Exhibit 10.21


 





B R I D G E  B A N K


 


July 12,2006


 


AML
Communications, Inc.


Mr. Jacob Inbar, President


1000 Avenida Acaso


Camarillo, CA
93012


 


 


Re: Bridge Bank
Credit Facility


 


 


Dear Jacob:


 


Thank you for
allowing Bridge Bank (“BB) the
opportunity to strengthen its relationship with AML Communications,  Inc. (“AML” or
“Borrower”). I would like to take this opportunity to propose some terms and
conditions for the credit facility under discussion. Bridge Bank (the “Bank” or “Lender”) is interested in continuing
its banking relationship with AML and will
consider the banking services described below. Please note that this letter is
not intended to constitute a commitment or offer to lend on the part of the
Lender, but rather to summarize for discussion purposes the credit accommodation
that we are interested in considering at this time. The Lender’s proposal to
make credit facilities available is subject to the approval of its Loan
Committee, and will be represented via the final Business Financing Agreement.


 


	
  Borrower:

  	
   

  	
  AML Communications,
  Inc.

  
	
   

  	
   

  	
   

  
	
  Lender:

  	
   

  	
  Bridge Bank, NA

  
	
   

  	
   

  	
   

  
	
  Credit Facilities:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Facility 1

  	
   

  	
  $1,000,000 Domestic Accounts Receivable Line of
  Credit.

  
	
   

  	
   

  	
   

  
	
  Facility 2:

  	
   

  	
  $1,000,000 Equipment Term Loan (inclusive of the
  existing -$200,000 outstanding). Borrower eligible to advance up to an
  additional -$800,000 in
  Equipment Term debt.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The net amount
  outstanding will not exceed $2,000,000 at anytime.

  
	
   

  	
   

  	
   

  
	
  Purpose:

  	
   

  	
  Provide working capital and equipment financing.

  
	
   

  	
   

  	
   

  
	
  Advance Rates:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Facility 1:

  	
   

  	
  Up to 80% of the gross eligible domestic receivables
  (net of pre-paid deposits, offsets, and contras related to each specific
  account debtor). Ineligible account criteria is as follows unless otherwise
  approved by the Bank: Account balances over 90 days from invoice date, concentration
  balances in excess of 30%, pre-billings, affiliated accounts, foreign
  accounts with the exception of Canada, progress billings, retention billings,
  bill & hold
  accounts, cross-aged balances whereby the amounts over 90 days of any account
  exceeds 35% of the total balance of that account debtor. Lender to approve
  exceptions to the standard concentration limit on a caseby- case basis. In
  addition, U.S. Government accounts will be considered eligible with a proper assignment
  of claims as required by Lender, or as otherwise approved by Lender. Lender
  will approve foreign accounts on a case-by-case basis.

  



 


 















 


 


FINANCIAL PROPOSAL FOR AML COMMUNICATIONS,
INC.


 


	
  Facility 2:

  	
   

  	
  Up to 100% of the invoice cost of purchased
  equipment or other eligible purchases acceptable to Lender. Eligible Invoices
  included invoices for new capital equipment, furniture, and software purchased
  within 90 days of formal loan documentation. Minimum draw of $50,000 per advance.

  
	
   

  	
   

  	
   

  
	
  Rates & Fees:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Interest Rate - Facility 1:

  	
   

  	
  Wall Street Journal “WSJ” Prime Rate (currently
  8.25%) plus 0.25%.

  
	
   

  	
   

  	
   

  
	
  Interest Rate - Facility 2: 

  	
   

  	
  WSJ Prime Rate plus 0.50%.

  
	
   

  	
   

  	
   

  
	
  Facility Fee:

  	
   

  	
  $5,000 (0.25% of total Credit Facility) due at
  signing of definitive Bank loan documents.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  $2,500 (0.25% of Facility 1) due 12 months from the
  date of definitive Bank loan documents.

  
	
   

  	
   

  	
   

  
	
  Repayment:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Facility 1:

  	
   

  	
  Interest to be paid monthly, principal due upon
  maturity.

  
	
   

  	
   

  	
   

  
	
  Facility 2:

  	
   

  	
  Existing Term Loans to continue amortizing under
  existing repayment schedule. Draw period of six months from date of
  Modification Agreement for the remaining eligible Equipment Term Loan
  advances. At the end of the draw period, the outstanding advanced amount will
  be termed out for principal repayment over 30 (thirty) monthly payments.

  
	
   

  	
   

  	
   

  
	
  Maturity &

  Payment Term:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Facility 1:

  	
   

  	
  Twenty-four (24) months from date of documents.

  
	
   

  	
   

  	
   

  
	
  Facility 2:

  	
   

  	
  Thirty-six (36) months from date of documents.

  
	
   

  	
   

  	
   

  
	
  Warrants:

  	
   

  	
  None.

  
	
   

  	
   

  	
   

  
	
  Financial

  Covenants:

  	
   

  	
   

  
	
   

  	
   

  	
  1.

  	
   

  	
  Borrower to maintain on a monthly basis a Quick
  Ratio of 1.50 to 1.00, which shall be defined as unrestricted cash and
  equivalents at Bank plus A/R divided
  by current liabilities (including all Bank debt).

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.

  	
   

  	
  Borrower to stay within 80% of planned quarterly
  revenue.

