<PAGE>
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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for use of the
Commission only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
AML COMMUNICATIONS
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER 22, 1999
Dear Stockholder:
You are cordially invited to attend the 1999 Annual Meeting of Stockholders
of AML Communications, Inc., which will be held on Wednesday, September 22,
1999, at 10:00 a.m. at the office of the Company, 1000 Avenida Acaso,
Camarillo, California 93012.
At the Annual Meeting, stockholders will be asked to consider the following
proposals:
1. To elect two Class I directors as described in the accompanying Proxy
Statement to hold office until the 2002 Annual Meeting of Stockholders and
until their successors are duly elected and qualified.
2. To transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on July 28, 1999 as
the Record Date for the determination of stockholders entitled to notice of
and to vote at the Annual Meeting. Only stockholders of record as of the
Record Date are entitled to such notice and to vote at the Annual Meeting. A
list of stockholders entitled to vote at the Annual Meeting will be open to
examination by any stockholder for any purpose germane to the Annual Meeting
during normal business hours from September 8, 1999 until September 21, 1999,
at the Company's offices located at 1000 Avenida Acaso, Camarillo, California.
All of the Company's stockholders are invited to attend the Annual Meeting.
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING,
PLEASE SIGN, DATE AND MAIL THE ENCLOSED PROXY CARD IN THE PRE-ADDRESSED
ENVELOPE PROVIDED WITH THIS NOTICE. NO ADDITIONAL POSTAGE IS REQUIRED IF
MAILED IN THE UNITED STATES. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY VOTE IN
PERSON, EVEN IF YOU SEND IN YOUR PROXY TO THE MEETING.
By Order of the Board of Directors,
Scott T. Behan
Secretary
Camarillo, California
August 6, 1999
<PAGE>
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
September 22, 1999
Approximate date of mailing: August 6, 1999
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of AML Communications, Inc. (the "Company" or "AML") of
proxies for use at the 1999 Annual Meeting of Stockholders of AML
Communications, Inc. (the "Annual Meeting") to be held on Wednesday, September
22, 1999, at 10:00 a.m. at the office of the Company, 1000 Avenida Acaso,
Camarillo, California 93012 and at any adjournment(s) or postponement(s)
thereof.
VOTING RIGHTS
Stockholders of record of AML as of the close of business on July 28, 1999
(the "Record Date") have the right to receive notice of and to vote at the
Annual Meeting. On July 23, 1999, AML had issued and outstanding 6,266,070
shares of Common Stock, $.01 par value (the "Common Stock"), the only class of
voting securities outstanding. The Company owns 114,500 additional shares of
treasury stock as a result of a stock buyback during the year. The Company is
not entitled to vote such shares, nor are they counted for quorum purposes.
Each stockholder of record as of the Record Date will be entitled to one
vote for each share of Common Stock held as of the Record Date. The presence
at the Annual Meeting in person or by proxy of a majority of the shares of
Common Stock outstanding as of the Record Date will constitute a quorum for
transacting business. Abstentions are counted for purposes of determining the
presence of a quorum for the transaction of business. With regard to the
election of directors, votes may be cast in favor or withheld; votes that are
withheld will be excluded entirely from the vote and will have no effect.
Abstentions may be specified on proposals other than the election of
directors, and will be counted as present for purposes of the item on which
the abstention is noted, and therefore counted in the tabulation of the votes
cast on a proposal with the effect of a negative vote. Under applicable
Delaware law, broker non-votes are not counted for purposes of determining the
votes cast on a proposal.
PERSONS MAKING THE SOLICITATION
The Proxy is solicited on behalf of the Board of Directors of the Company.
The only solicitation materials to be sent to stockholders will be this Proxy
Statement and the accompanying Proxy. The Board of Directors does not intend
to use specially engaged employees or paid solicitors. The Board of Directors
also intends to solicit Proxies held on behalf of stockholders by brokers,
dealers, banks and voting trustees or their nominees. The Company will pay all
reasonable expenses by such holders for mailing the solicitation material to
the stockholders for whom they hold shares. All solicitation expenses are
being paid by the Company.
2
<PAGE>
TERMS OF THE PROXY
The enclosed Proxy indicates the matters to be acted upon at the Annual
Meeting and provides a box to be marked to indicate the manner in which the
stockholder's shares are to be voted with respect to such matters. By
appropriately marking the boxes, a stockholder may specify, with respect to
the election of directors, whether the Proxy holder shall vote for or be
without authority to vote on any or all candidates; and with respect to all
other matters, whether the Proxy holder shall vote for or against or be
without authority to vote on such matters.
The Proxy also confers upon the holders thereof discretionary voting
authority with respect to such other business as may properly come before the
Annual Meeting.
