<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14 (a) of the
Securities Exchange Act of 1934
Filed by the Registrant [ x ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Exchange Act Rule 14a-11 or 14a-12
AM Communications, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
AM Communications, Inc.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c) (1) (ii), 14a-6(i) (1), or 14a-6(j)
(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-6
(i) (3).
[ ] 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:
____________________________________________________________________________
2) Aggregate number of securities to which the transaction applies:
____________________________________________________________________________
3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11:
____________________________________________________________________________
4) Proposed maximum aggregate value of transaction:
____________________________________________________________________________
[ ] 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:
__________________________________________________________________________
2) Form Schedule or Registration Statement No.:
__________________________________________________________________________
3) Filing Party:
__________________________________________________________________________
4) Date Filed:
__________________________________________________________________________
Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE>
AM COMMUNICATIONS, INC.
1900 AM Drive
P.O. Box 9004
Quakertown, PA 18951-9004
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
October 17, 1996
The Annual Meeting of Stockholders of AM Communications, Inc. (the
"Company") will be held on Thursday, October 17, 1996 at 11:00 a.m. at Meyers
Restaurant, 501 N. West End Boulevard (Route 309, 1 mile North of the
intersection of Routes 313 and 663), Quakertown, PA 18951-9004 for the following
purposes:
1. To elect eight directors;
2. To consider and vote upon an amendment to Article 4 of the Certificate of
Incorporation of the Company to increase the number of authorized shares of
Common Stock of the Company from 40,000,000 shares to 50,000,000 shares;
3. To consider and vote upon a proposal to amend the Company's 1991 Incentive
Stock Option Plan (the "1991 Plan") to increase the aggregate number of shares
of the Company's Common Stock authorized for issuance under the 1991 Plan from
4,000,000 to 5,000,000 shares; and
4. To transact such other business as may properly come before the meeting or
any adjournment or postponement thereof.
The close of business on August 23, 1996 has been fixed as the record date
for the meeting. All stockholders of record at that time are entitled to notice
of and to vote at the meeting and any adjournment or postponement thereof.
All stockholders are cordially invited to attend the meeting. The Board of
Directors urges you to date, sign and return promptly the enclosed proxy, which
is solicited by the Board of Directors of the Company, even if you attend the
meeting. The return of the proxy will not affect your right to vote in person if
you do attend the meeting. A copy of the Company's 1996 Annual Report is also
enclosed but is not to be regarded as proxy solicitation material.
Keith D. Schneck
President
September 18, 1996
<PAGE>
AM COMMUNICATIONS, INC.
1900 AM Drive
P.O. Box 9004
Quakertown, PA 18951-9004
PROXY STATEMENT
The enclosed proxy is solicited by the Board of Directors of AM
Communications, Inc. (the "Company"), a Delaware corporation, for use at the
Annual Meeting of Stockholders to be held at Meyers Restaurant, 501 N. West End
Boulevard (Route 309, 1 mile North of the intersection of Routes 313 and 663),
Quakertown, PA 18951 on October 17, 1996 at 11:00 a.m., and any adjournment or
postponement thereof. This proxy statement, the foregoing notice, and the
enclosed proxy are being mailed to stockholders on or about September 18, 1996.
The Board of Directors does not intend to bring any matters before the
meeting for action other than the matters specifically referred to in the notice
of the meeting, nor does the Board of Directors know of any matter which anyone
else proposes to present for action at the meeting. However, if any other
matters properly come before the meeting for action, the persons named in the
accompanying form of proxy, or their duly constituted substitutes acting at the
meeting, will be deemed authorized to vote or otherwise act thereon in
accordance with their judgment in such matters.
In the absence of contrary instructions contained in proxies received by
the Company, the shares represented by proxies will be voted "For" the nominees
of the Board of Directors in the election of directors, "For" the proposed
amendment to the Company's Certificate of Incorporation to increase the number
of authorized shares of Common Stock of the Company, "For" the proposed
amendment to the 1991 Plan to increase in the number of shares available for
grant under the 1991 Plan, and in the discretion of the proxy holders on such
other matters as may properly come before the meeting. Any proxy may be revoked
at any time prior to its exercise by notifying the President of the Company in
writing, by delivering a duly executed proxy bearing a later date, or by
attending the meeting and voting in person.
