assets (excluding baskets agreed for assets

financed elsewhere); negative pledge on intellectual property.   To include Account Control Agreements for

cash and investments held at SVB and elsewhere.

2.               Perfected

first security interest (to include Account Control Agreements) only in cash

and financial investments maintained at SVB or its subsidiaries in deposit or

investment accounts; negative pledge on all other assets (excluding baskets

agreed for assets financed elsewhere) including intellectual property.

 

Financial

Covenants:

1.               (Tested

quarterly) Minimum Tangible Net Worth of $100,000,000 at all times.

 

                                                                                                [Tangible

Net Worth defined as the sum of Total Assets minus Total Liabilities minus

Intangible Assets and Investments, plus Subordinated Debt.]

2.               None.

 

Other

Covenants:

                                                                                                None

(aside from standard banking restrictions as in existing documentation).

 

Financial Reporting:

a)              Provide to

Bank Form 10-Q with Compliance Certificate within 45 days of quarter-end.

b)             Provide to

Bank Form 10-K within 120 days after fiscal year.

c)              Provide to

Bank, when applicable, Form 8-K within 5 days of filing date.

d)             Accounts

Receivable Agings:

1.               Provide to

the Bank the Borrower’s A/R aging and the Borrowing Base Certificate within 30

days after each month end when usage under the Facility exceeds $5m.

2.               None.

e)              Annual A/R

audits:

1.               to be

performed at least once a fiscal year at the expense of the Borrower.

2.               None.

f)                Revised

budget and forecast, as approved by management within 30 days of approval.

 

Deposits:

1.                     Borrower

shall maintain its primary operating account at SVB, with at least $10,000,000

invested through SVB at all times.

 

2

 

 

2.                     Borrower

shall maintain its primary operating account at SVB, with at least $20,000,000

invested through SVB at all times.

 

Documents:                               The

Lender will provide their standard Loan & Security Agreement and related

Loan Documents, including Account Control Agreements.  These documents will be conformed to the specific terms of this

proposal at Borrower’s expense.

 

Subject

to:                                      This

proposal is subject to approval by Lender’s credit committee.  Approval shall be based on due diligence

performed by Lender and shall be granted at its sole discretion.

 

If these basic terms and

conditions are acceptable, please so indicate by returning an executed copy of

this letter.

 

Acceptance of this letter will

constitute your instruction to the Lender to commence its due diligence and

loan approval processes.  If approved,

the Lender shall commence preparation of documentation, which shall supercede

this letter at Borrower’s expense. 

Except for your obligation to pay the Lender’s expenses and charges

described above, this letter and our other communications and negotiations

regarding the proposed Facilities do not constitute an agreement or an offer

and do not create any legal rights benefiting, or obligations binding on,

either of us.  It is intended that all

legal rights and obligations of the Bank and Borrower will be set forth in

signed definitive loan documents.

 

This proposal will expire if

not accepted on or before 5:00 p.m. on August 9, 2002.  If these general terms and conditions meet

with your approval, please indicate your acceptance below and return this proposed

term sheet to me with a good faith deposit of $10,000.  The deposit, less out-of-pocket expenses,

will be returned to you in the event the Bank fails to provide a commitment

letter with substantially the same terms and conditions.  At closing, the good faith deposit, less

out-of pocket expenses, will be applied towards loan fees, and any remaining

balance will be returned to NMS Communications Corp.

 

We very much appreciate the

opportunity to present this proposal, and look forward to continuing to build

on our long-standing relationship with NMS Communications Corporation.

 

With Best Regards,

 

SILICON VALLEY BANK

 

Jonathan L. Gray

Senior Vice President

 

 

Option  1 is AGREED

& ACCEPTED, this 1st day of August, 2002.

 

NMS Communications Corporation

 

	

  By:

  	

  /s/ Alex

  Braverman

  	

   

  
	

   

  	

  Alex

  Braverman

  
	

   

  	

   

  
	

  Title:

  	

  Vice

  President and Corporate Controller

  

 

3EXHIBIT

10.5

 

	

  Date:

  	

   

  	

  29th April 2002

  
	

  Our ref:

  	

   

  	

  C&I/LC/TEAM10/BLC

  

 

 

CONFIDENTIAL

 

DSI (HK) Ltd.

Suite 1401, New T&T

Centre,

Harbour City,

Tsimshatsui,

Kowloon.

 

Attn.:  Mr.

