**Exhibit 10.23**

 

 

**PROMISSORYNOTE**

 
| **Borrower:** | ** ** | **AML Communications, Inc.** | ** ** | **Lender:** | ** ** | **Bank of America, N.A.**            |
|---------------|------------|-----------------------------------|------------|-------------|------------|--------------------------------------|
| ** **    | ** ** | **1000 Avenida Acaso**            |       |        |       | **CCS-Small Business/Premier**       |
| ** **    | ** ** | **Camarillo, CA 93012**           |       |        |       | **CA9-702-05-71**                    |
| ** **    | ** ** |                              |       |        |       | **101 S. Marengo Avenue, 5th Floor** |
| ** **    | ** ** |                              |       |        |       | **Pasadena, CA 91101-2428**          |

 
| **Principal  Amount:** | **$640,000.00** | **Date of Note:** | **January 25, 2006** |
|------------------------|-----------------|-------------------|---------------------------|

 

**PROMISE TO PAY. AML Communications, Inc. (“Borrower”)promises to pay to Bank of America, N.A. (“Lender”), or order, in lawful moneyof the United States of America, the principal amount of Six Hundred FortyThousand & 00/100 Dollars ($640,000.00), together with interest at therate of 6.760% per annum on the unpaid principal balance from February 10,2006, until paid in full.**

 

**PAYMENT. Borrower will pay this loan in 83 regularpayments of $4,425.88 each and one irregular last payment estimated at$556,594.48. Borrower’s first payment is due March 10, 2006, and allsubsequent payments are due on the same day of each month after that. Borrower’sfinal payment will be due on February 10, 2013, and will be for allprincipal and all accrued interest not yet paid. Payments include principal andinterest. Unless otherwise agreed or required by applicable law, payments willbe applied first to any accrued unpaid interest; then to principal; then to anylate charges; and then to any unpaid collection costs. Interest on this Note iscomputed on a 30/360 simple interest basis; that is, with the exception of odddays in the first payment period, monthly interest is calculated by applyingthe ratio of the annual interest rate over a year of 360 days, multiplied bythe outstanding principal balance, multiplied by a month of 30 days. Interestfor the odd days is calculated on the basis of the actual days to the next fullmonth and a 360-day year. Borrower will pay Lender at Lender’s address shownabove or at such other place as Lender may designate in writing.**

 

**PREPAYMENT.**Borrower may pay without penalty all or a portion of the amount owed earlierthan it is due. Early payments will not, unless agreed to by Lender in writing,relieve Borrower of Borrower’s obligation to continue to make payments underthe payment schedule. Rather, early payments will reduce the principal balancedue and may result in Borrower’s making fewer payments. Borrower agrees not tosend Lender payments marked “paid in full”, “without recourse”, or similarlanguage. If Borrower sends such a payment, Lender may accept it without losingany of Lender’s rights under this Note, and Borrower will remain obligated topay any further amount owed to Lender. All written communications concerningdisputed amounts, including any check or other payment instrument thatindicates that the payment constitutes “payment in full” of the amount owed orthat is tendered with other conditions or limitations or as full satisfactionof a disputed amount must be mailed or delivered to: Bank of America, N.A.;CCS-Small Business/Premier; CA9-702-05-71; 101 S. Marengo Avenue, 5th Floor;Pasadena, CA 91101-2428.

 

**LATE CHARGE.**If a payment is 15 days or more late, Borrower will be charged **4.000% of the unpaid portion of the regularlyscheduled payment.**

 

**INTEREST AFTER DEFAULT.    **Upon default, the interest rate on this Noteshall immediately increase by 6.000 percentage points, if permitted underapplicable law.

 

**DEFAULT.**   Each of the following shall constitute anevent of default (“Event of Default”) under this Note: 

 

**PaymentDefault.  **Borrower fails to make any payment when dueunder this Note.

 

**OtherDefaults.**Borrowerfails to comply with or to perform any other term, obligation, covenant orcondition contained in this Note or in any of the related documents or tocomply with or to perform any term, obligation, covenant or condition containedin any other agreement between Lender and Borrower.