Where a stockholder has appropriately directed how the Proxy is to be voted,
the shares will be voted in accordance with the stockholder's direction. In
the absence of instructions, shares represented by valid Proxies will be voted
for the two nominees for director. If any other matters are properly presented
at the Annual Meeting, the persons named in the Proxy will vote or refrain
from voting in accordance with their best judgment. A Proxy may be revoked at
any time prior to its exercise by giving written notice of the revocation
thereof to the Corporate Secretary of the Company or by filing a duly executed
Proxy bearing a later date. Stockholders may also vote in person if they
attend the Annual Meeting even though they have executed and returned a Proxy.
The Company's principal executive offices are located at 1000 Avenida Acaso,
Camarillo, California 93012 and its phone number is (805) 388-1345.
3
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information with respect to the
beneficial ownership of the Common Stock of the Company as of July 23, 1999,
by (i) each person known to the Company to own beneficially more than 5% of
the outstanding Common Stock, (ii) each Director of the Company, (iii) the
Chief Executive Officer and the four most highly compensated officers
(collectively, the "Named Executive Officers") and (iv) all Directors and
executive officers as a group. Except as otherwise noted, each named
beneficial owner has sole voting and investment power with respect to the
shares owned.
<TABLE>
<CAPTION>
Amount and
Nature of Percent of
Beneficial Outstanding
Ownership of Common
Beneficial Owner Common Stock Stock(1)
---------------- ------------ -----------
<S> <C> <C>
Jacob Inbar(2).................................. 1,162,023(3) 18.5%
Tiberiu Mazilu(2)............................... 936,439(4) 14.9%
Edwin J. McAvoy(2).............................. 303,573(5)(6) 4.8%
Scott T. Behan(2)............................... 156,536(7) 2.5%
Kirk A. Waldron(2).............................. 33,000(8) *
Richard W. Flatow(2)............................ 22,500(9) *
David A. Derby(2)............................... 22,500(10) *
Gerald M. Starek(2)............................. 20,000 *
All current executive officers and directors
as a group (7 persons)(11)(12)................. 2,352,998 37.1%
</TABLE>
- --------
*Represents less than 1%.
(1) Applicable percentage of ownership is based on 6,266,070 shares of Common
Stock outstanding as of July 23, 1999, together with applicable options
for such stockholder exercisable within 60 days, but not including
114,500 shares of treasury stock. Shares of Common Stock subject to
options exercisable within 60 days are deemed outstanding for computing
the percentage ownership of the person holding such options, but are not
deemed outstanding for computing the percentage of any other person.
(2) The address of such person is 1000 Avenida Acaso, Camarillo, California
93012.
(3) All shares, other than option shares issuable pursuant to options, are
held in the Inbar Trust U/A/D 3/13/90. Mr. Inbar and his wife, Catherine
Inbar, are the trustees with shared voting power with respect to such
shares.
(4) Includes 244,422 shares owned by Dr. Mazilu's minor child, beneficial
ownership of which is expressly disclaimed by Dr. Mazilu.
(5) All shares, other than option shares, are held in the Ed and Marlene
McAvoy Trust. Mr. McAvoy and his wife, Marlene McAvoy, are trustees with
shared voting power with respect to such shares.
(6) Includes 5,076 shares owned by Mr. McAvoy's adult child residing in the
same household, beneficial ownership of which is expressly disclaimed by
Mr. McAvoy.
(7) Includes 7,500 shares issuable pursuant to options exercisable within 60
days.
(8) Includes 32,500 shares issuable pursuant to options exercisable within 60
days.
(9) Includes 22,500 shares issuable pursuant to options exercisable within 60
days.
(10) Includes 18,750 shares issuable pursuant to options exercisable within 60
days.
(11) Mr. McAvoy resigned his position as a Director and Officer effective
February 23, 1999. His shares are not included in the calculation of
percentage ownership or total shares of the current executive officers
and directors as a group.
(12) Shares of Common Stock subject to options exercisable within 60 days are
deemed outstanding for computing the percentage ownership of all current
executive officers and directors as a group.
4
<PAGE>
ELECTION OF DIRECTORS
The Board of Directors of the Company is divided into three classes, Class
I, Class II and Class III, each serving for three-year terms, which are
staggered to provide for the election of approximately one-third of the Board
members each year. Two Class I directors are to be elected at the Annual
Meeting to hold office until the 2002 Annual Meeting of Stockholders and until
thier successors have been elected and qualified. Each Proxy, unless otherwise
specified, will be voted for the election to the Board of Directors for the
nominees set forth below. The Directors shall be elected by a plurality of the
votes of shares present in person or represented by proxy at the meeting.