Alfred Chan

 

 

Dear Sirs,

 

 

BANKING FACILITIES: 

DSI (HK) LTD.

 

 

We are pleased to confirm that the Bank is willing to make available to

your company (the “Company”) the following supplier finance facilities up to

the amounts indicated.

 

 

1.                   POST-SHIPMENT

FACILITY — HKD19,000,000.-

 

Negotiation

of clean or discrepant documents presented under irrevocable letters of credit

issued by banks acceptable to the Bank, up to 100% of the bill amount and for

maximum tenor of 90 days.

 

 

2.                   FACTORING FACILITY —

HKD19,000,000.-

 

For purchase of receivables in accordance with the terms of the

Receivables Purchase Agreement(s) entered into and the rider(s) (if any) from

time to time agreed between the Bank and the Company (“Agreement”).

 

Expressions used in this section have the same meanings as defined in

the Agreement unless otherwise defined or the context otherwise requires.

 

The above limit represents the FIU Limit.  Aggregate Funds In Use in respect of Debts purchased from the

Company shall not at any time exceed the FIU Limit or, when aggregated with the

total amount for the time being outstanding under Facility 1, shall not at any

time exceed HKD19,000,000.-.

 

 

Customer list is to be advised to and approved by the Bank from time to

time.

 

Prepayment will be made by the Bank up to the Prepayment Percentage (if

not zero) less the Bank’s Service Charge, but subject to the FIU Limit and the

Concentration Percentage not being exceeded, and conditional upon compliance in

all other respects with the terms of the Agreement.

 

Credit insurance cover (if applicable) will be taken out in the Bank’s

name with either a credit insurer or factoring company appointed by the Bank.

 

The following will also be required for all receivables purchased by

the Bank:-

 

(1)                                  copy of invoice endorsed with notice of

assignment of the relevant debt to the Bank of the right to receive payment in

respect of the invoice and otherwise complying with the terms of the Agreement;

 

(2)                                  if required by the Bank, formal

assignment of debt in the Bank’s approved form, duly executed by you;

 

(3)                                  cargo receipt, bill of lading, airway

bill or other evidence of delivery of goods or completion of services

satisfactory to the Bank;

 

Collection

will be done either through the Bank, the Bank’s service provider or a

factoring company appointed by the Bank. 

All proceeds are directly payable to the Bank.

 

Discounting

Charge will be payable monthly, calculated as the percentage stipulated in the

Agreement of the Funds In Use from time to time.

 

Service Charge will be calculated as stipulated in the Agreement.

 

Should

a repayment against an individual invoice be overdue, no further prepayment is

allowed until that overdue has been rectified.

 

 

INTEREST,

COMMISSIONS AND FEES

 

A default rate of Prime plus 8% per annum, or HIBOR plus 8% per annum,

whichever is higher, will apply to amounts not paid when due or in excess of

agreed facility amounts.  “Prime” means

the rate which we announce or apply from time to time as our prime rate for

lending Hong Kong Dollars and “HIBOR” means the rate which we determine to be

the Hong Kong Interbank Offered Rate for the relevant period.  Commissions will be charged at our standard

rates.  Export bills will be discounted

at 3-month HIBOR plus 2% per annum for Hong Kong Dollar bills and at our standard

bills finance rates for foreign currency bills.  All past due bills shall bear interest at 4% per annum above the

rates charged on your regular bills outstandings.

 

2

 

You shall pay to the Bank an arrangement fee of HKD8,000.-, payable on

the date on which the Bank’s offer of the above facilities are accepted by you

as signified by your counter-signing of this letter.  The arrangement fee is non-refundable in any event.  A handling fee in an amount to be mutually

agreed will be payable on each anniversary of the date of this letter if the

facilities are continuing.  The fees

will be debited to your current account.

 

Whether or not the documentation for the above facilities is executed

or the facilities are made available to you as contemplated following your

acceptance of this letter, you shall forthwith on demand reimburse the Bank all

out of pocket expenses (including but not limited to legal fees and

disbursements) incurred by the Bank in connection with the facilities

including, without limitation, the negotiation, preparation, execution and/or

enforcement of this letter and the documentation referred to below.

 

 

AVAILABILITY

AND REPAYMENT

 

The above facilities are subject to periodic review by the Bank at its

discretion, and it is expressly agreed that they will at all times be available

at the sole discretion of the Bank. 