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**Default in Favorof Third Parties.**Borroweror any Grantor defaults under any loan, extension of credit, securityagreement, purchase or sales agreement, or any other agreement, in favor of anyother creditor or person that may materially affect any of Borrower’s propertyor Borrower’s ability to repay this Note or perform Borrower’s obligationsunder this Note or any of the related documents.

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**FalseStatements.**Anywarranty, representation or statement made or furnished to Lender by Borroweror on Borrower’s behalf under this Note or the related documents is false ormisleading in any material respect, either now or at the time made or furnishedor becomes false or misleading at any time thereafter.

 

**Insolvency.**The dissolution or termination of Borrower’sexistence as a going business, the insolvency of Borrower, the appointment of areceiver for any part of Borrower’s property, any assignment for the benefit ofcreditors, any type of creditor workout, or the commencement of any proceedingunder any bankruptcy or insolvency laws by or against Borrower.

 

**Creditor orForfeiture Proceedings.**Commencementof foreclosure or forfeiture proceedings, whether by judicial proceeding,self-help, repossession or any other method, by any creditor of Borrower or byany governmental agency against any collateral securing the loan. This includesa garnishment of any of Borrower’s accounts, including deposit accounts, withLender. However, this Event of Default shall not apply if there is a good faithdispute by Borrower as to the validity or reasonableness of the claim which isthe basis of the creditor or forfeiture proceeding and if Borrower gives Lenderwritten notice of the creditor or forfeiture proceeding and deposits withLender monies or a surety bond for the creditor or forfeiture proceeding, in anamount determined by Lender, in its sole discretion, as being an adequatereserve or bond for the dispute.

 

**EventsAffecting Guarantor.**Anyof the preceding events occurs with respect to any guarantor, endorser, surety,or accommodation party of any of the indebtedness or any guarantor, endorser,surety, or accommodation party dies or becomes incompetent, or revokes ordisputes the validity of, or liability under, any guaranty of the indebtednessevidenced by this Note.

 

**Change InOwnership. **Any change in ownership of twenty-five percent(25%) or more of the common stock of Borrower.

 

**AdverseChange.**A materialadverse change occurs in Borrower’s financial condition, or Lender believes theprospect of payment or performance of this Note is impaired.

 

**LENDER’S RIGHTS.**Upon default, Lender may declare the entireunpaid principal balance on this Note and all accrued unpaid interestimmediately due, and then Borrower will pay that amount.

 

**ATTORNEYS’ FEES; EXPENSES.**Lender may hire or pay someone else to helpcollect this Note if Borrower does not pay. Borrower will pay Lender thatamount. This includes, subject to any limits under applicable law, Lender’sattorneys’ fees and Lender’s legal expenses, whether or not there is a lawsuit,including attorneys’ fees, expenses for bankruptcy proceedings (includingefforts to modify or vacate any automatic stay or injunction), and appeals.Borrower also will pay any court costs, in addition to all other sums providedby law.

 

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**Loan No:6728515616**

 

**JURY WAIVER. Lender and Borrower hereby waive the rightto any jury trial in any action, proceeding, or counterclaim brought by eitherLender or Borrower against the other.**

 

**GOVERNING LAW. This Note will be governed by federallaw applicable to Lender and, to the extent not preempted by federal law, thelaws of the State of California without regard to its conflicts of lawprovisions. This Note has been accepted by Lender in the State of California.**

 

**CHOICE OF VENUE.**If there is a lawsuit, Borrower agrees uponLender’s request to submit to the jurisdiction of the courts of any County,State of California.