In the event that a nominee for director listed below should become
unavailable for election for any reason, the persons named in the accompanying
Proxy have the right to use their discretion to vote for such other person as
may be determined by the holders of such proxies. To the best of the Company's
knowledge, the nominees are and will be available to serve.
The following table sets forth the names and ages of the nominees for
directors, and each other present director whose term of office does not
expire in 1999, the year he was first elected as a director and his positions
held with the Company.
Nominees for term expiring in 2002:
<TABLE>
<CAPTION>
Director Term to
Name Age Positions Since Expire
---- --- --------- -------- -------
<C> <S> <C> <C> <C>
Scott T. Behan.... 38 Executive Vice President, Sales and Marketing 1999 2002
and Director
Richard W. Flatow. 58 Director 1995 2002
Directors whose terms expire in or after 2000 and who are not currently
nominees for re-election:
Kirk A. Waldron... 36 President, Chief Executive Officer and Director 1999 2000
David A. Derby.... 58 Director 1995 2000
Jacob Inbar....... 50 Chairman of the Board 1986 2001
Gerald M. Starek.. 58 Director 1999 2001
</TABLE>
Background of the Nominees and Directors
Scott T. Behan has been a Director and Executive Vice President of Sales and
Marketing of the Company since February 1999, and has been a Director of
Interactive Buyers Network, a high-tech Internet E-commerce service provider,
since 1998. From 1994 up until his current appointment, Mr. Behan served as
the Company's Vice President of New Business Development. From 1987 to 1994,
Mr. Behan held a variety of engineering and sales and marketing positions
within the Company. Mr. Behan holds a B.S. in Electrical Engineering from
Worcester Polytechnic Institute.
Richard W. Flatow has been a Director of the Company since December 1995 and
has been the President of RWF Enterprises, a management consulting firm, since
1994. From 1993 to 1994, Mr. Flatow was President and Chief Executive Officer
of Futurekids, Inc., a franchiser of computer training for children.
Previously, Mr. Flatow was a Managing Partner and Senior Consultant for Hankin
& Co., a middle-market management consulting firm.
Kirk A. Waldron has been a Director, President and Chief Executive Officer
of the Company since February 1999. From 1996 up until his current
appointment, Mr. Waldron served as the Company's Chief Financial Officer and
in 1998 he was appointed as the Company's Chief Operating Officer. From 1994
to 1996, Mr. Waldron was Chief Financial Officer at Dynamotion/ATI Corp., a
publicly held high-tech manufacturer of precision drilling equipment. Mr.
Waldron holds a B.S. in Business Administration from the University of
Southern California.
5
<PAGE>
David A. Derby has been a Director of the Company since December 1995, and
has been President, Chief Executive Officer and a Director of Datron Systems
Incorporated (Nasdaq: DTSI), a manufacturer of radio and satellite
communication systems and products, since May 1982. In April 1998, Mr. Derby
was elected Chairman of the Board of Datron Systems Incorporated.
Jacob Inbar is a co-founder of the Company and has been a Director and
Chairman of the Board since September 1985. From 1986 to 1999, Mr. Inbar
served as President and Chief Executive Officer of the Company. Mr. Inbar
holds a B.S. in Electrical Engineering from Ben Gurion University, Israel and
an M.B.A. from California Lutheran University.
Gerald M. Starek has been a Director of the Company since March 1999, and
has served as a Director of Advanced Energy Industries, Inc. since 1998. From
1993 to 1995, Mr. Starek served on the Board of Directors of Systems
Chemistry, Inc., a privately held company that was purchased in 1995 by
SubMicron Systems, Inc.. Previously, Mr. Starek served as President, Chief
Executive Officer and Chairman of the Silicon Valley Group, a supplier of
automated wafer processing equipment for the semiconductor industry that he
founded in 1977.
Committees of the Board
The Board of Directors has delegated certain of its authority to a
Compensation Committee and an Audit Committee. Both Committees are composed of
Messrs. Flatow, Derby and Starek, with Mr. Flatow serving as chairman of the
Compensation Committee and Mr. Derby serving as chairman of the Audit
Committee. No member of either committee is a former or current officer or
employee of the Company.
The Compensation Committee reviews executive salaries and administers any
bonus, incentive compensation and stock option plans of the Company, including
the Company's Amended and Restated 1995 Stock Incentive Plan. In addition, the
Compensation Committee consults with management of the Company regarding
pension and other benefit plans, and compensation policies and practices of
the Company.
The Audit Committee reviews the professional services provided by the
Company's independent auditors, the independence of such auditors from
management of the Company, the annual financial statements of the Company and
the Company's system of internal accounting controls. The Audit Committee also
reviews such other matters with respect to the accounting, auditing and
financial reporting practices and procedures of the Company as it may find
appropriate or as may be brought to its attention.
