Document:

EXHIBIT
10.2

 

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

 

WARRANT TO PURCHASE STOCK

 

Corporation: AML
Communications, Inc a Delaware Corporation

Number of Shares:
                   

Class of Stock: Series
Common Stock

Initial Exercise Price:
$0.24

Issue Date: 16 July, 2003

Expiration Date: 16 July,
2008

 

THIS WARRANT CERTIFIES
THAT, for other good and valuable consideration, (“Holder”) is entitled to
purchase the number of fully paid and nonassessable shares of the class of
securities (the “Shares”) of the corporation (the “Company”) at the initial
exercise price per Share (the  “Warrant Price”) all as set forth above
and as adjusted pursuant to Article 2 of this Warrant, subject to the  provisions
and upon the terms and conditions set forth in this Warrant.

 

ARTICLE 1.
EXERCISE.

 

1.1 Method of
Exercise. Holder may exercise this Warrant by delivering a duly executed
Notice of Exercise in substantially the form attached as Annex A or B to the
principal office of the Company. Unless Holder is exercising the conversion
right set forth in Section 1.2, Holder shall also deliver to the Company a
check 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 may
from time to time convert this Warrant, in whole or in part, into a number of
Shares determined by dividing (a) the aggregate fair market value of the Shares
or other securities otherwise issuable upon exercise of this Warrant minus the
aggregate Warrant Price of such Shares by (b) the fair market value of one
Share. The fair market value of the Shares shall be determined pursuant to
Section 1.3.

 

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

 

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

 

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

 

1

 

1.6                   Assumption
Upon Sale, Merger, or Consolidation of the Company

 

1.6.1. “Acquisition”.
For the purpose of this Warrant, “Acquisition” means any sale, license, or
other disposition of all or substantially all of the assets of the Company, or
any reorganization, consolidation, or merger of the Company where the holders
of the Company’s securities before the transaction beneficially own less than
50% of the outstanding voting securities of the surviving entity after the
transaction.

 

1.6.2. Assumption
of Warrant. Upon the closing of any Acquisition, the successor entity shall
assume  the
obligations of this Warrant, and this Warrant shall be exercisable for the same
securities, cash, and property as would be payable for the Shares issuable upon
exercise of the unexercised portion of this Warrant as if such Shares were
outstanding on the record date for the Acquisition and subsequent closing. The
Warrant 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 in
common stock, or other securities, subdivides the outstanding common stock into
a greater amount of common stock, or, if the Shares are securities other than
common stock, subdivides the Shares in a transaction that increases the amount
of common stock into which the Shares are convertible, then upon exercise of
this Warrant, for each Share acquired, Holder shall receive, without cost to
Holder, the total number and kind of securities to which Holder would have been
entitled had Holder owned the Shares of record as of the date the dividend or
subdivision occurred.

 

2.2 Reclassification,
Exchange or Substitution. Upon any reclassification, exchange,
substitution, or other event that results in a change of the number and/or
class of the securities issuable upon exercise or conversion of this Warrant,
Holder shall be entitled to receive, upon exercise or conversion of this
Warrant, the number and kind of securities and property that Holder would have
received for the Shares if this Warrant had been exercised immediately before
such reclassification, exchange, substitution, or other event. Such an event
shall include any automatic conversion of the outstanding or issuable
securities of the Company of the same class or series as the Shares to common
stock pursuant to the terms of the Company’s Articles of Incorporation upon the
closing of a registered public offering of the Company’s common stock. The
Company or its successor shall promptly issue to Holder a new Warrant for such
new securities or other property. The new Warrant shall provide for adjustments
which shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Article 2 including, without limitation, adjustments
to the Warrant Price and to the number of securities or property issuable upon
exercise of the new Warrant. The provisions of this Section 2.2 shall
similarly apply to successive reclassifications, exchanges, substitutions, or
other events.

 

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

 

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

 

2

 

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

 

2.6 Certificate as to
Adjustments. Upon each adjustment of the Warrant Price, the Company at its
expense shall promptly compute such adjustment, and furnish Holder with a
certificate of its Chief Financial Officer setting forth such adjustment and
the facts upon which such adjustment is based. The Company shall, upon written
request, furnish Holder a certificate setting forth the Warrant Price in effect
upon the date thereof and the series of adjustments leading to such Warrant
Price.