Voting Securities and Certain Beneficial Holders Thereof
At the close of business on August 23, 1996, the record date to determine
stockholders entitled to vote at the Annual Meeting, the Company had 31,033,630
outstanding shares of Common Stock, par value $.10 per share, and 25,825
outstanding shares of Senior Convertible Redeemable Preferred Stock, par value
$100 per share.
On August 23, 1996, the aggregate market value of Registrant's outstanding
voting (Common) Stock held by non-affiliates, was $8,550,519 (based on the
average between the bid and the asked prices of such stock on that date).
1
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The presence, in person or by proxy, of stockholders entitled to cast a
majority of the votes which all stockholders are entitled to cast will
constitute a quorum. On all matters voted upon at the meeting and any
adjournment or postponement thereof, each record holder of Common Stock will be
entitled to one vote per share and each record holder of Senior Convertible
Redeemable Preferred Stock will be entitled to 100 votes per share. In the
election of directors, stockholders do not have cumulative voting rights. The
nominees receiving the highest number of votes cast, up to the number of
directors to be elected, shall be elected. Accordingly, abstentions and broker
non-votes will not affect the outcome of the election. Amendment of Article 4 of
the Certificate of Incorporation of the Company will require the affirmative
vote of a majority of the outstanding shares of the Common Stock and the Senior
Convertible Redeemable Preferred Stock. Thus, with respect to such proposed
amendment, abstentions and broker non-votes will have the same effect as
negative votes. Approval of the proposed amendment to the 1991 Plan requires the
affirmative vote of a majority of the Common Stock and the Senior Convertible
Redeemable Preferred Stock voted at the meeting. Since abstentions are counted
in the tabulations of the votes cast on proposals presented to stockholders,
abstentions will have the same effect as negative votes with respect to this
proposal. Broker non-votes will not be counted for purposes of approval of the
proposed amendment to the 1991 Plan and, thus, will not affect the outcome of
this proposal.
Security Ownership of Certain Beneficial Owners and Management
The table below sets forth certain information as of August 23, 1996 with
respect to each person and entity known to the Company to be the beneficial
owner of more than 5% of the outstanding shares of the Company's Common Stock,
each nominee for director of the Company and each executive officer listed in
the cash compensation table who owns shares of Common Stock and all executive
officers and directors of the Company as a group.
Beneficial Ownership of Common Stock
Beneficial Owner (1) (2) Amount Percentage of Class(10)
- -------------------------------------------------------------------------------
Alvin Hoffman 19,257,337 (3) 57.3%
Henry I. Boreen 1,615,765 (4) 5.1%
Burt Hoffman 495,510 (5) 1.6%
Herman O. Benninghoff, II 265,000 (6) *
Keith D. Schneck 252,500 (7) *
Hal Krisbergh 20,000 (8) *
R. Barry Borden 10,000 *
Lemuel A. Tarshis --- *
All Directors and Executive
Officers as a Group (12 Persons) 23,389,105 (9) 60.6%
* Less than one percent.
2
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(1) To the best of the Company's knowledge, all shares of stock are owned
beneficially, and sole voting and investment power is held with respect thereto,
by the persons and entities named, except as otherwise noted.
(2) The addresses for Messrs. A. Hoffman, B. Hoffman, Boreen, Benninghoff,
Schneck, Krisbergh, Borden and Tarshis is AM Communications, P.O. Box 9004,
Quakertown, PA 18951-9004.
(3) The information concerning the beneficial ownership of Mr. Hoffman is
based, in part, upon information furnished by Mr. Hoffman to the Company. The
beneficial ownership indicated represents (i) an aggregate of 16,191,837 shares
of Common Stock currently owned, (ii) 25,825 shares of Senior Convertible
Preferred Stock convertible into 2,582,500 shares of Common Stock, (iii) 10,000
shares which may be acquired upon the exercise of stock options in accordance
with the Company's 1991 Incentive Stock Option Plan, and (iv) 473,000 shares of
Common Stock currently owned by Mr. Hoffman's wife. Mr. Hoffman disclaims
beneficial ownership of the shares set forth in (iv) above.
(4) Includes 100,000 shares which may be acquired upon the exercise of
warrants issued by the Company in connection with the Senior Promissory Note,
and 875,000 shares which may be acquired upon the exercise of stock options in
accordance with the Company's 1982 and 1991 Incentive Stock Option Plans.