The Company does not have a nominating committee. Nominations for the
election of directors are made by the full Board of Directors.
Board and Committee Attendance
From April 1, 1998 through March 31, 1999, the end of the Company's fiscal
year, the Board of Directors held ten meetings. Each director attended 75% or
more of the total number of meetings of the Board of Directors, including
meetings of committees of which he was a member, held during the period for
which he has been a director. The Audit Committee held one meeting and the
Compensation Committee held seven meetings during the fiscal year.
Compensation of Directors
Directors who are also officers of the Company receive no additional
compensation for their services as directors. Each of the nonemployee
directors receives an annual retainer of $6,000 for serving on the Board and
$500 for each Board or Committee meeting attended, plus out-of-pocket
expenses. In addition, under the terms of the Company's Amended and Restated
1995 Stock Incentive Plan, each Nonemployee Director may receive discretionary
awards of shares of Common Stock subject to the terms of the Plan. Nonemployee
Directors shall not be eligible to be considered for the grant of Incentive
Stock Options. No Nonemployee Director shall be granted Options in excess of
25,000 shares of Common Stock during any one calendar year.
6
<PAGE>
Executive Compensation
The following table sets forth certain information regarding the
compensation paid by the Company to the Named Executive Officers who received
salary and bonuses in excess of $100,000 during the fiscal year ended March
31, 1999 as well as the previous two fiscal years, for all services rendered
in all capacities to the Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation(1)
---------------------------
All
Name and Principal Position FY Salary(2) Bonus Other(3)
- --------------------------- ---- -------- ------ --------
<S> <C> <C> <C> <C>
Kirk A. Waldron.............................. 1999 $111,096 $ -- $ --
President and Chief Executive Officer(7) 1998 101,154 11,000 3,860
1997 26,923(8) 12,000 --
Scott T. Behan............................... 1999 108,862 -- --
Executive Vice President of Sales and 1998 102,800 10,500 4,083
Marketing(7) 1997 87,308 15,000 6,462
Tiberiu Mazilu............................... 1999 127,189 -- --
Vice President Engineering(5) 1998 136,607 13,000 5,753
1997 132,405 16,000 6,480
Jacob Inbar.................................. 1999 160,186 -- --
Chairman of the Board(4) 1998 175,565 17,000 6,108
1997 163,560 23,000 6,480
Edwin J. McAvoy.............................. 1999 128,259 -- --
Director of Programs(6) 1998 134,532 13,000 5,654
1997 129,271 16,000 6,480
</TABLE>
- --------
(1) Other than salary, bonus and the other compensation described herein, the
Company did not pay any Named Executive Officer any compensation,
including incidental personal benefits, in excess of 10% of such Named
Executive Officer's salary.
(2) Salary includes amounts deferred pursuant to the Company's 401(k) plan.
(3) The amounts shown represent Company contributions to the Company's 401(k)
plan and profit sharing plans for the benefit of the Named Executive
Officer.
(4) Mr. Inbar resigned his position as President and Chief Executive Officer
effective February 23, 1999. He entered into an employment contract with
the Company at that time. See Employment Contracts and Change in Control
Agreements.
(5) Mr. Mazilu resigned his position as a Director effective February 23,
1999. He entered into an employment agreement with the Company at that
time. See Employment Contracts and Change in Control Agreements.
(6) Mr. McAvoy resigned his position as Vice President of Sales and Marketing
and Director effective February 23, 1999. He entered into an employment
contract with the Company at that time. See Employment Contracts and
Change in Control Agreements.
(7) Mr. Waldron and Mr. Behan were appointed President and Chief Executive
Officer and Executive Vice President of Sales and Marketing, respectively,
of the Company on February 23, 1999.
(8) Reflects compensation starting December 16, 1996, the date Mr. Waldron
commenced employment with the Company. Mr. Waldron was appointed Chief
Executive Officer of the Company on February 23, 1999.
7
<PAGE>
Option Grants in Last Fiscal Year
The following table sets forth certain information concerning grants of
options to each of the Company's Named Executive Officers during the fiscal
year ended March 31, 1999. In addition, in accordance with the rules and
regulations of the Securities and Exchange Commission, the following table
sets forth the hypothetical gains that would exist for the options based on
the assumption that the stock price were to appreciate annually by 5% and 10%
respectively. The rates do not represent the Company's estimate or projection
of future Common Stock prices and no assurance can be given that the share
price will appreciate at the rates shown in the table.
