Document:

Exhibit 10.2

 

FIRST AMENDMENT TO INDEMNIFICATION ESCROW AGREEMENT

 

This AMENDMENT TO INDEMNIFICATION ESCROW AGREEMENT (the “Amendment”),
dated February 1, 2006 and effective as of December 23, 2005, is entered into
by and among Mr. Lap Shun (John) Hui, an individual resident of the State of
California (“Mr. Hui”), Gateway, Inc., a Delaware corporation (“Gateway”)
and UMB Bank, N.A., as escrow agent (the “Escrow Agent”). Initially
capitalized terms used in this Amendment and not otherwise defined herein shall
have the meanings ascribed to them in the Indemnification Agreement, by and
between Gateway and Mr. Hui (the “Indemnification Agreement”) dated as
of March 11, 2004.

 

WHEREAS, Gateway and Mr. Hui entered into the Indemnification
Agreement;

 

WHEREAS, concurrently with the execution of the Indemnification Agreement,
Gateway, Mr. Hui and UMB Bank, N.A., as escrow agent (the “Escrow Agent”)
entered into an Indemnification Escrow Agreement (the “Indemnification
Escrow Agreement”) dated as of March 11, 2004; and

 

WHEREAS, Gateway and Mr. Hui now desire to amend the Indemnification
Escrow Agreement as follows.

 

NOW, THEREFORE, in consideration of the foregoing and of the
representations, warranties, covenants and agreements set forth in this
Amendment, the parties hereto, intending to be legally bound, agree as follows:

 

1.             Section 1.1 of the
Indemnification Escrow Agreement is amended to read in its entirety as
follows:  “Consent to Escrow. Each
of Gateway and Mr. Hui has hereby agreed that: 
(i) all the Initial Escrow Shares shall be withheld from Mr. Hui and
held in escrow from the date hereof through the Termination Date (as defined
below), and (ii) any Reallocation Shares (together with the Initial Escrow
Shares, the “Escrow Shares”) shall be held in escrow from the date they
are issued through the Termination Date. The Escrow Shares shall be held in
escrow until the date that Mr. Hui is entitled to receive all Escrow Shares in
accordance with the provisions of Section 10 of the Indemnification Agreement
(the “Termination Date”).”

 

2.             Section 2.2(d) of
the Indemnification Escrow Agreement is amended to read in its entirety as
follows:  “Disbursement on Termination
Date. On or after the Termination Date, Mr. Hui may deliver to Escrow Agent
notice that the Termination Date has been reached (the “Final Termination
Notice”). Subject to the provisions of Article 3, on the tenth (10th)
business day after receipt of Mr. Hui’s Final Termination Notice (together with
a certification by Mr. Hui that the Final Termination Notice was delivered to
Gateway concurrently with the delivery to the Escrow Agent), the Escrow Agent
will deliver the remaining portion of the Escrow Account, or the undisputed

 

 

portion thereof (if any) in the
event that any portion of the Escrow Account is subject to a Payment Dispute
(as defined below) at such time, to Mr. Hui.”

 

3.             Section 5.2 is
hereby amended to provide for notice to Gateway and Escrow Agent as follows:

 

“If to Gateway, to:

 

Gateway, Inc.

7565 Irvine Center Drive

Irvine, California  92618

Attn: 
Michael R. Tyler, General Counsel

Facsimile No.:  (949) 471-7020

 

If to the Escrow Agent, to:

 

UMB Bank, N.A.

Attn: Jason McConnell, Corporate Trust

2401 Grand Boulevard, Suite 200

Kansas City, MO  64108

Facsimile No.:  (816) 860-3029”

 

4.             Each of Gateway and
Mr. Hui hereby represents and warrants (a) this Amendment has been duly
authorized, executed and delivered on its or his behalf and constitutes its or
his legal, valid and binding obligation and (b) that the execution, delivery
and performance of this Amendment by each of Gateway and Mr. Hui does not and
will not violate any applicable law or regulation. For the purpose of
compliance with requirements of the USA Patriot Act, Mr. Hui, as an individual
signatory, certifies that his date of birth is December 30, 1955.

 

5.             This Amendment may
be executed by the parties in multiple counterparts, each of which shall be
deemed an original and all of which together constitute one and the same
instrument.

 

 

IN WITNESS WHEREOF, the parties hereto have duly executed this First
Amendment to Indemnification Escrow Agreement on the day and year first above
written.