 

ARTICLE 3. REPRESENTATIONS
AND COVENANTS OF THE COMPANY.

 

3.1                                 Representations
and Warranties. The Company hereby represents and warrants to the Holder as
follows:

 

(a) The initial
Warrant 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-length
transaction in which at least $500,000 of the Shares were sold and (ii) the
fair market value of the Shares as of the date of this Warrant.

 

(b) All Shares
which may be issued upon the exercise of the purchase right represented by this
Warrant, shall, upon issuance, be duly authorized, validly issued, fully paid
and nonassessable, and free of any liens and encumbrances except for
restrictions on transfer provided for herein or under applicable federal and
state securities laws.

 

3.2                                 Notice
of Certain Events. If the Company proposes at any time (a) to declare any
dividend or distribution upon its common stock, whether in cash, property,
stock, or other securities and whether or not a regular cash dividend; (b) to
offer for subscription pro rata to the holders of any class or series of its
stock any additional shares of stock of any class or series or other rights;
(c) to effect any reclassification or recapitalization of common stock; (d) to
merge 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 the
opportunity to participate in an underwritten public offering of the company’s
securities for cash, then, in connection with each such event, the Company
shall give Holder (1) at least 20 days prior written notice of the date on
which a record will be taken for such dividend, distribution, or subscription
rights (and specifying the date on which the holders of common stock will be
entitled thereto) or for determining rights to vote, if any, in respect of the
matters referred to in (c) and (d) above; (2) in the case of the matters
referred to in (c) and (d) above at least 20 days prior written notice of the
date when the same will take place (and specifying the date on which the
holders of common stock will be entitled to exchange their common stock for
securities 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 as
is 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, the
Company shall deliver to the Holder (a) promptly after mailing, copies of all
notices 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, the
annual audited financial statements of the Company certified by independent
public accountants of recognized standing and (c) such other financial
statements required under and in accordance with any loan documents between
Holder and the Company (or if there are no such requirements or if the subject
loan(s) no longer are outstanding), then within forty-five (45) days after the
end of each of the first three quarters of each fiscal year, the Company’s
quarterly, unaudited financial statements.

 

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

 

3

 

ARTICLE 4. MISCELLANEOUS.

 

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

 

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

 

THIS SECURITY HAS NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT
BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION
THEREOF UNDER SUCH ACT OR PURSUANT TO RULE 144 OR AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE CORPORATION AND ITS COUNSEL THAT SUCH
REGISTRATION IS NOT REQUIRED.

 

4.3 Compliance with
Securities Laws on Transfer. This Warrant and the Shares issuable upon
exercise this Warrant (and the securities issuable, directly or indirectly,
upon conversion of the Shares, if any) may not be transferred or assigned in
whole or in part without compliance with applicable federal and state
securities laws by the transferor and the transferee (including, without
limitation, the delivery of investment representation letters and legal
opinions reasonably satisfactory to the Company, as reasonably requested by the
Company). The Company shall not require Holder to provide an opinion of counsel
if the transfer is to an affiliate of Holder or if there is no material
question as to the availability of current information as referenced in Rule
144(c), Holder represents that it has complied with Rule 144(d) and (e) in
reasonable detail, the selling broker represents that it has complied with Rule
144(f), and the Company is provided with a copy of Holder s notice of proposed
sale.

 

4.4 Transfer
Procedure.Subject to the provisions of Section 4.3, Holder may
transfer all or part of this Warrant or the Shares issuable upon exercise of
this Warrant (or the securities issuable, directly or indirectly, upon
conversion of the Shares, if any) to any affiliate of Holder, or, to any other
transferee by giving the Company notice of the portion of the Warrant being
transferred setting forth the name, address and taxpayer identification number
of the transferee and surrendering this Warrant to the Company for reissuance
to the transferee(s) (and Holder if applicable). Unless the Company is filing
financial information with the SEC pursuant to the Securities Exchange Act of
1934, the Company shall have the right to refuse to transfer any portion of
this Warrant to any person who directly competes with the Company.