OPTION GRANTS DURING FISCAL 1999
<TABLE>
<CAPTION>
Potential
Realizable Value
at Assumed
Annual Rates
of Stock Price
Number of % of Total Appreciation
Securities Options Granted Exercise for Option Term
Underlying to Employees in Price Expiration -----------------
Name Options Granted Fiscal Year(1) ($/Share) Date(2) 5% 10%
---- --------------- --------------- -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Kirk A. Waldron......... 30,000 10.1% 3.875 6/24/08 $189,359 $301,523
50,000 16.8% 1.281 2/23/09 104,331 166,129
Scott T. Behan.......... 30,000 10.1% 3.875 6/24/08 189,359 301,523
50,000 16.8% 1.281 2/23/09 104,331 166,129
Tiberiu Mazilu.......... -- -- -- -- -- --
Jacob Inbar............. -- -- -- -- -- --
Edwin J. McAvoy......... -- -- -- -- -- --
</TABLE>
- --------
(1) Options to purchase an aggregate of 298,500 shares of Common Stock were
granted to employees, including the Named Executive Officers, during the
fiscal year ending March 31, 1999 with exercise prices ranging from $1.00
to $3.88 per share, in each case the fair market value of the Common Stock
on the date of grant. All such options are subject to vesting over a four-
year period, with 25% of the options exercisable on each successive
anniversary of the date of grant.
(2) Options granted have a term of 5 or 10 years, subject to earlier
termination in certain events related to termination of employment.
Option Exercises and Fiscal Year-End Option Values
The following table sets forth certain information with respect to the
unexercised options to purchase Common Stock held by each of the Named
Executive Officers as of March 31, 1999:
<TABLE>
<CAPTION>
Fiscal Year-End Option Values
----------------------------------------------------
Number of Securities
Underlying Unexercised Value of Unexercised In-
Options/SARs at FY end the Money Options/SARs
Shares (#) at FY end ($)(2)
Acquired Value -------------------------- -------------------------
on Exercise Realized(1) Exercisable Unexercisable Exercisable Unexercisable
----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Kirk A. Waldron......... -- $ -- 12,500(4) 117,500(5) $ -- $ --
Scott T. Behan.......... -- -- -- 80,000(3) -- --
Tiberiu Mazilu.......... -- -- -- -- -- --
Jacob Inbar............. 60,766 $51,019 -- -- -- --
Edwin McAvoy............ -- -- -- -- -- --
</TABLE>
- --------
(1) Market value of the Company's Common Stock at the exercise date minus the
exercise price.
(2) Fair market value of the Common Stock as of March 31, 1999 represents the
closing trading price of the Common Stock on such date ($1.13 per share)
minus the exercise price.
(3) Represents options granted in June 1998 and February 1999.
(4) Represents options granted in April 1997.
(5) Represents options granted in April 1997, June 1998 and February 1999.
8
<PAGE>
Employment Contracts and Change in Control Agreements
The Company has entered into employment agreements with Jacob Inbar, Tiberiu
Mazilu and Edwin McAvoy (collectively, the "Employees"). The Employees are
eligible to participate in the Company's employee benefits plans and executive
compensation programs for the duration of the contract period(s).
In February 1999, upon his resignation as the Company's President and Chief
Executive Officer, the Company entered into an employment agreement with Jacob
Inbar, effective through August 2001. This agreement is a matter of separate
inducement from his current position as Chairman of the Board, for the
performance of such part-time duties, functions, responsibilities and
authority as are consistent with that of a Chairman, working part-time, former
senior executive and co-founder of the Company. The terms of the agreement are
such that he receives an aggregate base salary ("Annual Base Salary")
comprised of an annual salary ("Annual Salary") and an initial annual bonus
("Initial Annual Bonus"). The Annual Salary for the first year will be in the
amount of $12,000. The Annual Salary for the second year and a half is to be
negotiated between Mr. Inbar and the Chief Executive Officer, but will in no
cases be less than the first year amount. The Initial Annual Bonus will be in
the amount of $58,000 per year of the contract, including a pro rata amount of
this annual rate for the last six months of the contract. The Initial Annual
Bonus is payable in advance on a quarterly basis. In addition Mr. Inbar will
receive a $400 a month office stipend for the duration of the contract and the
Company will continue to provide Mr. Inbar with an automobile comparable to
the automobile provided to him at the time of the agreement, including all
expenses related to the business use thereof (including insurance, gasoline
and maintenance) through December 1, 1999. The agreement also provides that in
the event Mr. Inbar's employment is terminated by the Company at any time
during the duration of the employment agreement, for reasons of disability,
good reason, without cause or by mutual agreement, Mr. Inbar will receive
severance compensation in an amount equal to the Annual Base Salary payable in
bi-weekly increments through August 23, 2001. In addition, all unvested stock
options, restricted stock and other awards issued pursuant to the Stock
Incentive Plan shall immediately vest and the Company shall continue to
provide Mr. Inbar and his dependents with medical benefits for the duration of
the employment contract.