 

	
   

  	
  GATEWAY, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John P. Goldsberry

  	
   

  
	
   

  	
   

  	
  Name:

  	
  John P. Goldsberry

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President, Chief

  
	
   

  	
   

  	
   

  	
  Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /a/ Lap Shun Hui

  	
   

  
	
   

  	
  LAP SHUN (JOHN) HUI

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ESCROW AGENT

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark B. Flannagan

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Mark B. Flannagan

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  	
   

  
												

 

 

[Signature Page to First Amendment to Indemnification Escrow Agreement]Exhibit 10.21

 

BUSINESS
FINANCING MODIFICATION AGREEMENT

 

This Business Financing Modification
Agreement is entered into as of December 23, 2005, by and between AML
Communications, Inc. (the “Borrower”) and Bridge Bank, National Association (“Lender”).

 

1.             DESCRIPTION
OF EXISTING INDEBTEDNESS: Among other indebtedness which may be owing by
Borrower to Lender, Borrower is indebted to Lender pursuant to, among other
documents, a Business Financing Agreement, dated July 8, 2004 by and between
Borrower to Lender, as may be amended from time to time, (the “Business
Financing Agreement”).  Capitalized terms
used without definition herein shall have the meanings assigned to them in the
Business Financing Agreement.

 

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

 

2.             DESCRIPTION
OF CHANGE IN TERMS.

 

A.            Modification(s)
to Business Financing Agreement:

 

1)             The
following defined terms are hereby added to Section 1.1, entitled “Definitions”:

 

“Equipment” means all present and future machinery,
equipment, tenant improvements, furniture, fixtures, vehicles, tools, parts and
attachments in which Borrower has any interest.

 

“Equipment Loan 1 Advance” has the
meaning set forth in Section 2.3 (a) hereof.

 

“Equipment Loan 2 Advance” has the
meaning set forth in Section 2.3 (b) hereof.

 

2)             The
following defined terms are hereby amended to read as follows:

 

“Credit Limit” means $2,023,514.41, of
which (i) up to $1,000,000 may be used for Formula balances, (ii) $273,514.41
has been fully advanced under Equipment Loan 1 Advances, and (iii) up to
$750,000.00 may be used for Equipment Loan 2 Advances, subject to Section 2.2
and 2.3.

 

“Equipment Advance” means an Equipment
Loan 1 Advance, or an Equipment Loan 2 Advance, as set forth in Section 2.3
hereof.

 

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

 

2.3           Equipment
Advances.

 

(a)           From
the date of this Agreement through and including the date of this Business
Financing Modification Agreement, Lender has made Equipment Advances to
Borrower for an aggregate principal amount of $273,514.41 (the “Equipment Loan
1 Advances”). The unpaid principal balance of all Equipment Loan 1 Advances as
of December 22, 2005 is $253,514.41, all of which shall be repaid in thirty-six
(36) equal monthly installments of principal, plus all accrued Finance Charges,
beginning on December 31, 2005, and continuing on the last day of each month
thereafter until all of the Equipment Loan 1 Advances have been repaid in full.

 

(b)           Subject
to the terms and conditions of this Agreement, from January 1, 2006 through the
earlier of June 30, 2006 or the Termination Date, Borrower may request
Equipment Advances of up to an aggregate principal amount of $750,000 to
finance the acquisition of Equipment (each an “Equipment Loan 2 Advance”).  Each Equipment Loan 2 Advance shall not
exceed 100% of the invoice price of Equipment approved by Lender from time to
time.  On the last day of each month,
Borrower shall pay Lender all accrued Finance Charges on all outstanding
Equipment Loan 2 Advances during such month. Any Equipment

 

1

 

Loan 2 Advances outstanding on the earlier of
(i) June 30, 2006 or (ii) the date that Borrower has requested Equipment Loan 2
Advances in an aggregate principal amount of $750,000 (the “Term Out Date”)
shall be payable in thirty-six (36) equal monthly installments of principal,
plus all accrued Finance Charges, beginning on the last day of the month after
the Term Out Date (or on the Term Out Date if such date is the last day of the
month) and continuing on the same day of each month thereafter until all of the
Equipment Loan 2 Advances have been repaid in full.

 

(c)           Once
the Equipment Loan 1 Advances and Equipment Loan 2 Advances are termed out, the
Finance Charge Percentage for Equipment Loan 1 Advances and Equipment Loan 2
Advances shall be fixed at such rate effective as of December 31, 2005, or the
Term Out Date, as applicable.  Equipment
Advances may be prepaid, but may not be reborrowed.  If this Agreement is terminated prior to all
Equipment Advances are paid in full, all outstanding principal balance plus all
accrued Finance Charges of Equipment Advances shall be due immediately.