 

**RIGHT OF SETOFF.**To the extent permitted by applicable law,Lender reserves a right of setoff in all Borrower’s accounts with Lender(whether checking, savings, or some other account). This includes all accountsBorrower holds jointly with someone else and all accounts Borrower may open inthe future. However, this does not include any IRA or Keogh accounts, or anytrust accounts for which setoff would be prohibited by law. Borrower authorizesLender, to the extent permitted by applicable law, to charge or setoff all sumsowing on the indebtedness against any and all such accounts.

 

**COLLATERAL.**Borrower acknowledges this Note is secured by the following collateraldescribed in the security instrument listed herein: a Deed of Trust dated January 25,2006, to a trustee in favor of Lender on real property located in Santa ClaraCounty, State of California. That agreement contains the following due on saleprovision: Lender may, at Lender’s option, declare immediately due and payableall sums secured by the Deed of Trust upon the sale or transfer, without Lender’sprior written consent, of all or any part of the Real Property, or any interestin the Real Property. A “sale or transfer” means the conveyance of RealProperty or any right, title or interest in the Real Property; whether legal,beneficial or equitable; whether voluntary or involuntary; whether by outrightsale, deed, installment sale contract, land contract, contract for deed,leasehold interest with a term greater than three (3) years, lease-optioncontract, or by sale, assignment, or transfer of any beneficial interest in orto any land trust holding title to the Real Property, or by any other method ofconveyance of an interest in the Real Property. If any Borrower is acorporation, partnership or limited liability company, transfer also includesany change in ownership of more than twenty-five percent (25%) of the votingstock, partnership interests or limited liability company interests, as thecase may be, of such Borrower. However, this option shall not be exercised byLender if such exercise is prohibited by applicable law.

 

**Miscellaneous.**If this Note or Agreement represents arenewal, modification, extension, substitution or consolidation of anobligation owed to us, then you acknowledge and agree that there are no claims,setoffs, avoidances, counterclaims or defenses or rights to claims, setoffs,avoidances, counterclaims or defenses to payment or enforcement of the priorobligation. You agree that if this Note or Agreement is in default, includingthe failure to make the Minimum Payment by the due date, you will accept callsregarding the collection of this Note or Agreement at any residence or place ofemployment. The calls can be automatically dialed and a recorded message may beplayed. You agree such calls will not be “unsolicited” calls for purposes ofany federal, state or local law. To improve customer service and security,telephone communications with you may be monitored and recorded. You agree thatmonitoring or recording may be done and that no additional notice to you oradditional approval from you is needed. You authorize us, our parent company,Bank of America Corporation (or any successor company) and Bank of AmericaCorporation’s affiliates and subsidiaries to: (a) obtain other informationdeemed necessary concerning the granting and maintaining of this Note or CreditLine Account, including the obtaining of credit bureau and other reportsconcerning your credit experience and other information from credit reportingagencies, creditors, any department of motor vehicles or similar state agency,your employer (past, present and future) and other persons (and all suchentities may release and/or verify such information to us at any time withoutnotification to you or without your consent), (b) release Note or CreditLine Account information to comply with any served subpoena, summons or orderissued by any state or federal agency or court, and (c) provideapplication, Note and Credit Line Account information to any third party who isreasonably believed to be conducting an inquiry according to the Federal FairCredit Reporting Act or any similar state law. This Note or Agreement constitutesthe entire understanding and agreement between the parties as to the mattersset forth in this Note or Agreement and supercedes all prior understandings andcorrespondence, oral or written, with respect to the subject matter hereof. Wereserve the right to defer or delay the date certain changes are to occurwithout notice and without being liable for any such deferment or delay. Acourt decree for divorce or separation or a non-court approved mutual agreementdoes not affect, eliminate or reduce any person’s liability for the Note orCredit Line balance if we are not a party to the decree or agreement.Notwithstanding any other provision contained in the Note or this Agreement, wedo not intend to charge, and you shall not be required to pay, any amount offinance charge or fee more than the maximum permitted by applicable law. Anypayment in excess of the maximum shall be refunded to you or credited againstprincipal, at our option. If this Note or CreditLine Agreement is a renewal ofa prior Note or CreditLine Agreement, then it is the intent of the parties thatthe Note or CreditLine Agreement evidencing the original extension of creditnot be extinguished by the renewal. It is further the intent of the partiesthat no novation shall occur by the renewal of such extension of credit. Ourrecords shall be evidence of whether this Note or CreditLine Agreement is arenewal.