Notwithstanding any other provisions contained in this letter or in any

other document, the Bank will at all times have the right to require immediate

payment and/or cash collateralisation of all or part of any sums actually or

contingently owing to it in respect of the above Facility 1, and the right to

immediately terminate or suspend, in whole or in part, all of the above

Facilities 1 to 2 and all further utilisation of the facilities.

 

 

ASSIGNMENT

 

The Company may not assign or

transfer all or any of it’s rights, benefits or obligations under this letter

(and any documentation or transactions to which this letter relates) without

the Bank’s prior written consent.

The Bank may at any time assign

or transfer to any one or more banks or other financial institutions all or any

of it’s rights, benefits or obligations under this letter (and any

documentation or transactions to which this letter relates) or change its

lending office.

3

 

DOCUMENTATION

 

Before the above facilities may be used, the enclosed copy of this

letter and the Bank’s standard form General Customer Agreement must be signed

by the Company and returned to us together with a certified copy of appropriate

authorising board resolutions.

 

The following documentation are held/will also be required:

 

·                                                             Corporate guarantee by DSI Toys, Inc.,

limited to the principal amount of HKD19,000,000.-, plus interest and other

charges.

 

·                                                            Receivable Purchase Agreement and other

related documents, including without limitation formal assignment of debts

where required, in the Bank’s approved forms for the above Facility 2.

 

·                                                            Certified true copies of the certificates

of incorporation and memoranda and articles of association of the Company and

DSI Toys, Inc.

 

·                                                            A signed original copy of the audited

financial statements of the Company within 9 months after its financial year

end.  A signed original copy of the

interim management accounts of the Company within 3 months after the respective

period.

 

·                                                            Such other information as the Bank may

request from time to time.

 

 

UNDERTAKINGS

 

The Company undertakes to the Bank that it will:

 

·                                                            Not encumber its assets by way of a

debenture / floating charge over all assets without the prior written consent

of the Bank.

 

·                                                            Inform the Bank within seven days from

execution of any new pledge / charge over the Company’s assets.

 

·                                                            Not utilize the above facilities to

finance any related companies transactions.

 

·                                                             Immediately

inform the Bank of any change of its directors or beneficial shareholders or

amendment of its memorandum or articles of association.

 

4

 

By acceptance of this letter the Company gives

consent to the Bank to disclose details of the Company’s  account relationship with

the Bank (including credit balances and any security given for the facilities)

to all or any of the following persons (whether in or outside Hong Kong): (i)

its Head Office and any of its offices, branches, related companies or

associates, (ii) any actual or proposed participant or sub-participant in, or

assignee or novatee of the Bank’s rights in relation to the Company’s accounts,

(iii) any agent, contractor or third party service provider which provides

services of any kind to the Bank in connection with the operation of its

business, (iv) any financial institution with which the Company has or proposes

to have dealings to enable credit checks to be conducted on the Company,  and (v) any person to whom the Bank is under

an obligation to make disclosure under the requirements of any law binding on

the Bank or any of its branches.

 

Please sign the enclosed copy of this letter and return it to the

Bank’s Credit Operations at 11th Floor, Standard Chartered Tower, 388 Kwun Tong

Road, Kwun Tong, Hong Kong, for the attention of Mr. Franco Fu, within one

month after the date of this letter, after which this offer will lapse.  This letter will be governed by Hong Kong

SAR law.

 

We enclose a set of documents which should also be completed and

returned to the Bank at the above mentioned address.  If you have any queries regarding the completion of the required

documents, please contact Mr. Franco Fu, whose telephone number is 2282-6253.  With regard to queries on banking arrangements,

you can contact our Relationship Manager Ms. Daniella Koo, whose telephone

number is 2821-1835.

 

5

We are pleased to be of service to you and take this opportunity to

thank you for your custom.

 

 

Yours faithfully,

For and on behalf of STANDARD CHARTERED BANK

 

 

 

 

 

	

  /s/ IRIS LI

  	

   

  	

  /s/ SANDRA LEUNG

  
	

  Iris Li

  Senior Credit Documentation Manager

  	

   

  	

  Sandra Leung

  Manager, Credit Operations

  

 

SL/IL/FF/mc

Encl.

 

Agreed.

For and on behalf of DSI (HK) LTD.

 

	

  /s/ ALFRED CHAN

  	

   

  	

   

  
	

   

  	

   

  	

   

  

 

 

6

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