**EXHIBIT10.2**

 

THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTEREDUNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOFUNDER SUCH ACT OR PURSUANT TO RULE 144 OR AN OPINION OF COUNSEL REASONABLYSATISFACTORY TO THE CORPORATION AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOTREQUIRED.

 

**WARRANT TO PURCHASE STOCK**

 

Corporation: AMLCommunications, Inc a Delaware Corporation

Number of Shares:                   

Class of Stock: SeriesCommon Stock

Initial Exercise Price:$0.24

Issue Date: 16 July, 2003

Expiration Date: 16 July,2008

 

THIS WARRANT CERTIFIESTHAT, for other good and valuable consideration, (“Holder”) is entitled topurchase the number of fully paid and nonassessable shares of the class ofsecurities (the “Shares”) of the corporation (the “Company”) at the initialexercise price per Share (the****“Warrant Price”) all as set forth aboveand as adjusted pursuant to Article 2 of this Warrant, subject to the****provisionsand upon the terms and conditions set forth in this Warrant.

 

ARTICLE 1.EXERCISE.

 

1.1 Method ofExercise. Holder may exercise this Warrant by delivering a duly executedNotice of Exercise in substantially the form attached as Annex A or B to theprincipal office of the Company. Unless Holder is exercising the conversionright set forth in Section 1.2, Holder shall also deliver to the Company acheck for the aggregate Warrant Price for the Shares being purchased.

 

1.2 Conversion Right .In lieu of exercising this Warrant as specified in Section 1.1, Holder mayfrom time to time convert this Warrant, in whole or in part, into a number ofShares determined by dividing (a) the aggregate fair market value of the Sharesor other securities otherwise issuable upon exercise of this Warrant minus theaggregate Warrant Price of such Shares by (b) the fair market value of oneShare. The fair market value of the Shares shall be determined pursuant toSection 1.3.

 

1.3 Fair Market Value.If the Shares are traded in a public market, the fair market value of theShares shall be the closing price of the Shares (or the closing price of theCompany’s stock into which the Shares are convertible) reported for thebusiness day immediately before Holder delivers its Notice of Exercise to theCompany. If the Shares are not traded in a public market, the Board ofDirectors of the Company shall determine fair market value in its reasonablegood faith judgment.

 

1.4 Delivery ofCertificate and New Warrant. Promptly after Holder exercises or convertsthis Warrant, the Company shall deliver to Holder certificates for the Sharesacquired and, if this Warrant has not been fully exercised or converted and hasnot expired, a new Warrant representing the Shares not so acquired.

 

1.5 Replacement ofWarrants. On receipt of evidence reasonably satisfactory to the Company ofthe loss, theft, destruction or mutilation of this Warrant and, in the case ofloss, theft or destruction, on delivery of an indemnity agreement reasonably satisfactoryin form and amount to the Company or, in the case of mutilation, on surrenderand cancellation of this Warrant, the Company at its expense shall execute anddeliver, in lieu of this Warrant, a new warrant of like tenor.

 

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1.6**                  **AssumptionUpon Sale, Merger, or Consolidation of the Company

 

1.6.1. “Acquisition”.For the purpose of this Warrant, “Acquisition” means any sale, license, orother disposition of all or substantially all of the assets of the Company, orany reorganization, consolidation, or merger of the Company where the holdersof the Company’s securities before the transaction beneficially own less than50% of the outstanding voting securities of the surviving entity after thetransaction.

 

1.6.2. Assumptionof Warrant. Upon the closing of any Acquisition, the successor entity shallassume****theobligations of this Warrant, and this Warrant shall be exercisable for the samesecurities, cash, and property as would be payable for the Shares issuable uponexercise of the unexercised portion of this Warrant as if such Shares wereoutstanding on the record date for the Acquisition and subsequent closing. TheWarrant Price shall be adjusted accordingly.

 

ARTICLE 2.ADJUSTMENTS TO THE SHARES.

 

2.1 Stock Dividends,Splits, Etc. If the Company declares or pays a dividend on its common stock(or the Shares if the Shares are securities other than common stock) payable incommon stock, or other securities, subdivides the outstanding common stock intoa greater amount of common stock, or, if the Shares are securities other thancommon stock, subdivides the Shares in a transaction that increases the amountof common stock into which the Shares are convertible, then upon exercise ofthis Warrant, for each Share acquired, Holder shall receive, without cost toHolder, the total number and kind of securities to which Holder would have beenentitled had Holder owned the Shares of record as of the date the dividend orsubdivision occurred.