In February 1999, upon his resignation as the Company's Vice President of
Sales and Marketing and a Director, the Company entered into an employment
agreement with Edwin J. McAvoy, effective through February 23, 2001. This
agreement was made in the interest of retaining Mr. McAvoy in the position of
Director of Programs of the Company. The terms of the agreement are such that
he receives an annual base salary of $117,000 payable in accordance with the
Company's normal payment practices. In addition, Mr. McAvoy will be provided
with an automobile comparable to the automobile provided to him at the time of
the agreement, including all expenses related to the business use thereof
(including insurance, gasoline and maintenance) through December 26, 1999. The
agreement also provides that in the event Mr. McAvoy's employment is
terminated by the Company within the first twelve months of the employment
term, for reasons of disability, good reason, or without, Mr. McAvoy will
receive severance compensation in an amount equal to the Annual Base Salary
effective upon the date of Termination, pro-rated bi-weekly, through August
23, 2000. If Mr. McAvoy's employment is terminated by the Company within the
second twelve months of the employment contract, Mr. McAvoy will receive
severance compensation in an amount equal to the Annual Base Salary effective
upon the date of Termination, pro-rated bi-weekly, for a period of six months
from the date of Termination. In addition, all theretofore unvested stock
options, restricted stock and other awards issued pursuant to the Stock
Incentive Plan shall immediately vest and the Company shall continue to
provide Mr. McAvoy and his dependents with medical benefits for the duration
of the employment contract.
In February 1999, upon his resignation as a Director, the Company entered
into an employment agreement with Tiberiu Mazilu, effective through February
23, 2001. This agreement was made in the interest of retaining Mr. Mazilu in
the position as an Executive and Vice President of Engineering of the Company
for the first year of the contract, and as a consultant for the second year of
the contract. The terms of the agreement are such that he receives an annual
base salary of $117,000 for the first year of the contract, and $58,500 for
the second year of the contract, both amounts payable in accordance with the
Company's normal payment practices. In addition, Mr. Mazilu will be provided
with an automobile comparable to the automobile provided to him at the time of
9
<PAGE>
the agreement, including all expenses related to the business use thereof
(including insurance, gasoline and maintenance) through November 11, 1999. The
agreement also provides that in the event Mr. Mazilu's employment is
terminated by the Company within the first twelve months of the employment
term, for reasons of disability, good reason, or without, Mr. Mazilu will
receive severance compensation in an amount equal to the Annual Base Salary
effective upon the date of Termination, pro-rated bi-weekly, through August
23, 2000. If Mr. Mazilu's employment is terminated by the Company within the
second twelve months of the employment contract, Mr. Mazilu will receive
severance compensation in an amount equal to the Annual Base Salary effective
upon the date of Termination, pro-rated bi-weekly, for a period of six months
from the date of Termination. In addition, all theretofore unvested stock
options, restricted stock and other awards issued pursuant to the Stock
Incentive Plan shall immediately vest and the Company shall continue to
provide Mr. Mazilu and his dependents with medical benefits for the duration
of the employment contract.
The Company has entered into a Change in Control Agreement with Kirk A.
Waldron. In August 1998, in the interest of retaining Mr. Waldron's services,
the Company entered into a Change in Control Agreement with Mr. Waldron. In
the case where the Company is consolidated or merged with or into another
corporation or corporations in which the stockholders of the Company
immediately prior to the consolidation or merger do not retain a majority of
the voting power of the surviving corporation or a sale of all or
substantially all of the assets of the Company, and Mr. Waldron's employment
is terminated within one year of the effective date of the Change in Control,
he would be entitled to a severance payment equal to his annual base salary,
at the rate in effect immediately prior to such Change in Control, payable in
a single lump sum payment within ten days of the effective date of such Change
in Control, or immediately upon termination. This agreement is binding upon
all successors and assigns and is effective for as long as the Executive is an
employee of the Company.
Legal Proceedings
The Company may be subject, from time to time, to various legal proceedings
relating to claims arising out of its operations in the ordinary course of its
business. Two purported class action lawsuits have been filed against the
Company and certain of its current and former officers and directors. The
first lawsuit, entitled Ronny Sussman v. AML Communications, Inc., et al.,
Case No. 179776, was filed on March 19, 1998 in the Superior Court for the
State of California (Ventura County) (the "State Action"). The second lawsuit,
entitled Ronny Sussman v. AML Communications, Inc., et al., Case No. 98-2010
CAS (Ex) (C.D. Cal.), was filed on March 20, 1998 in the federal district
court in Los Angeles, California (the "Federal Action"). The individual
defendants named in both of the actions are Jacob Inbar (the Company's then
President, Chief Executive Officer and Chairman of the Board of Directors),
Tiberiu Mazilu (the Company's then Vice President of Custom Products and a
member of the Board of Directors), Edwin J. McAvoy (the Company's then Vice
President of Sales and Marketing and a member of the Board of Directors),
Scott T. Behan (the Company's then Vice President of New Product Development)
and William E. Sheridan III (the Company's then Chief Financial Officer).