 

3.             CONSISTENT
CHANGES.  The Existing Documents are
each hereby amended wherever necessary to reflect the changes described above.

 

4.             INTENTIONALLY
OMITTED.

 

5.             NO DEFENSES OF BORROWER/GENERAL RELEASE. 
Borrower agrees that, as of this date, it has no defenses against the
obligations to pay any amounts under the Indebtedness.  Each of Borrower and Guarantor (each, a “Releasing
Party”) acknowledges that Lender would not enter into this Business Financing
Modification Agreement without Releasing Party’s assurance that it has no
claims against Lender or any of Lender’s officers, directors, employees or
agents.  Except for the obligations
arising hereafter under this Business Financing Modification Agreement, each
Releasing Party releases Lender, and each of Lender’s and entity’s officers,
directors and employees from any known or unknown claims that Releasing Party
now has against Lender of any nature, including any claims that Releasing
Party, its successors, counsel, and advisors may in the future discover they
would have now had if they had known facts not now known to them, whether
founded in contract, in tort or pursuant to any other theory of liability,
including but not limited to any claims arising out of or related to the
Agreement or the transactions contemplated thereby.  Releasing Party waives the provisions of
California Civil Code section 1542, which states:

 

“A general release does not extend to
claims which the creditor does not know or suspect to exist in his favor at the
time of executing the release, which if known by him must have materially
affected his settlement with the debtor.”

 

The provisions, waivers and releases set
forth in this section are binding upon each Releasing Party and its
shareholders, agents, employees, assigns and successors in interest.  The provisions, waivers and releases of this
section shall inure to the benefit of Lender and its agents, employees,
officers, directors, assigns and successors in interest.  The provisions of this section shall survive
payment in full of the Obligations, full performance of all the terms of this
Business Financing Modification Agreement and the Agreement, and/or Lender’s
actions to exercise any remedy available under the Agreement or otherwise.

 

6.             CONTINUING
VALIDITY.  Borrower understands and
agrees that in modifying the existing Indebtedness, Lender is relying upon
Borrower’s representations, warranties, and agreements, as set forth in the
Existing Documents.  Except as expressly
modified pursuant to this Business Financing Modification Agreement, the terms
of the Existing Documents remain unchanged and in full force and effect.  Lender’s agreement to modifications to the
existing Indebtedness pursuant to this Business Financing Modification
Agreement in no way shall obligate Lender to make any future modifications to
the Indebtedness.  Nothing in this
Business Financing Modification Agreement shall constitute a satisfaction of
the Indebtedness.  It is the intention of
Lender and Borrower to retain as liable parties all makers and endorsers of
Existing Documents, unless the party is expressly released by Lender in
writing.  No maker, endorser, or
guarantor will be released by virtue of this Business Financing Modification
Agreement.  The terms of this paragraph
apply not only to this Business Financing Modification Agreement, but also to
any subsequent Business Financing modification agreements.

 

2

 

7.             REFERENCE
PROVISION.

 

a.             The parties prefer that any dispute between them be resolved in litigation
subject to a Jury Trial Waiver as set forth in the Loan Documents (defined
below), but the California Supreme Court has held that pre-dispute Jury Trial
Waivers not authorized by statute are unenforceable. This Reference Provision
will be applicable until: (i) the California Supreme Court holds that a
pre-dispute Jury Trial Waiver provision similar to that contained in the Loan
Documents is valid or enforceable; or (ii) the California Legislature enacts a
statute which becomes law, authorizing pre-dispute Jury Trial Waivers of the
type in the Loan Documents and, as a result, such waivers become
enforceable.  In addition, this Reference
Provision, if not already applicable as otherwise provided herein, will become
applicable, if a Court, contrary to a choice of law provision contained in the
Loan Documents, holds that the laws of the State of California apply to the
Loan Documents.

 

b.             Other than (i) nonjudicial foreclosure of security interests in real or
personal property,  (ii) the appointment
of a receiver or (iii) the exercise of other provisional remedies (any of which
may be initiated pursuant to applicable law), any controversy, dispute or claim
(each, a “Claim”) between the parties arising out of or relating to this
Agreement or any other document, instrument or agreement between Lender and the
undersigned (collectively in this Section, the “Loan Documents”), will be
resolved by a reference proceeding in California in accordance with the
provisions of Section 638 et seq. of the California Code of Civil Procedure (“CCP”),
or their successor sections, which shall constitute the exclusive remedy for
the resolution of any Claim, including whether the Claim is subject to the
reference proceeding.  Except as
otherwise provided in the Loan Documents, venue for the reference proceeding
will be in the Superior Court or Federal District Court in the County or District
where the real property, if any, is located or in a County or District where
venue is otherwise appropriate under applicable law (the “Court”).