(5) Includes 50,000 shares which may be acquired upon the exercise of
warrants issued by the Company in connection with the Senior Promissory Note.
(6) Includes 160,000 shares which may be acquired upon the exercise of
stock options in accordance with the Company's 1982 and 1991 Incentive Stock
Option Plans.
(7) Includes 102,500 shares of Common Stock currently owned and 150,000
shares which may be acquired upon exercise of stock options in accordance with
the 1991 Plan.
(8) Includes 20,000 shares which may be acquired upon the exercise of stock
options in accordance with the 1991 Plan.
(9) Includes an aggregate of 18,319,104 shares of Common Stock and 25,825
shares of Senior Convertible Redeemable Preferred Stock (which are presently
convertible into 2,582,500 shares of the Company's Common Stock) currently owned
and 2,486,501 shares of Common Stock which may be acquired upon the exercise of
options and warrants.
(10) The percentages have been calculated on the basis of treating as
outstanding, for a particular holder, all shares of the Common Stock outstanding
on said date and all shares of the Common Stock issuable to such holder in the
event of exercise or conversion of outstanding options, warrants and convertible
securities owned by such holder at said date which are exercisable or
convertible within 60 days of such date.
3
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The table below sets forth certain information as of August 23, 1996 with
respect to each person and entity known to the Company to be the beneficial
owner of more than 5% of the outstanding shares of the Company's Senior
Convertible Redeemable Preferred Stock.
Beneficial Ownership
Beneficial Owner Amount Percentage of Class
- --------------------------------------------------------------------------------
Alvin Hoffman 25,825 100%
1. ELECTION OF DIRECTORS
At the meeting, the stockholders will be asked to elect eight directors, to
hold office until the next annual meeting or until their respective successors
have been duly elected and qualified. It is expected that proxies executed on
the enclosed form will be voted, in the absence of other instructions, for the
election of the persons named below, each of whom is presently serving as a
director of the Company. Should any one or more of these nominees become
unavailable to accept nominations or election as a director, the persons named
in the enclosed proxy will vote the shares which they represent for the election
of such other persons as the Board of Directors may recommend, unless the Board
of Directors reduces the number of directors.
The nominees for directors, together with certain information with respect
to them, are as follows:
<TABLE>
<CAPTION>
Became
Name & Age Director Principal Occupation and Business During Last Five Years
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Henry I. Boreen, 69 1985 Mr. Boreen has served as Chairman and Chief Executive Officer
of the Company since 1990. He also served as Chief Financial
Officer and President from 1990 through April 1995. He has been
Chief Executive Officer and a director of HIB International, Inc.,
which participates in high technology joint ventures, since 1985.
Mr. Boreen is also Chairman and interim chief executive officer
of Integrated Circuit Systems, a publicly held company.
Keith D. Schneck, 41 1995 Mr. Schneck joined the Company in April 1995 as President and
Chief Financial Officer and became a director in June 1995. From
1987 until he joined the Company, Mr. Schneck held senior
management positions at Integrated Circuit Systems, Inc.
including Chief Operating Officer and Senior Vice President,
Finance.
Herman O. Benninghoff, II, 64 1988 Mr. Benninghoff has served as Chairman of Philadelphia Pipe
Bending Co. and D Kay Fabricators, Inc. since 1977. He is also a
director and principal in STF Corporation Inc., Rockaway, NJ.
Alvin Hoffman, 68 1995 Mr. Hoffman is an investment manager and has been a registered
broker with Makefield Securities in Boca Raton, FL since 1982.
4
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Hal Krisbergh, 49 1995 Mr. Krisbergh is President of WorldGate Communications
located in Rydal, PA and is also a director of Ortel Corporation, a
publicly held company. He previously served as President of the
Communications Division of General Instrument Corporation
from 1981 to 1994.
Burt Hoffman, 42 1996 Mr. B. Hoffman is an investment manager and a broker with
Makefield Securities since 1985 and the son of Mr. Alvin
Hoffman.
Lemuel A. Tarshis, Ph.D., 55 1996 Dr. Tarshis has been principal of Assessment Alternatives,
Inc., a management consulting firm since 1992. He also is a
director and research professor at Stevens Institute of
Technology since 1991. Prior to 1992, Dr. Tarshis held
vice president positions with General Instrument Corporation.
