Exhibit 10.1

 

BUSINESS FINANCING MODIFICATION AGREEMENT

 

This Business Financing Modification Agreement is entered into as of July 7,
2005, by and between AML Communications, Inc. (the “Borrower”) and Bridge Bank,
National Association (“Lender”).

 

1.             DESCRIPTION OF EXISTING INDEBTEDNESS: Among other indebtedness
which may be owing by Borrower to Lender, Borrower is indebted to Lender
pursuant to, among other documents, a Business Financing Agreement, dated
July 8, 2004 by and between Borrower to Lender, as may be amended from time to
time, (the “Business Financing Agreement”).  Capitalized terms used without
definition herein shall have the meanings assigned to them in the Business
Financing Agreement.

 

Hereinafter, all indebtedness owing by Borrower to Lender shall be referred to
as the “Indebtedness” and the Business Financing Agreement and any and all other
documents executed by Borrower in favor of Lender shall be referred to as the
“Existing Documents.”

 

2.             DESCRIPTION OF CHANGE IN TERMS.

 

A.            Modification(s) to Business Financing Agreement:

 

1)             The defined term “Termination Date” is hereby amended to read as
follows:

 

“Termination Date” means the earlier of (a) August 7, 2005, or (b) the date on
which Lender elects to terminate this Agreement pursuant to the terms herein.

 

2)             Section 2.3 is hereby amended in its entirety to read as follows:

 

2.3           Equipment Advances.  Subject to the terms and conditions of this
Agreement, from the date of this Agreement through the earlier of August 7, 2005
or the Termination Date, Borrower may request Equipment Advances of up to an
aggregate principal amount of $500,000 to finance the acquisition of Equipment. 
Each Equipment Advance shall not exceed 100% of the invoice price of Equipment
(which is not to including soft costs) approved by Lender from time to time.  On
the last day of each month, Borrower shall pay Lender all accrued Finance
Charges on all outstanding Equipment Advances during such month. Any Equipment
Advances outstanding on the earlier of (i) August 7, 2005 or (ii) the date that
Borrower has requested Equipment Advances in an aggregate principal amount of
$500,000 (the “Term Out Date”) shall be payable in thirty-six (36) equal monthly
installments of principal, plus all accrued Finance Charges, beginning the last
day of the month after the Term Out Date (or on the Term Out Date if it is the
last day of the month) and continuing on the same day of each month thereafter
until all of the Equipment Advances have been repaid in full, provided, if this
Agreement is terminated prior to all Equipment Advances are paid in full, all
outstanding principal balance plus all accrued Finance Charges of Equipment
Advances shall be due at the time of the termination. Once the Equipment
Advances are termed out, the Finance Charge Percentage for Equipment Advances
shall be fixed at such rate effective as of the Term Out Date. Equipment
Advances may be prepaid, but may not be reborrowed.

 

3)             The first sentence of Section 15, entitled “Term and Termination”
is hereby amended to read as follows:

 

“This Agreement shall become effective upon the execution and delivery hereof by
Borrower and Lender and shall continue in full force and effect until the
Termination Date.”

 

4)             Lender hereby waives payment of the Facility Fee, which is due on
the first anniversary of the date of this Agreement.

 

3.             CONSISTENT CHANGES.  The Existing Documents are each hereby
amended wherever necessary to reflect the changes described above.

 

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4.             INTENTIONALLY OMITTED.

 

5.             NO DEFENSES OF BORROWER.  Borrower agrees that, as of this date,
it has no defenses against the obligations to pay any amounts under the
Indebtedness.

 

6.             CONTINUING VALIDITY.  Borrower understands and agrees that in
modifying the existing Indebtedness, Lender is relying upon Borrower’s
representations, warranties, and agreements, as set forth in the Existing
Documents.  Except as expressly modified pursuant to this Business Financing
Modification Agreement, the terms of the Existing Documents remain unchanged and
in full force and effect.  Lender’s agreement to modifications to the existing
Indebtedness pursuant to this Business Financing Modification Agreement in no
way shall obligate Lender to make any future modifications to the Indebtedness. 
Nothing in this Business Financing Modification Agreement shall constitute a
satisfaction of the Indebtedness.  It is the intention of Lender and Borrower to
retain as liable parties all makers and endorsers of Existing Documents, unless
the party is expressly released by Lender in writing.  No maker, endorser, or
guarantor will be released by virtue of this Business Financing Modification
Agreement.  The terms of this paragraph apply not only to this Business
Financing Modification Agreement, but also to any subsequent Business Financing
modification agreements.

 

7.             INTENTIONALLY OMITTED.

 

8.             COUNTERSIGNATURE.  This Business Financing Modification Agreement
shall become effective only when executed by Lender and Borrower.

 

BORROWER:

LENDER:

 

 

 

 

 

AML COMMUNICATIONS, INC.

BRIDGE BANK, NATIONAL ASSOCIATION

 

 

 

 

By:

/s/ Jacob Inbar

 

By:

/s/ Lee Shodiss

 

Name:

Jacob Inbar

 

Name:

Lee Shodiss

 

Title:

CEO & President

 

Title:

Senior VP

 

 

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