 

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

 

	
  For the Company:

  1000, Avenida Acaso

  Camarillo

  CA 93012

  	
  For the Holder:

  

 

4.6 Waiver. This
Warrant and any term hereof may be changed, waived, discharged or terminated
only by an instrument in writing signed by the party against which enforcement
of such change, waiver, discharge or termination is sought.

 

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

 

Governing Law. This
Warrant shall be governed by and construed in accordance with the laws of the
State of California, without giving effect to its principles regarding
conflicts of law.

 

4

 

“COMPANY”

 

	
  AML Communications,
  Inc.

  
	
   

  
	
  By:

  
	
   

  
	
   

  
	
  Name: Jacob Inbar

  
	
   

  
	
  Title: Chairman of the
  Board, President & CEO

  
	
   

  
	
   

  
	
  By:

  
	
   

  
	
   

  
	
  Name:

  	
  Susan Fite

  
	
   

  	
   

  
	
  Title:

  	
  Director of Finance

  

 

5

 

ANNEX A

 

FORM OF EXERCISE NOTICE

 

(To be executed by the
registered holder hereof)

 

The undersigned
registered owner of this Warrant exercises this Warrant for the purchase of
                   
shares of Common Stock of AML Communications, a Delaware corporation, and
herewith makes payment therefor of
$                  
(such payment being made [check one] (x) o
in cash or by certified or official bank check or (y) o
by acceptance of a reduced number of shares of Common Stock upon cancellation
of this Warrant as provided in Section 2(b) of this Warrant, all on the
terms and conditions specified in this Warrant, and requests that (i)
certificates and/or other instruments covering such shares of Common Stock be
issued in accordance with the instructions given below and (ii) if such shares
of Common Stock shall not include all of the shares of Common Stock to which
the Holder is entitled under this Warrant, that a new Warrant for the
unpurchased balance of the shares of Common Stock issuable hereunder be
delivered to the undersigned. References in this Exercise Notice to “Common
Stock” shall include other securities or other property to the extent included
in 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

  	
   

  
						

 

*                                         Include
if applicable.

 

**                                  The
signature must correspond with the name as written upon the face of

the attached Warrant in every particular, without alteration.

 

 

6

 

ANNEX B

 

FORM OF ASSIGNMENT

 

(To be executed by the
registered holder hereof)

 

FOR VALUE RECEIVED the
undersigned registered owner of this Warrant hereby sells, assigns and
transfers unto the assignee named below all the rights of the undersigned under
this Warrant with respect to the number of shares of Common Stock covered
thereby set forth below to:

 

	
  Name of Assignee

  	
   

  	
  Address

  	
   

  	
  Number of

  Shares of

  Common Stock

  

 

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

 

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (Signature of
  Registered Holder)*

  
	
   

  	
   

  	
   

  
	
   

  	
  Name of Registered
  Holder

  
	
   

  	
  (Please Print)

  
	
   

  	
   

  
	
  Witness:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
						

 

*                                         The
signature must correspond with the name as written upon the face of

the attached Warrant in every particular, without alteration.

 

7EXHIBIT 10.3

 

ACCOUNTS
RECEIVABLE PURCHASE MODIFICATION AGREEMENT

 

This Accounts
Receivable Purchase Modification Agreement is entered into as of
September 24, 2003, by and between AML Communications, Inc. (the “Seller”)
and Silicon Valley Bank (“Buyer”).

 

1.                                       DESCRIPTION
OF EXISTING INDEBTEDNESS: Among other indebtedness which may be owing by
Seller to Buyer, Seller is indebted to Buyer pursuant to, among other
documents, an Accounts Receivable Purchase Agreement, dated November 20,
2001 by and between Seller and Buyer, as may be amended from time to time, (the
“Accounts Receivable Purchase Agreement”). 
The Accounts Receivable Purchase Agreement provides for, among other
things, an aggregate amount of all Purchased Receivable in the original amount
of One Million Dollars ($1,000,000.00). 
Capitalized terms used without definition herein shall have the meanings
assigned to them in the Accounts Receivable Purchase Agreement.