R. Barry Borden, 57 1996 Mr. Borden is Chairman of Mergent International since March
1996, a supplier of software for data security for networks,
and president of LMA Group, Inc., since 1984, a general
management consulting firm. He previously has held
executive level positions with other high technology
companies including Cricket Software Inc., Franklin
Computer Corporation and Delta Data Systems. Mr. Borden
is also a director of Scangraphics, a publicly held company.
</TABLE>
Section 16 (a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than 10% of its
common stock, to file reports of ownership and changes in ownership of the
Common Stock with the Securities and Exchange Commission. An initial report of
stock ownership and a report pertaining to a grant of incentive stock options
were filed late by Robert Vogel. The Company believes that all filing
requirements applicable to its other officers, directors and greater than 10%
beneficial owners have been timely satisfied.
Information Concerning Meetings, Committees and Directors' Compensation
The Board of Directors held four regular meetings during the fiscal year
ended March 30, 1996 and acted twice by unanimous consent in writing in
accordance with Delaware law. During fiscal 1996, all directors attended at
least 75% of the total number of meetings of the Board of Directors and
committees of the Board on which they served.
The Audit Committee is responsible for reviewing audit activities,
recommending to the Board of Directors the engagement of independent auditors,
and reviewing the professional services rendered by the independent auditors
including the scope of the audit, their fees, and the results of their
engagement. No member of the committee is an employee of the Company. The Audit
Committee consists of Messrs. Boreen and A. Hoffman, who met once during fiscal
1996.
5
<PAGE>
The Compensation and Stock Option Committee is responsible for the
administration of the 1991 Plan which committee is authorized to select
recipients of options and determine the terms of their options, subject to the
provisions of the 1991 Plan. In addition, the Committee reviews and approves
employee compensation plans and such other benefits as it deems advisable. The
Compensation and Stock Option Committee consists of Messrs. Krisbergh and
Benninghoff. The Committee met twice during the last fiscal year.
The Company does not have a Nominating Committee.
Directors who are not officers or employees of the Company are paid $500
for each Board of Directors meeting and Committee meeting attended. In addition,
since July 1, 1995, each director, who is not an employee of the Company, is
entitled to receive, on July 1 of each year, an automatic grant of annual
incentive stock options covering 10,000 shares of the Company's Common Stock,
pursuant to the 1991 Incentive Stock Option Plan.
Executive Officers
<TABLE>
<CAPTION>
Became
Name & Age Officer Position with the Company and Business During Last Five Years
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Henry I. Boreen, 69 1990 Chairman and Chief Executive Officer since October, 1990. Served
as Chief Financial Officer and President from 1990 to 1995.
Keith D. Schneck, 41 1995 President and Chief Financial Officer since joining the Company
in April, 1995. He held senior management positions at Integrated
Circuit Systems, Inc. including Chief Operating Officer and Senior
Vice President, Finance from 1987 until he joined the Company.
David L. DeLane, 56 1988 Vice President, Sales and Marketing since joining the Company in
1988.
Michael L. Quelly, 43 1989 Vice President, Engineering since 1989 and Executive Vice President
from 1990 to 1995. He has been employed by the Company since
1982.
Joseph D. Rocci, 48 1988 Vice President, Products & Technology of the Company since 1989.
Served as Vice President, Product Operations of the Company from
1988 to 1989. He has been employed by the Company since 1983.
Robert Vogel, 35 1996 Vice President, Marketing of the Company since January, 1996.
From 1993 to December, 1995 he had been employed as a senior product
director at General Instrument Corporation. Prior to this he had
served as a principal and a consultant with Integrated System
Consulting Group, a software and integration consulting firm.
</TABLE>
Executive Compensation
The following table sets forth information concerning cash remuneration for
each of the last three fiscal years of the Company's Chief Executive Officer,
and with respect to stock options granted during the last three fiscal years to
the Company's Chief Executive Officer.
6
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<TABLE>
<CAPTION>
Annual and Long Term Compensation
Name & Principal Fiscal Stock Options Other
Position Year Salary Awarded Compensation
- -------- ---- ------ ------- ------------
<S> <C> <C> <C> <C>
Henry I. Boreen 1996 --- 10,000 ---
Chairman, CEO, 1995 --- --- ---
and CFO* 1994 --- --- ---
</TABLE>
*Mr. Boreen was CFO of the Company until April, 1995.
