**Exhibit10.22**

 

**BUSINESS FINANCING MODIFICATION AGREEMENT**

 

This Business Financing ModificationAgreement is entered into as of January 19, 2006, by and between AMLCommunications, Inc. (the “Borrower”) and Bridge Bank, NationalAssociation (“Lender”).

 

1.                                       DESCRIPTIONOF EXISTING INDEBTEDNESS: Among other indebtedness which may be owing byBorrower to Lender, Borrower is indebted to Lender pursuant to, among otherdocuments, a Business Financing Agreement, dated July 8, 2004 by andbetween Borrower and Lender, as may be amended from time to time, (the “BusinessFinancing Agreement”).  Capitalized termsused without definition herein shall have the meanings assigned to them in theBusiness Financing Agreement.

 

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

 

2.                                       DESCRIPTIONOF CHANGE IN TERMS.

 

A.                                   Modification(s)to Business Financing Agreement:

 

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

 

“Credit Limit” means $2,003,514.41, ofwhich (i) up to $1,000,000 may be used for Formula Advances, (ii) $253,514.41was outstanding as of December 23, 2005 as unpaid principal balance ofEquipment Loan 1 Advances, and (iii) up to $750,000.00 may be used forEquipment Loan 2 Advances, subject to Sections 2.2 and 2.3 hereof.

 

“Overadvance” means, (a) theamount, if any, by which the total amount of Formula Advances then outstandingexceeds the lesser of $1,000,000 or the Borrowing Base; (b) the entireamount of any advance made on or after December 23, 2005 as Equipment Loan1 Advance, or (c) the amount, if any, by which the total amount of EquipmentLoan 2 Advances exceeds $750,000.

 

2)                                      Thefollowing subsections in Section 7, entitled “Miscellaneous Provisions”,are hereby amended in their entirety to read as follows:

 

(j)                                     Provide to Lenderthe following with respect to Borrower’s financial condition and results ofoperations for such month and the period then ending, in each case in form andsubstance acceptable to Lender, (i) no later than 30 days after the end ofeach month, a Compliance Certificate and financial statements including balancesheet, income statement, and statement of cashflows, (ii) within 5 daysafter the end of each month, accounts receivable and payable aging report, anddeferred revenue report, (iii) within 5 days after the end of each monthwhile any Formula Advances remain unpaid, and prior to any Formula Advance, aborrowing base certificate, and (iv) such other matters as Lender mayrequest.

 

(m)                               Permit and cooperate with Lender fromtime to time hereafter to audit Borrower’s Receivables at Borrower’sexpense.  Such audit shall be conductedno later than June 30, 2006 and annually thereafter or as otherwiserequested by Lender. The results of such audit must be acceptable to Lender.

 

3.                                       CONSISTENTCHANGES.  The Existing Documents areeach hereby amended wherever necessary to reflect the changes described above.

 

4.                                       INTENTIONALLYOMITTED.

 

# **5.**                                       NO DEFENSES OF BORROWER/GENERAL RELEASE. Borrower agrees that, as of this date, it has no defenses against theobligations to pay any amounts under the Indebtedness.  Each of Borrower and Guarantor (each, a “ReleasingParty”) acknowledges that Lender would not enter into this Business FinancingModification Agreement without Releasing Party’s assurance that it has noclaims against Lender or any of Lender’s officers, directors, employees oragents.  Except for the obligationsarising hereafter under this

 

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# **BusinessFinancing Modification Agreement, each Releasing Party releases Lender, andeach of Lender’s and entity’s officers, directors and employees from any knownor unknown claims that Releasing Party now has against Lender of any nature,including any claims that Releasing Party, its successors, counsel, andadvisors may in the future discover they would have now had if they had knownfacts not now known to them, whether founded in contract, in tort or pursuantto any other theory of liability, including but not limited to any claimsarising out of or related to the Agreement or the transactions contemplatedthereby.  Releasing Party waives theprovisions of California Civil Code section 1542, which states:**

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### **“Ageneral release does not extend to claims which the creditor does not know orsuspect to exist in his favor at the time of executing the release, which ifknown by him must have materially affected his settlement with the debtor.”**

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# **Theprovisions, waivers and releases set forth in this section are bindingupon each Releasing Party and its shareholders, agents, employees, assigns andsuccessors in interest.  The provisions,waivers and releases of this section shall inure to the benefit of Lenderand its agents, employees, officers, directors, assigns and successors ininterest.  The provisions of this section shallsurvive payment in full of the Obligations, full performance of all the termsof this Business Financing Modification Agreement and the Agreement, and/orLender’s actions to exercise any remedy available under the Agreement orotherwise.**

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6.                                       CONTINUINGVALIDITY.  Borrower understands andagrees that in modifying the existing Indebtedness, Lender is relying uponBorrower’s representations, warranties, and agreements, as set forth in theExisting Documents.  Except as expresslymodified pursuant to this Business Financing Modification Agreement, the termsof the Existing Documents remain unchanged and in full force and effect.  Lender’s agreement to modifications to theexisting Indebtedness pursuant to this Business Financing ModificationAgreement in no way shall obligate Lender to make any future modifications tothe Indebtedness.  Nothing in thisBusiness Financing Modification Agreement shall constitute a satisfaction ofthe Indebtedness.  It is the intention ofLender and Borrower to retain as liable parties all makers and endorsers ofExisting Documents, unless the party is expressly released by Lender inwriting.  No maker, endorser, orguarantor will be released by virtue of this Business Financing ModificationAgreement.  The terms of this paragraphapply not only to this Business Financing Modification Agreement, but also toany subsequent Business Financing modification agreements.

 

7.                                       COUNTERSIGNATURE.  This Business Financing ModificationAgreement 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:                   | President & CEO          |   | Title: | Senior Vice  President |   |
|                          |                                   |  |  |  |  |  |  |  |  |  |  |  |

 

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