 

**Automatic Payment.**

 

The Service.The Borrower hereby chooses to have its principal and interest payments madepursuant to the Lender’s Automatic Payment Service, and authorizes the Lenderto collect all sums due hereunder by charging the full amount thereof to theBorrower’s Account listed in the Disbursement Request and Authorization, orsuch other of the Borrower’s accounts with the Lender as designated by theBorrower in writing. Should there be insufficient funds in the Account to paywhen due all or any portion of the amount due, the full amount of suchdeficiency shall be immediately due and payable by the Borrower. The DisbursementRequest and Authorization describes additional terms for the Automatic PaymentService.

 

Termination.If, for any reason during the term of this Agreement, the Borrower or Lenderterminates this Automatic Payment Service, the interest rate under this Agreementwill increase by one (1) percentage point and the amount of each paymentwill be increased accordingly.

 

**Loan Fee.**If a Loan Fee is due, the amount is shown on the Disbursement Requestand this fee is nonrefundable. Notwithstanding anything to the contrary in thisAgreement, this is not a “flat fee” and varies according to the details of eachtransaction. Any Loan Fee upon renewal or increase (if any) will be negotiatedat the time of renewal or increase.

 

**Arbitration.**(a)  This paragraph concerns the resolution of anycontroversies or claims between the parties, whether arising in contract, tortor by statute, including but not limited to controversies or claims that ariseout of or relate to: (i) this agreement (including any renewals,extensions or modifications); or (ii) any document related to thisagreement (collectively a “Claim”). For the purposes of this arbitrationprovision only, the term “parties” shall include any parent corporation,subsidiary or affiliate of Lender involved in the servicing, management oradministration of any obligation described or evidenced by this agreement.

 

(b)  Atthe request of any party to this agreement, any Claim shall be resolved bybinding arbitration in accordance with the Federal Arbitration Act (Title 9, U.S.Code) (the “Act”).   The Act will applyeven though this agreement provides that it is governed by the law of aspecified state. The arbitration will take place on an individual basis withoutresort to any form of class action.

 

(c)  Arbitrationproceedings will be determined in accordance with the Act, the then-current rules andprocedures for the arbitration of financial services disputes of the AmericanArbitration Association or any successor thereof (“AAA”), and the terms of thisparagraph.   In the event of anyinconsistency, the terms of this paragraph shall control.   If AAA is unwilling or unable to (i) serveas the provider of arbitration or (ii) enforce any provision of thisarbitration clause, any party to this agreement may substitute anotherarbitration organization with similar procedures to serve as the provider ofarbitration.

 

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(d)  Thearbitration shall be administered by AAA and conducted, unless otherwiserequired by law, in any U.S. state where real or tangible personal propertycollateral for this credit is located or if there is no such collateral, in thestate specified in the governing law section of this agreement.   All Claims shall be determined by onearbitrator; however, if Claims exceed Five Million Dollars ($5,000,000), uponthe request of any party, the Claims shall be decided by threearbitrators.   All arbitration hearingsshall commence within ninety (90) days of the demand for arbitration and closewithin ninety (90) days of commencement and the award of the arbitrator(s)shall be issued within thirty (30) days of the close of the hearing.   However, the arbitrator(s), upon a showingof good cause, may extend the commencement of the hearing for up to an additionalsixty (60) days.   The arbitrator(s)shall provide a concise written statement of reasons for the award.   The arbitration award may be submitted toany court having jurisdiction to be confirmed, judgment entered and enforced.