 

2.2 Reclassification,Exchange or Substitution. Upon any reclassification, exchange,substitution, or other event that results in a change of the number and/orclass of the securities issuable upon exercise or conversion of this Warrant,Holder shall be entitled to receive, upon exercise or conversion of thisWarrant, the number and kind of securities and property that Holder would havereceived for the Shares if this Warrant had been exercised immediately beforesuch reclassification, exchange, substitution, or other event. Such an eventshall include any automatic conversion of the outstanding or issuablesecurities of the Company of the same class or series as the Shares to commonstock pursuant to the terms of the Company’s Articles of Incorporation upon theclosing of a registered public offering of the Company’s common stock. TheCompany or its successor shall promptly issue to Holder a new Warrant for suchnew securities or other property. The new Warrant shall provide for adjustmentswhich shall be as nearly equivalent as may be practicable to the adjustmentsprovided for in this Article 2 including, without limitation, adjustmentsto the Warrant Price and to the number of securities or property issuable uponexercise of the new Warrant. The provisions of this Section 2.2 shallsimilarly apply to successive reclassifications, exchanges, substitutions, orother events.

 

2.3 Adiustments forCombinations,etc. . If the outstanding shares are combined or consolidated,by reclassification or otherwise, into a lesser number of shares, the WarrantPrice shall be proportionately increased.

 

2.4 No Impairment. TheCompany shall not, by amendment of its Articles of Incorporation or through areorganization, transfer of assets, consolidation, merger, dissolution, issue,or sale of securities or any other voluntary action, avoid or seek to avoid theobservance or performance of any of the terms to be observed or performed underthis Warrant by the Company, but shall at all times in good faith assist incarrying out of all the provisions of this Article 2 and in taking allsuch action as may be necessary or appropriate to protect Holder’s rights underthis Article against impairment. If the Company takes any action affectingthe Shares or its common stock other than as described above that adverselyaffects Holder’s rights under this Warrant, the Warrant Price shall be adjusteddownward and the number of Shares issuable upon exercise of this Warrant shallbe adjusted upward in such a manner that the aggregate Warrant Price of thisWarrant is unchanged.

 

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2.5 Fractional Shares.No fractional Shares shall be issuable upon exercise or conversion of theWarrant and the number of Shares to be issued shall be rounded down to thenearest whole Share. If a fractional share interest arises upon any exercise orconversion of the Warrant, the Company shall eliminate such fractional shareinterest by paying Holder an amount computed by multiplying the fractionalinterest by the fair market value of a full Share.

 

2.6 Certificate as toAdjustments. Upon each adjustment of the Warrant Price, the Company at itsexpense shall promptly compute such adjustment, and furnish Holder with acertificate of its Chief Financial Officer setting forth such adjustment andthe facts upon which such adjustment is based. The Company shall, upon writtenrequest, furnish Holder a certificate setting forth the Warrant Price in effectupon the date thereof and the series of adjustments leading to such WarrantPrice.

 

ARTICLE 3. REPRESENTATIONSAND COVENANTS OF THE COMPANY.

 

3.1                                 Representationsand Warranties. The Company hereby represents and warrants to the Holder asfollows:

 

(a) The initialWarrant Price referenced on the first page of this Warrant is not greater than(i) the price per share at which the Shares were last issued in an arms-lengthtransaction in which at least $500,000 of the Shares were sold and (ii) thefair market value of the Shares as of the date of this Warrant.

 

(b) All Shareswhich may be issued upon the exercise of the purchase right represented by thisWarrant, shall, upon issuance, be duly authorized, validly issued, fully paidand nonassessable, and free of any liens and encumbrances except forrestrictions on transfer provided for herein or under applicable federal andstate securities laws.