  
	
   

  	
   

  	
   

  
	
  Collateral:

  	
   

  	
  Lender will maintain a perfected first priority
  security interest in all of the Borrower’s Assets, including intellectual
  property and general intangibles currently owned or later acquired. Lender will
  be in second position on specific fixed assets previously financed elsewhere.

  
	
   

  	
   

  	
   

  
	
  Subordinated Debt:

  	
   

  	
  Any other debt and/or lien holder (if any exist),
  will be required to enter into an inter-creditor / subordination agreement acceptable
  to the Lender and/or be terminated. Exception for specific fixed asset liens
  previously existing.

  
	
   

  	
   

  	
   

  
	
  Banking

  Relationship:

  	
   

  	
  Borrower will maintain its primary operating and
  investment accounts with Lender. All cash & cash equivalents held outside
  of Bridge Bank will be subject to a Collateral Control Agreement acceptable
  to the Bank.

  



 



 2
 






 



 


	
  Reporting:

  	
   

  	
  Borrower to provide the following information:

  
	
   

  	
   

  	
  ·

  	
   

  	
  Within 30 days of each month end: Balance Sheet,
  Income Statement and statement of cash flows together with compliance
  certificate.

  
	
   

  	
   

  	
  ·

  	
   

  	
  Prior to borrowing and within 30 days of each
  month-end while borrowing on Facility 1: Accounts receivable and payable
  aging reports together with borrowing base certificate.

  
	
   

  	
   

  	
  ·

  	
   

  	
  Within 150 days of each fiscal year end: CPA
  prepared annual financial statements.

  
	
   

  	
   

  	
  ·

  	
   

  	
  Within 30 days prior to each fiscal year end: Annual
  board approved financial forecast.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Field

  Examination:

  	
   

  	
  Prior to borrowing on Facility 1 and while there is a balance
  outstanding, annual field examinations required, or upon Lenders’ request at
  the Borrower’s expense. Costs may range fiom $750.00 - $1,250.00 per day with the duration and scope of the exam to
  be determined at time of field examination.

  
	
   

  	
   

  	
   

  
	
  Insurance:

  	
   

  	
  Bank to be named loss payee on primary genera1
  business insurance.

  
	
   

  	
   

  	
   

  
	
  Conditions of

  Closing:

  	
   

  	
   

  
	
   

  	
   

  	
  ·

  	
   

  	
  After due diligence inquiry conducted by Lender,
  there shall be no discovery of any facts or circumstances which would, as
  determined by Lender at its sole discretion, negatively effect or potentially
  negatively effect the collectability of the obligations under or in
  connection with the Business Finance Agreement.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ·

  	
   

  	
  No representation, warranty, or disclosure made to
  Lender by Borrower shall prove to be false or misleading as of the date made.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ·

  	
   

  	
  All documentation forms would be provided by Lender
  and, assuming that Lender has approved all due diligence concerning Borrower,
  Borrower shall have properly executed all documentation required by the
  Lender.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ·

  	
   

  	
  Borrower to insure subordination of any debt or
  lien, fiom any other secured party, and supply Lender with any other support
  deemed necessary.

  
							



 


This proposal
letter is provided solely for the purpose described herein and may not be
disclosed to or relied upon by any other party without the Lender’s prior
written consent. This proposal is intended to form the basis for a discussion
of a credit accommodation, and further negotiations adding to or modifying the
general scope of the major terms shall not be precluded by the issuance of this
Proposal Letter. The Lender’s proposal to make the credit facilities available
is subject to the approval of its Loan Committee, and any commitment to lend
will be made in writing. This proposal is confidential and proprietary for the
sole purpose of discussions between the parties hereunder.


 


Bridge Bank
reserves the right to issue press releases, advertisements and other
promotional materials describing any successfid outcome of services provided on
your behalf. The Borrower agrees that Bridge Bank shall have the right to identify
the Borrower by name in those materials.


 



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Whether or not the
transactions contemplated hereby are consummated, by your acceptance hereof:
(a) you agree to bear all reasonable out-of-pocket expenses of Lender and all
fees and disbursements of Lender’s counsel (including the allocated costs of
inside counsel) relating to the preparation of this letter and of the proposed
financing documentation and to the transaction contemplated hereby and thereby,
and (b) you agree to indemnify Lender, its affiliates, and their respective directors,
officers and employees and to defend and hold Lender, its affiliates and such
other persons harmless from and against all losses, claims, damages,
liabilities and expenses (including expenses of litigation or preparation
thereof) which Lender or any such affiliates or such other persons in
connection with or arising out of the matters referred to herein, except for
damages resulting from the gross negligence or willful misconduct of the
Lender.


 


If the basic terms
and conditions described above are acceptable, please so indicate by signing
this letter and returning the same to the attention of the undersigned by no
later than July  21, 2006, or by such date agreed upon by Bridge Bank in writing.


 


Thanks again for
allowing Bridge Bank to make this proposal and please feel free to contact me
with any questions you may have. I look forward to establishing a relationship
with you.


 


Best Regards,


 


 


 


 


Mike Lederman


Vice President


 


 


Agreed and acknowledged:


 


 


	
  /s/ Jacob Inbar

  	
   

  	
  7/17/06

  	
   

  
	
  AML Communications,
  Inc.

  	
   

  	
  Date

  



 



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