 

(e)  Thearbitrator(s) will give effect to statutes of limitation in determining anyClaim and may dismiss the arbitration on the basis that the Claim is barred.For purposes of the application of the statute of limitations, the service onAAA under applicable AAA rules of a notice of Claim is the equivalent ofthe filing of a lawsuit.   Any disputeconcerning this arbitration provision or whether a Claim is arbitrable shall bedetermined by the arbitrator(s).   Thearbitrator(s) shall have the power to award legal fees pursuant to the terms ofthis agreement.

 

(f)  Thisparagraph does not limit the right of any party to: (i) exercise self-helpremedies, such as but not limited to, setoff; (ii) initiate judicial or non-judicialforeclosure against any real or personal property collateral; (iii) exerciseany judicial or power of sale rights, or (iv) act in a court of law toobtain an interim remedy, such as but not limited to, injunctive relief, writof possession or appointment of a receiver, or additional or supplementaryremedies.

 

(g)  Thefiling of a court action is not intended to constitute a waiver of the right ofany party, including the suing party, thereafter to require submittal of theClaim to arbitration

 

(h)  Theprocedure described above will not apply if the Claim, at the time of theproposed submission to arbitration, arises from or relates to an obligation toLender secured by real property. In this case, all of the parties to thisagreement must consent to submission of the Claim to arbitration. If bothparties do not consent to arbitration, the Claim will be resolved as follows:The parties will designate a referee (or a panel of referees) selected underthe auspices of AAA in the same manner as arbitrators are selected in AAAadministered proceedings. The designated referee(s) will be appointed by acourt as provided in California Code of Civil Procedure Section 638 andthe following related sections. The referee (or presiding referee of the panel)will be an active attorney or a retired judge. The award that results from thedecision of the referee(s) will be entered as a judgment in the court thatappointed the referee, in accordance with the provisions of California Code ofCivil Procedure Sections 644 and 645.

 

**ASSIGNMENT.**Lender may sell or offer to sell this Note, together with any and all documentsguaranteeing, securing or executed in connection with this Note, to one or moreassignees without notice to or consent of Borrower. Lender is hereby authorizedto share any information it has pertaining to the loan evidenced by this Note,including without limitation credit information on the undersigned, any of itsprincipals, or any guarantors of this Note, to any such assignee or prospectiveassignee.

 

**COUNTERPARTS.**This Note may be executed in any number of counterparts, each of whichwhen so executed shall be deemed to be an original and all of which takentogether shall constitute one and the same agreement.

 

**PRE BILLING.**If the Borrower and Lender elect to use pre-billing calculation, foreach payment date (the “Due Date”) the amount of each payment debit will bedetermined as follows: On the “Billing Date” Lender will prepare and mail toBorrower an invoice of the amounts that will be due on that Due Date (“BilledAmount”). (The “Billing Date” will be a date that is a specified number ofcalendar days prior to the Due Date, which number of days will be mutuallyagreed from time to time by Lender and Borrower.) The calculation of the BilledAmount will be made on the assumption that no new extensions of credit orpayments will be made between the Billing Date and the Due Date, and that therewill be no changes in the applicable interest rate. On the Due Date Lender willdebit the Designated Account for the Billed Amount, regardless of the actualamount due on that date (“Accrued Amount”). If the Due Date does not fall on aBusiness Day, Lender shall debit the Designated Account on the first BusinessDay following the Due Date. For purposes of this Agreement, “Business Day”means a day other than Saturday, Sunday or other day on which commercial banksare authorized to close or are in fact closed in the state where the Lender’slending office is located. If the Billed Amount debited to the DesignatedAccount differs from the Accrued Amount, the difference will be treated as follows:If the Billed Amount is less than the Accrued Amount, the Billed Amount for thefollowing Due Date will be increased by the amount of the underpayment.Borrower will not be in default by reason of any such underpayment. If theBilled Amount is more than the Accrued Amount, the Billed Amount for thefollowing Due Date will be decreased by the amount of the overpayment.Regardless of any such difference, interest will continue to accrue based onthe actual amount of principal outstanding without compounding. Lender will notpay interest on any overpayment.