 

c.             The referee shall be a retired Judge or Justice selected by mutual written
agreement of the parties.  If the parties
do not agree, the referee shall be selected by the Presiding Judge of the Court
(or his or her representative).  A
request for appointment of a referee may be heard on an ex parte or expedited
basis, and the parties agree that irreparable harm would result if ex parte
relief is not granted.  The referee shall
be appointed to sit with all the powers provided by law.  Pending appointment of the referee, the Court
has power to issue temporary or provisional remedies.

 

d.             The parties agree that time is of the essence in conducting the reference
proceedings.  Accordingly, the referee
shall be requested, subject to change in the time periods specified herein for
good cause shown, to (a) set the matter for a status and trial-setting
conference within fifteen (15) days after the date of selection of the referee,
(b) if practicable, try all issues of law or fact within ninety (90) days after
the date of the conference and (c) report a statement of decision within twenty
(20) days after the matter has been submitted for decision.

 

e.             The referee will have power to expand or limit the amount and duration of
discovery.  The referee may set or extend
discovery deadlines or cutoffs for good cause, including a party’s failure to
provide requested discovery for any reason whatsoever.  Unless otherwise ordered based upon good
cause shown, no party shall be entitled to “priority” in conducting discovery,
depositions may be taken by either party upon seven (7) days written notice,
and all other discovery shall be responded to within fifteen (15) days after
service.  All disputes relating to
discovery which cannot be resolved by the parties shall be submitted to the
referee whose decision shall be final and binding.

 

f.              Except as expressly set forth in this Agreement, the referee shall
determine the manner in which the reference proceeding is conducted including
the time and place of hearings, the order of presentation of evidence, and all
other questions that arise with respect to the course of the reference
proceeding.  All proceedings and hearings
conducted before the referee, except for trial, shall be conducted without a
court reporter, except that when any party so requests, a court reporter will
be used at any hearing conducted before the referee, and the referee will be
provided a courtesy copy of the transcript. 
The party making such a request shall have the obligation to arrange for
and pay the court reporter.  Subject to
the referee’s power to award costs to the prevailing party, the parties will
equally share the cost of the referee and the court reporter at trial.

 

g.             The referee shall be required to determine all issues in accordance with
existing case law and the statutory laws of the State of California.  The rules of evidence applicable to
proceedings at law in the State of California will be applicable to the
reference proceeding.  The referee shall
be empowered to enter equitable as well as legal relief, provide all temporary
or provisional remedies, enter equitable orders that will be binding on the parties
and rule on any motion which would be authorized in a trial, including without
limitation motions for summary judgment or summary adjudication.  The referee shall issue a decision and
pursuant to CCP §644 the referee’s decision shall be entered by the Court as a
judgment or an order in the same manner as if the action had been tried by the
Court.  The final judgment or order or
from any appealable decision or order

 

3

 

entered by the referee shall be fully appealable as
provided by law.  The parties reserve the
right to findings of fact, conclusions of laws, a written statement of
decision, and the right to move for a new trial or a different judgment, which
new trial, if granted, is also to be a reference proceeding under this
provision.

 

h.             If the enabling legislation which provides for appointment of a referee is
repealed (and no successor statute is enacted), any dispute between the parties
that would otherwise be determined by reference procedure will be resolved and
determined by arbitration.  The
arbitration will be conducted by a retired judge or Justice, in accordance with
the California Arbitration Act §1280 through §1294.2 of the CCP as amended from
time to time.  The limitations with
respect to discovery set forth above shall apply to any such arbitration
proceeding.

 

i.              THE PARTIES RECOGNIZE AND AGREE THAT ALL DISPUTES RESOLVED UNDER THIS
REFERENCE PROVISION WILL BE DECIDED BY A REFEREE AND NOT BY A JURY.  AFTER CONSULTING (OR HAVING HAD THE
OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR OWN CHOICE, EACH PARTY KNOWINGLY
AND VOLUNTARILY AND FOR THEIR MUTUAL BENEFIT AGREES THAT THIS REFERENCE
PROVISION WILL APPLY TO ANY DISPUTE BETWEEN THEM WHICH ARISES OUT OF OR IS
RELATED TO THIS AGREEMENT OR THE LOAN DOCUMENTS.

 

8.             COUNTERSIGNATURE.  This Business Financing Modification
Agreement 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

  	
   

  
										

 

4

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