 

3.2                                 Noticeof Certain Events. If the Company proposes at any time (a) to declare anydividend or distribution upon its common stock, whether in cash, property,stock, or other securities and whether or not a regular cash dividend; (b) tooffer for subscription pro rata to the holders of any class or series of itsstock any additional shares of stock of any class or series or other rights;(c) to effect any reclassification or recapitalization of common stock; (d) tomerge or consolidate with or into any other corporation, or sell, lease,license, or convey all or substantially all of its assets, or to liquidate,dissolve or wind up; or (e) offer holders of registration rights theopportunity to participate in an underwritten public offering of the company’ssecurities for cash, then, in connection with each such event, the Companyshall give Holder (1) at least 20 days prior written notice of the date onwhich a record will be taken for such dividend, distribution, or subscriptionrights (and specifying the date on which the holders of common stock will beentitled thereto) or for determining rights to vote, if any, in respect of thematters referred to in (c) and (d) above; (2) in the case of the mattersreferred to in (c) and (d) above at least 20 days prior written notice of thedate when the same will take place (and specifying the date on which theholders of common stock will be entitled to exchange their common stock forsecurities or other property deliverable upon the occurrence of such event);and (3) in the case of the matter referred to in (e) above, the same notice asis given to the holders of such registration rights.

 

3.3 Information Rights.So long as the Holder holds this Warrant and/or any of the Shares, theCompany shall deliver to the Holder (a) promptly after mailing, copies of allnotices or other written communications to the shareholders of the Company, (b)within ninety (90) days after the end of each fiscal year of the Company, theannual audited financial statements of the Company certified by independentpublic accountants of recognized standing and (c) such other financialstatements required under and in accordance with any loan documents betweenHolder and the Company (or if there are no such requirements or if the subjectloan(s) no longer are outstanding), then within forty-five (45) days after theend of each of the first three quarters of each fiscal year, the Company’squarterly, unaudited financial statements.

 

3.4 Registration UnderSecurities Act of 1933, as amended. The Shares are not registered and subject to SEC rule 144.  The Shares may become registered by “Piggyback” in the event that the Company undertakes a future registration.

 

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ARTICLE 4. MISCELLANEOUS.

 

4.1                                 Term.This Warrant is exercisable, in whole or in part, at any time and from time totime on or before the Expiration Date set forth above.

 

4.2 Legends. ThisWarrant and the Shares (and the securities issuable, directly or indirectly,upon conversion of the Shares, if any) shall be imprinted with a legend insubstantially the following form:

 

THIS SECURITY HAS NOTBEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOTBE SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATIONTHEREOF UNDER SUCH ACT OR PURSUANT TO RULE 144 OR AN OPINION OF COUNSELREASONABLY SATISFACTORY TO THE CORPORATION AND ITS COUNSEL THAT SUCHREGISTRATION IS NOT REQUIRED.

 

4.3 Compliance withSecurities Laws on Transfer. This Warrant and the Shares issuable uponexercise this Warrant (and the securities issuable, directly or indirectly,upon conversion of the Shares, if any) may not be transferred or assigned inwhole or in part without compliance with applicable federal and statesecurities laws by the transferor and the transferee (including, withoutlimitation, the delivery of investment representation letters and legalopinions reasonably satisfactory to the Company, as reasonably requested by theCompany). The Company shall not require Holder to provide an opinion of counselif the transfer is to an affiliate of Holder or if there is no materialquestion as to the availability of current information as referenced in Rule144(c), Holder represents that it has complied with Rule 144(d) and (e) inreasonable detail, the selling broker represents that it has complied with Rule144(f), and the Company is provided with a copy of Holder s notice of proposedsale.

 

4.4 TransferProcedure.Subject to the provisions of Section 4.3, Holder maytransfer all or part of this Warrant or the Shares issuable upon exercise ofthis Warrant (or the securities issuable, directly or indirectly, uponconversion of the Shares, if any) to any affiliate of Holder, or, to any othertransferee by giving the Company notice of the portion of the Warrant beingtransferred setting forth the name, address and taxpayer identification numberof the transferee and surrendering this Warrant to the Company for reissuanceto the transferee(s) (and Holder if applicable). Unless the Company is filingfinancial information with the SEC pursuant to the Securities Exchange Act of1934, the Company shall have the right to refuse to transfer any portion ofthis Warrant to any person who directly competes with the Company.

 

4.5 Notices. Allnotices and other communications from the Company to the Holder, or vice versa,shall be deemed delivered and effective when given personally or mailed byfirst-class registered or certified mail at such address as may have beenfurnished to the Company or the Holder, as the case may be, in writing by theCompany or such holder from time to time. AlI notices to be provided under thisWarrant shall be sent to the following address:

 
| For the Company:  1000, Avenida Acaso  Camarillo  CA 93012 | For the Holder: |
|------------------------------------------------------------|-----------------|

 

4.6 Waiver. ThisWarrant and any term hereof may be changed, waived, discharged or terminatedonly by an instrument in writing signed by the party against which enforcementof such change, waiver, discharge or termination is sought.