 

**AUTOMATIC PAYMENTS.**Borrower hereby authorizes Lender automatically to deduct from Borrower’saccount numbered 17113-01042 the amount of any loan payment. If the funds inthe account are insufficient to cover any payment, Lender shall not beobligated to advance funds to cover the payment. At any time and for anyreason, Borrower or Lender may voluntarily terminate Automatic Payments.

 

**TERMINATION OF AUTOMATIC PAYMENTS.**In the event that Borrower terminates theAutomatic Payment arrangement with Lender, Borrower agrees that the interestrate under the Note will increase, at the discretion of the Lender, by one-halfpercentage point (0.50%) per annum over the rate of interest stated in theNote, and the amount of each interest installment will be increasedaccordingly. The effective rate of interest under the Note shall not in anyevent exceed the maximum rate permitted by law.

 

**FINAL AGREEMENT. BY SIGNING THIS DOCUMENT EACH PARTYREPRESENTS AND AGREES THAT: (A) THIS DOCUMENT REPRESENTS THE FINALAGREEMENT BETWEEN THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF, (B) THISDOCUMENT SUPERSEDES ANY COMMITMENT LETTER, TERM SHEET OR OTHER WRITTEN OUTLINEOF TERMS AND CONDITIONS RELATING TO THE SUBJECT MATTER HEREOF, UNLESS SUCHCOMMITMENT LETTER, TERM SHEET OR OTHER WRITTEN OUTLINE OF TERMS AND CONDITIONSEXPRESSLY PROVIDES TO THE CONTRARY, (C) THERE ARE NO ORAL AGREEMENTSBETWEEN THE PARTIES, AND (D) THIS DOCUMENT MAY NOT BE CONTRADICTED BYEVIDENCE OF ANY PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS ORUNDERSTANDINGS OF THE PARTIES.**

 

**ADDITIONAL DEFAULTS.**Each of the following shall constitute anadditional event of default (“Event of Default”) under this Note:

 

**Event of Default Under Related Documents.**A default or event of default occurs under theterms of any promissory note, guaranty, pledge agreement, security agreement orother agreement or instrument executed by Borrower or any guarantor, pledgor,accommodation party or other obligor in connection with or relating to thisNote.

 

**Judgment.**The entry of a judgment against any Borrower or guarantor, pledgor,accommodation party or other obligor which Lender deems to be of a materialnature, in Lender’s sole discretion.

 

**Creditor or Forfeiture Proceedings.**Commencement of foreclosure or forfeitureproceedings, whether by judicial proceeding, self-help, repossession or anyother method, by any creditor of Borrower or by any governmental agency againstany assets of Borrower and/or any guarantor, pledgor, accommodation party orother obligor. This includes a garnishment of: (1) any of Borrower’saccounts, including deposit accounts, with Lender and/or (2) any account,including deposit accounts, with Lender of any guarantor, pledgor,accommodation party or other obligor. However, this Event of Default shall notapply if there is a good faith dispute by such Borrower and/or guarantor,pledgor,

 

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accommodation party or other obligor as to the validity orreasonableness of the claim which is the basis of the creditor or forfeitureproceeding and if such Borrower and/or guarantor, pledgor, accommodation partyor other obligor gives Lender written notice of the creditor of forfeitureproceeding and deposits with Lender monies or a surety bond for the creditor orforfeiture proceeding, in an amount determined by Lender, in its solediscretion, as being an adequate reserve or bond for the dispute.

 

**Adverse Change of Obligor.**A materiel adverse change occurs in thefinancial condition of any guarantor, pledgor, accommodation party or otherobligor, as determined by Lender in its sole discretion.

 

**Resignation/Withdrawal.** The resignation or withdrawal of any partner or a material owner ofBorrower or any guarantor, pledgor, accommodation party or other obligor, asdetermined by Lender in its sole discretion.