While the Federal Action asserts claims under the federal securities laws and
the State Action asserts claims under California's securities laws, the
complaints are otherwise essentially identical. The complaints allege that
during the purported class period of April 10, 1996 to March 25, 1997,
defendants made overly optimistic estimates regarding the Company's
anticipated financial performance for fiscal years 1997 and 1998, and overly
optimistic statements regarding the Company's ability to develop and to sell
new products for the PCS market, all allegedly in order to profit from insider
trading at artificially inflated prices.
In the Federal Action, four lead plaintiffs and co-lead council were
appointed on June 29, 1998 pursuant to the Private Securities Litigation
Reform Act of 1995. On September 3, 1998 plaintiffs filed an amended complaint
by filing a motion to dismiss the case. Plaintiff's opposition to the motion
was filed on December 3, 1998. The motion was heard by the court on February
8, 1999 and the judge has taken the motion under advisement. All discovery is
stayed in the federal action unless and until it is determined that plaintiffs
have stated an actionable claim. The Company denies the material allegations
in the complaints and intends to defend the actions vigorously. An adverse
determination could have a material adverse effect upon the Company.
10
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In the State Action, all proceedings have been stayed until the stay of
discovery is lifted in the federal action. Plaintiffs also intend to file an
amended complaint in the state action once the case proceeds. The Company's
response will be due 45 days after the filing of the amended complaint. The
Company intends to respond by filing a demurrer, which is the California
equivalent of a motion to dismiss for failure to state an actionable claim.
The Company and its legal counsel are currently evaluating the claims. At
this stage, it is not possible to predict the outcome or determine a range of
possible losses, if any. The Company, its directors and officers deny the
material allegations in the complaints and intend to defend the actions
vigorously. An adverse determination could have a material adverse effect upon
the Company's financial position or results of operations. During the year
ended March 31, 1998, the Company recorded $150,000 as costs related to these
lawsuits. There were no additional costs recorded related to this lawsuit
during the fiscal year ended March 31, 1999.
The Company currently is not party to any other legal proceedings, the
adverse outcome of which, individually or in the aggregate, management
believes would have a material adverse effect on the business, financial
condition or results of operations of the Company.
Indemnification
The General Corporation Law of the State of Delaware, the state of
incorporation of the Company, and the Bylaws of the Company provide for
indemnification of directors and officers. Section 145 of the Delaware General
Corporation Law provides generally that a person sued as a director, officer,
employee or agent of a corporation may be indemnified by the corporation for
reasonable expenses, including attorneys' fees, if, in cases other than
actions brought by or in the right of the corporation, he or she has acted in
good faith and in a manner he or she reasonably believed to be in, or not
opposed to, the best interests of the corporation (and in the case of a
criminal proceeding, had no reasonable cause to believe that his or her
conduct was unlawful). Section 145 provides that no indemnification for any
claim or matter may be made, in the case of an action brought by or in the
right of the corporation, if the person has been adjudged to be liable, unless
the Court of Chancery or other court determines that indemnity is fair and
reasonable despite the adjudication of liability. Indemnification is
mandatory, in the case of a director, officer, employee or agent who has been
successful on the merits, or otherwise, in defense of a suit against him or
her. The determination of whether a director, officer, employee or agent
should be indemnified must be made by a majority of disinterested directors,
independent legal counsel or the stockholders.
Directors and officers of the Company are covered under policies of
directors' and officers' liability insurance. The directors and officers are
parties to Indemnity Agreements (the "Indemnity Agreements"). The Indemnity
Agreements provide indemnification for the directors and officers in the event
the directors' and officers' liability insurance does not cover a particular
claim for indemnification or if such a claim or claims exceed the limits of
such coverage. The Indemnity Agreements are generally intended to provide
indemnification for any amounts a director or officer is legally obligated to
pay because of claims arising out of the director's or officer's service to
the Company.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires directors, certain officers of
the Company and persons holding more than 10% of the Company's Common Stock to
file reports concerning their ownership of Common Stock by dates established
under the Exchange Act and also requires that the Company disclose in the
Proxy Statement any non-compliance with those requirements during the fiscal
year ended March 31, 1999. Based solely upon a review of reports delivered to
the Company for fiscal year 1999, all Section 16(a) filing requirements were
satisfied.