 

Hereinafter, all indebtedness owing by Seller to Buyer shall be referred
to as the “Indebtedness”.

 

2.                                       DESCRIPTION
OF COLLATERAL.   The Collateral as
described in the Accounts Receivable Purchase Agreement and in the Intellectual
Property Security Agreement secures repayment of the Indebtedness.

 

Hereinafter, the
above-described security documents and guaranties, together with all other
documents securing repayment of the Indebtedness shall be referred to as
the  “Security Documents”.  Hereinafter, the Security Documents,
together with all other documents evidencing or securing the Indebtedness shall
be referred to as the “Existing Documents”.

 

3.                                       DESCRIPTION
OF CHANGE IN TERMS.

 

A.                                   Modification(s)
to Accounts Receivable Purchase Agreement:

 

1.                                       Section 2.2 entitled “Acceptance of
Receivables” is hereby amended in part to provide that in no event shall the
aggregate amount of all Purchased Receivables outstanding at any time exceed
Two Million Dollars ($2,000,000.00).

 

2.                                       Section 3.2 entitled “Finance Charges” is
hereby amended in part to provide that Seller shall pay to Buyer a minimum of
$6,500 (Six Thousand Five Hundred Dollars) in Finance Charge on each
Reconciliation Period.

 

3.                                       Section 3.3 entitled “Collateral Handling Fee”
is hereby amended in part to provide that on each Reconciliation Date, Seller
will pay to Buyer a collateral handling fee, equal 0.75% per month of the
average Daily Account Balance outstanding during the applicable Reconciliation
Period.

 

4.                                       Section 3.7 entitled “Early Termination Fee” is
hereby amended in its entirety to read as follows:

 

A fully earned, non-refundable
early termination fee of $50,000 is due upon voluntary full payment of the
Obligations and termination of the Accounts Receivable Purchase Agreement prior
to November 20, 2004 unless the Obligations are paid in full from an
initial advance from a loan agreement with Silicon Valley Bank.

 

1

 

5.                                       Section 17 entitled “Term and Termination” is
hereby amended in part to provide that the term of the Loan Agreement shall be
through November 20, 2004 unless terminated in writing by Buyer or Seller.

 

 

B.                                     Modification
to the IP Agreement:

 

Item “(g)” under
Section 3 entitled “Covenants and Warranties” is hereby amended to read as
follows:

 

Grantor shall not register any Copyrights or Mask Works with the United
States Copyright Office unless it: (i) has given at least fifteen (15) days’
prior notice to Bank of its intent to register such Copyrights or Mask Works
and has provided Bank with a copy of the application it intends to file with
the United States Copyright Office (excluding exhibits thereto); (ii) executes
a security agreement or such other documents as Bank may reasonably request in
order to maintain the perfection and priority of Bank’s security interest in
the Copyrights proposed to be registered with the United States Copyright
Office; and (iii) records such security documents with the United States
Copyright Office contemporaneously with filing the Copyright application(s)
with the United States Copyright Office. 
Grantor shall promptly provide to Bank a copy of the Copyright
application(s) filed with the United States Copyright Office, together with
evidence of the recording of the security documents necessary for Bank to
maintain the perfection and priority of its security interest in such
Copyrights or Mask Works.  Grantor shall
provide written notice to Bank of any application filed by Grantor in the
United States Patent Trademark Office for a patent or to register a trademark
or service mark within 30 days of any such filing;

 

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

 

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

 

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

 

7.                                       COUNTERSIGNATURE.  This Accounts Receivable Purchase Modification
Agreement shall become effective only when executed by Seller and Buyer.

 

	
  SELLER:

  	
  BUYER:

  
	
   

  	
   

  
	
  AML COMMUNICATIONS,
  INC.

  	
  SILICON VALLEY BANK

  

 

2

 

	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  Name:

  	
  Jacob Inbar

  	
   

  	
  Name:

  	
  Robert Anderson

  	
   

  
	
  Title:

  	
  President and CEO

  	
   

  	
  Title:

  	
  Vice-President

  	
   

  
									

 

3

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