 

**Adverse Government Action.** Any governmental authority (including, without limitation, any nation,state or other political subdivision thereof, any central bank, and any entityexercising executive, legislative, judicial, regulatory or administrativefunctions, and any corporation or other entity owned or controlled by any ofthe foregoing) takes or institutes action, which, in the opinion of Lender,will adversely affect Borrower’s financial condition or ability to pay orperform Borrower’s obligations under this Note or any instrument or agreementrequired under, or executed in connection with, this Note.

 

**ADDRESS FOR NOTICES.** Any notice required to be given under this Note shall be given inwriting, and shall be effective when actually delivered, when actually receivedby telefacsimile (unless otherwise required by law), when deposited with anationally recognized overnight courier, or, if mailed, when deposited in theUnited States mail, as first class, certified or registered mail postageprepaid, directed if to Borrower at the address shown near the beginning ofthis Note and if to Lender at the address set forth below. Any party may changeits address for notices under this Note by giving formal written notice to theother parties, specifying that the purpose of the notice is to change the party’saddress. For notice purposes, Borrower agrees to keep Lender informed at alltimes of Borrower’s current address. Unless otherwise provided or required bylaw, if there is more than one Borrower, any notice given by Lender to anyBorrower is deemed to be notice given to all Borrowers. Notwithstandinganything to the contrary herein, all notices and communications to the Lendershall be directed to the following address:

 

Bank of America, N.A. Pasadena BCS, Attn: Notice Desk 101 South Marengo Avenue, 5th Floor Pasadena, CA 91101-2428.

 

**Additional Interest After Default.** Upon any Event of Default under this Note, Lender,at its option, may, if permitted under applicable law, increase the interestrate on this Note to the interest rate specified in the paragraph aboveentitled “Interest After Default”.

 

**FINANCIAL STATEMENTS AND OTHER INFORMATION.** Borrower will provide Lender with suchfinancial statements, Including tax returns, other statements of condition orother information, in form and content acceptable to Lender, as Lender shallrequest from time to time within fifteen days of the date of the request.

 

**MAINTENANCE OF PRINCIPAL DEPOSIT ACCOUNTS.** Borrower agrees to maintain its principaldeposit accounts with Lender. 

 

**Successor lnterests.** The terms of this Note shall be binding upon Borrower, and uponBorrower’s hairs, personal representatives, successors and assigns, and shallinure to the benefit of Lender and its successors and assigns.

 

**General Provisions.** Lender may delay or forgo enforcing any of its rights or remedies underthis Note without losing them. Borrower and any other person who signs,guarantees or endorses this Note, to the extent allowed by law, waive anyapplicable statute of limitations, presentment, demand for payment, and noticeof dishonor. Upon any change in the terms of this Note, and unless otherwiseexpressly stated in writing, no party who signs this Note, whether as maker,guarantor, accommodation maker or endorser, shall be released from liability.All such parties agree that Lender may renew or extend (repeatedly and for anylength of time) this loan or release any party or guarantor or collateral; orimpair, fail to realize upon or perfect Lender’s security interest in thecollateral; and take any other action deemed necessary by Lender without theconsent of or notice to anyone. All such parties also agree that Lander maymodify this loan without the consent of or notice to anyone other than theparty with whom the modification is made. The obligations under this Note are jointand several.

 

**PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THEPROVISIONS OF THIS NOTE, BORROWER AGREES TO THE TERMS OF THE NOTE.**

 

**BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORYNOTE.**

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**BORROWER:**

 
| **AML COMMUNICATIONS, INC.** |                                                     |
|------------------------------|----------------------------------------------------------|
|                         |                                                     |
|                         |                                                     |
| By:                          | /s/ Jacob Inbar                                          |   | By: | /s/ Ed McAvoy |   |
|                         | Jacob Inbar, President of AML  Communications, Inc. |   | Ed McAvoy, Secretary of AML Communications,  Inc. |
|                              |                                                          |  |  |  |  |

 

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