11
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INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP acted as the independent public accountants for the
Company during the fiscal year ended March 31, 1999. Representatives of that
firm are expected to be present at the Annual Meeting and will have an
opportunity to make a statement and will be available to respond to
appropriate questions. The Company has selected Arthur Andersen LLP as the
Company's independent public accountants for the fiscal year ending March 31,
2000.
STOCKHOLDER PROPOSALS
No proposals have been submitted by stockholders for consideration at the
Annual Meeting. Any proposal relating to a proper subject which an eligible
stockholder of the Company may intend to present for action at the 2000 Annual
Meeting of Stockholders of the Company must be received by March 20, 2000 to
be considered for inclusion in the Company's Proxy Statement and form of Proxy
relating to that meeting. The Board of Directors of the Company will review
any proposals from eligible stockholders which it receives by that date and,
with the advice of counsel, will determine whether any such proposal will be
included in its 2000 proxy solicitation materials under applicable proxy rules
of the Securities and Exchange Commission (the "SEC").
OTHER MATTERS
The Company does not know of any business other than that described herein
which will be presented for consideration or action by the stockholders at the
Annual Meeting. If, however, any other business shall properly come before the
Annual Meeting, shares represented by Proxies will be voted in accordance with
the best judgment of the persons named therein or their substitutes.
ANNUAL REPORT
The Company's 1999 Annual Report to Stockholders is being mailed to
stockholders together with this Proxy Statement. Stockholders are referred to
the report for financial and other information about the Company, but such
report is not incorporated in this Proxy Statement and is not part of the
proxy soliciting material.
FORM 10-KSB ANNUAL REPORT
The Company will provide to any stockholder, without charge, a copy of its
Annual Report on Form 10-KSB for the fiscal year ended March 31, 1999,
including financial statements, filed with the SEC, upon the request of such
stockholder. Requests should be directed to AML Communications, Inc.,
Attention: Investor Relations, 1000 Avenida Acaso, Camarillo, California
93012.
By Order of the Board of Directors,
Scott T. Behan
Secretary
Camarillo, California
August 6, 1999
12
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Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Stockholders
AML COMMUNICATIONS, INC.
September 22, 1999
Please Detach and Mail in the Envelope Provided
A [X] Please mark your
votes as in this
example.
WITHHOLD
FOR AUTHORITY
the Nominees to vote for the
listed at right Nominees listed at right
1. Election [ ] [ ] NOMINEES:
of Scott T. Behan
2 Class 1 Richard W. Flatow
Directors:
Instructions: To withhold authority to vote for any individual nominee, strike
out that nominee's name in the list at right.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the 1999 Annual Meeting of Stockholders
and any and all postponements or adjournments thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO INSTRUCTIONS ARE GIVEN, THIS PROXY WILL
BE VOTED FOR THE NOMINEE(S) FOR CLASS 1 DIRECTOR LISTED AT LEFT AND IN THE
DISCRETION OF THE PROXIES ON MATTERS DESCRIBED IN ITEM 2.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
Yes No
Do you plan to attend the meeting. [ ] [ ]
Signature of Stockholder:____________ ____________ Title_______ Dated:_________
Signature of
Joint Stockholder
If Held Jointly
NOTE: Please sign exactly as name appears hereon. When shares are held by joint
tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give your full title as such.
If a corporation, please sign in full corporate name by the president or
other authorized officer. If a partnership, please sign in the
partnership's name by an authorized person.
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
AML COMMUNICATIONS, INC.
1000 Avenida Acaso, Camarillo, CA 93012
PROXY FOR THE 1999 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 22, 1999
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of
Stockholders and the accompanying Proxy Statement for the 1999 Annual Meeting
of Stockholders, revoking all prior proxies, hereby appoints Jacob Inbar and
Scott T. Behan, and each of them, as Proxies, each with the power to appoint and
substitute, and hereby authorizes each of them to represent and to vote as
designated on the reverse side, all the shares of Common Stock of AML
Communications, Inc. (the "Company") held of record by the undersigned on July
28, 1999 at the 1999 Annual Meeting of Stockholders to be held on September 22,
1999 and any postponements or adjournments thereof.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY, USING THE ENCLOSED
ENVELOPE. THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS
INDICATED; HOWEVER, IF NO INSTRUCTIONS ARE GIVEN, THIS PROXY WILL BE VOTED FOR
THE NOMINEE(S) FOR DIRECTOR LISTED AND IN THE DISCRETION OF THE PROXIES ON ALL
SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE 1999 ANNUAL MEETING OF
STOCKHOLDERS.
(Continued on reverse side)
