**Exhibit 10.17**

 

**BUSINESSFINANCING MODIFICATION AGREEMENT**

 

This Business Financing ModificationAgreement is entered into as of July 27, 2005, by and between AMLCommunications, Inc. (the “Borrower”) and Bridge Bank, NationalAssociation (“Lender”).

 

1.             DESCRIPTION OFEXISTING 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 to Lender, as may be amended from time to time, (the “BusinessFinancing Agreement”). Capitalized terms used without definition herein shallhave the meanings assigned to them in the Business 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.             DESCRIPTION OFCHANGE IN TERMS.

 

A.            Modification(s)to Business Financing Agreement:

 

1)             Thefollowing defined terms are hereby amended to read as follows:

 

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

 

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

 

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

 

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

 

“Prime Rate” means for any day, avariable rate of interest, per annum, most recently published by the WallStreet Journal, as the “prime rate,” provided that if such day is not abusiness day, the Prime Rate for such day shall be such rate on suchtransactions on the next preceding business day as so published in the WallStreet Journal on the next succeeding business day. The Prime Rate shall at noevent be less than 5.50%.

 

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

 

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

 

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

 

2.3           EquipmentAdvances. Subject to the terms and conditions of this Agreement, from thedate of this Agreement through the earlier of December 31, 2005 or theTermination Date, Borrower may request Equipment Advances of up to an aggregateprincipal amount of $1,000,000 to finance the acquisition of Equipment. EachEquipment Advance shall not exceed 100% of the invoice price of Equipmentapproved by Lender from time to time. On the last day of each month, Borrowershall pay Lender all accrued Finance Charges on all outstanding Equipment Advancesduring 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 anaggregate principal amount of $1,000,000 (the “Term Out Date”) shall be payablein thirty-six (36) equal monthly installments of principal, plus all accruedFinance 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 onthe same day of each

 

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month thereafter until all of the EquipmentAdvances have been repaid in full, provided, if this Agreement is terminatedprior to all Equipment Advances are paid in full, all outstanding principalbalance plus all accrued Finance Charges of Equipment Advances shall be due atthe time of the termination. Once the Equipment Advances are termed out, theFinance Charge Percentage for Equipment Advances shall be fixed at such rateeffective as of the Term Out Date. Equipment Advances may be prepaid, but maynot be reborrowed.

 

4)             Thefollowing subsections in Section 3.3 are hereby amended to read asfollows:

 

(a)           FacilityFee. On each anniversary of the date of this Business FinancingModification Agreement and prior to the termination of this Agreement, Borrowershall pay to Lender the Facility Fee; provided, Borrower is allowed to pay eachannual Facility Fee in four equal quarterly installments, with the firstpayment to be made upon execution of this Business Financing ModificationAgreement, and the remaining payments due every three months thereafter. In theevent this Agreement is terminated prior to an anniversary of the date of thisBusiness Financing Modification Agreement, any unpaid portion of the Facility Feeshall be paid at the time of termination.

 

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

 

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

 

(p)           Effectiveas of the quarter ending September 30, 2005, and each quarter thereafterand while any Equipment Advances remains unpaid, maintain a Debt ServiceCoverage ratio of at least 1.25 to 1.00.

 

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

 

(r)            Provideto 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 reflectthe changes described above.

 

4.             INTENTIONALLYOMITTED.

 

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

 

6.             CONTINUINGVALIDITY. Borrower understands and agrees that in modifying the existingIndebtedness, Lender is relying upon Borrower’s representations, warranties,and agreements, as set forth in the Existing 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’sagreement to modifications to the existing Indebtedness pursuant to thisBusiness Financing Modification Agreement in no way shall obligate Lender tomake any future modifications to the Indebtedness. Nothing in this BusinessFinancing Modification Agreement shall constitute a satisfaction of theIndebtedness. It is the intention of Lender and Borrower to retain as liableparties all makers and endorsers of Existing Documents, unless the party isexpressly released by Lender in writing. No maker, endorser, or guarantor willbe released by virtue of this Business Financing Modification Agreement. Theterms of this paragraph apply not only to this Business Financing ModificationAgreement, but also to any subsequent Business Financing modificationagreements.

 

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

 

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8.             COUNTERSIGNATURE.This Business Financing Modification Agreement shall become effective only whenexecuted 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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