 

4.7 Attorneys Fees. Inthe event of any dispute between the parties concerning the terms andprovisions of this Warrant, the party prevailing in such dispute shall beentitled to collect from the other party all costs incurred in such dispute,including reasonable attorneys fees.

 

Governing Law. ThisWarrant shall be governed by and construed in accordance with the laws of theState of California, without giving effect to its principles regardingconflicts of law.

 

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“COMPANY”

 
| AML Communications,  Inc.                          |
|----------------------------------------------------|
|                                               |
| By:                                                |
|                                               |
|                                               |
| Name: Jacob Inbar                                  |
|                                               |
| Title: Chairman of the  Board, President & CEO |
|                                               |
|                                               |
| By:                                                |
|                                               |
|                                               |
| Name:                                              | Susan Fite |
|                                               |   |
| Title:                                             | Director of Finance |

 

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**ANNEX A**

 

**FORM OF EXERCISE NOTICE**

 

(To be executed by theregistered holder hereof)

 

The undersignedregistered owner of this Warrant exercises this Warrant for the purchase of                   shares of Common Stock of AML Communications, a Delaware corporation, andherewith makes payment therefor of$                  (such payment being made [check one] (x) oin cash or by certified or official bank check or (y) oby acceptance of a reduced number of shares of Common Stock upon cancellationof this Warrant as provided in Section 2(b) of this Warrant, all on theterms and conditions specified in this Warrant, and requests that (i)certificates and/or other instruments covering such shares of Common Stock beissued in accordance with the instructions given below and (ii) if such sharesof Common Stock shall not include all of the shares of Common Stock to whichthe Holder is entitled under this Warrant, that a new Warrant for theunpurchased balance of the shares of Common Stock issuable hereunder bedelivered to the undersigned. References in this Exercise Notice to “CommonStock” shall include other securities or other property to the extent includedin Warrant Stock.

 
| Dated:                                                                 |                                |                      |   |
|------------------------------------------------------------------------|-------------------------------------|---------------------------|--------|
|                                                                   |                                |                      |
|                                                                   | (Signature of  Registered Holder)** |
|                                                                   |                                |
| Instructions for  issuance and registration  of shares of Common Stock |                                |
|                                                                   |                                |
|                                                                   |                                | Social Security or  Other |
| Name of Registered  Holder                                             | Identifying Number:                 |
|                                                                   |                                |
| (Please Print)                                                         |                                |
|                                                                   |                                |
| Please deliver  certificate to the following address:                  |                                |
|                                                                   |                                |
| Street                                                                 |                                |
|                                                                   |                                |
| City, State and Zip  Code                                              |                                |
|                                                                        |                                     |                           |        |  |  |

 

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*                                         Includeif applicable.

 

**                                  Thesignature must correspond with the name as written upon the face ofthe attached Warrant in every particular, without alteration.

 

 

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**ANNEX B**

 

**FORM OF ASSIGNMENT**

 

(To be executed by theregistered holder hereof)

 

FOR VALUE RECEIVED theundersigned registered owner of this Warrant hereby sells, assigns andtransfers unto the assignee named below all the rights of the undersigned underthis Warrant with respect to the number of shares of Common Stock coveredthereby set forth below to:

 
| **Name of Assignee** |   | **Address** |   | **Number of  Shares of  Common Stock** |
|----------------------|--------|-------------|--------|----------------------------------------|

 

References in this Exercise Notice to “Common Stock” shall includeother securities or other property to the extent included in Warrant Stock.

 
| Dated:   |                               |   |   |
|----------|------------------------------------|--------|--------|
|     |                               |   |
|     | (Signature of  Registered Holder)* |
|     |                               |   |
|     | Name of Registered  Holder         |
|     | (Please Print)                     |
|     |                               |
| Witness: |                               |
|     |                               |   |
|     |                               |   |
|          |                                    |        |        |  |  |

 

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*                                         Thesignature must correspond with the name as written upon the face ofthe attached Warrant in every particular, without alteration.

 

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