Exhibit 10.17


 


BUSINESS
FINANCING MODIFICATION AGREEMENT


 


This Business Financing Modification
Agreement is entered into as of July 27, 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
following defined terms are hereby amended to read as follows:


 


“Credit Limit” means $2,000,000.00, of
which up to $1,000,000 may be used for Formula Advances, and up to $1,000,000
may be used for Equipment Advances, subject to Section 2.2 and 2.3.


 


“Debt Service Coverage” means a ratio
of (a) the sum of net profit after tax, interest expense, and depreciation
and amortization divided by (b) the sum of interest expense and current
portion of long-term debt divided by 4.


 


“Finance Charge Percentage” means a
rate per year equal to (a) the Prime Rate plus .25% with respect to
Formula Advances, and (b) the Prime Rate plus 2.00% with respect to
Equipment Advances.


 


“Facility
Fee” means a fee equal to $5,000.00.


 


“Prime Rate” means for any day, a
variable rate of interest, per annum, most recently published by the Wall
Street Journal, as the “prime rate,” provided that if such day is not a
business day, the Prime Rate for such day shall be such rate on such
transactions on the next preceding business day as so published in the Wall
Street Journal on the next succeeding business day. The Prime Rate shall at no
event be less than 5.50%.


 


“Termination Date” means the earlier
of (a) July 27, 2006, or (b) the date on which Lender elects to
terminate this Agreement pursuant to the terms herein.


 


2)             The
defined term “Minimum Utilization Fee” is hereby deleted in its entirety.


 


3)             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 December 31, 2005 or the
Termination Date, Borrower may request Equipment Advances of up to an aggregate
principal amount of $1,000,000 to finance the acquisition of Equipment. Each
Equipment Advance shall not exceed 100% of the invoice price of Equipment
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) December 31,
2005 or (ii) the date that Borrower has requested Equipment Advances in an
aggregate principal amount of $1,000,000 (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


 


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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.


 


4)             The
following subsections in Section 3.3 are hereby amended to read as
follows:


 


(a)           Facility
Fee. On each anniversary of the date of this Business Financing
Modification Agreement and prior to the termination of this Agreement, Borrower
shall pay to Lender the Facility Fee; provided, Borrower is allowed to pay each
annual Facility Fee in four equal quarterly installments, with the first
payment to be made upon execution of this Business Financing Modification
Agreement, and the remaining payments due every three months thereafter. In the
event this Agreement is terminated prior to an anniversary of the date of this
Business Financing Modification Agreement, any unpaid portion of the Facility Fee
shall be paid at the time of termination.


 


(b)           Termination
Fee. In the event this Agreement is terminated prior to July 27, 2006,
Borrower shall pay the Termination Fee to Lender; provided that such
Termination Fee shall be waived if this Agreement is terminated on terms
acceptable to Lender in connection with Borrower’s entry into a financing
agreement with an affiliate of Lender.


 


5)             Subsection 7
(p) is hereby amended to read as follows:


 


(p)           Effective
as of the quarter ending September 30, 2005, and each quarter thereafter
and while any Equipment Advances remains unpaid, maintain a Debt Service
Coverage ratio of at least 1.25 to 1.00.


 


6)             Section 7
is hereby amended to include the following subsection:


 


(r)            Provide
to Lender, within 60 days prior to the start of Borrower’s each fiscal year,
annual projections acceptable to Lender.


 


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


 


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.             CONDITIONS.
The effectiveness of this Business Financing Modification Agreement is
conditioned upon Lender’s receipt of this Business Financing Modification
Agreement executed by Borrower in original.


 


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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 Vice President

  
								



 


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