The Company does not maintain any long term incentive plans for its
officers.
The Company does not have any employment contracts or arrangements with
any of its executive officers.
The Company does not have, and during the past five fiscal years has not
had, any other plans providing cash or non-cash compensation to officers or
employees, other than the Company's 1982 and 1991 Incentive Stock Option Plans,
and group life, health or relocation plans available generally to all salaried
employees that do not discriminate in scope, terms or operation in favor of
officers or directors.
The following table sets forth certain information pertaining to the stock
options granted to the individual named in the Cash Compensation Table during
the fiscal year ended March 30, 1996:
<TABLE>
<CAPTION>
% of Total Exercise
Number of Securities Options Granted to or Base Expiration
Name Underlying Options Granted Employees in Fiscal Year Price ($\share) Date
- ---- -------------------------- ------------------------- --------------- ----------
<S> <C> <C> <C> <C> <C>
Henry I. Boreen 10,000 1.7% $.84 7/31/05
</TABLE>
The following table sets forth certain information pertaining to the stock
options held by the individual named in the Cash Compensation Table:
<TABLE>
<CAPTION>
Fiscal 1996 Year End Option Values
----------------------------------
Number of Value of
Unexercised Options In-the-Money Options
At Fiscal Year End at March 30, 1996 (1)
------------------------------ ---------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Henry I. Boreen 875,000 --- $203,000 ---
</TABLE>
(1) Value is based upon the closing price of the stock on March 30, 1996,
less the exercise price.
7
<PAGE>
During fiscal 1996, the Compensation and Stock Option Committee of the
Board of Directors determined that it was in the best interest of the Company
and its stockholders to adjust the exercise price of certain stock option grants
which were then out-of-the-money, to restore the equity incentive which the
options were originally intended to provide. Accordingly, in November 1995, new
stock opitons were granted in accordance with the provisions of the 1991 Plan,
to replace the out-of-the-money options. The replacement options were granted at
an exercise price per share equal to $0.84, the fair market value of the
Company's Common Stock on the date of such grant, subject to the surrender and
cancellation of the outstanding options being replaced. Such replacement options
included vesting schedules which were the same as the replaced options.
Certain elationships and Related Transactions
During April 1995, warrants held by Messrs. Hoffman, Boreen, Bastian,
Benninghoff along with those held by Keystone Venture II, L.P. were exercised.
The exercise price was paid in cash except for $850,803 which was satisfied by a
note receivable, bearing 8% interest, from Mr. Hoffman. The note was due and
paid June 30, 1995.
In July 1996, the Company loaned Mr. Alvin Hoffman a total of $655,000
under a note receivable, bearing 8% interest, due September 28, 1996. The note
is collateralized with the shares of the Company's Senior Convertible Redeemable
Preferred Stock owned by Mr. Hoffman.
2. PROPOSAL TO AMEND COMPANY'S CERTIFICATE OF INCORPORATION TO
INCREASE AUTHORIZED SHARES OF COMMON STOCK.
On August 7, 1996, the Board of Directors approved a proposal to amend
Article 4 of the Company's Certificate of Incorporation in order to increase the
number of shares of Common Stock which the Company is authorized to issue from
40,000,000, par value $.10 per share, to 50,000,000, par value $.10 per share.
The Board of Directors also directed that the proposed amendment be considered
at the Annual Meeting of Stockholders to be held on October 17, 1996. The
affirmative vote of the holders of a majority of the outstanding shares of
Common Stock and the Senior Convertible Redeemable Preferred Stock of the
Company is required to approve the proposed amendment.
The amendment will not affect the number of shares of Preferred Stock
authorized, which is 1,000,000 shares, of which 25,825 shares are currently
outstanding. The proposed amendment would increase the number of shares of
Common Stock which the Company is authorized to issue from 40,000,000 to
50,000,000. The additional 10,000,000 shares would be a part of the existing
class of Common Stock and, if and when issued, would have the same rights and
privileges as the shares of Common Stock presently issued and outstanding. The
holders of Common Stock of the Company are not entitled to preemptive rights or
cumulative voting.
8
<PAGE>
The Board of Directors believes it desirable to increase the number of
authorized shares of Common Stock of the Company so that sufficient shares will
be available for issuance pursuant to outstanding options, warrants and
convertible securities, and for other proper corporate purposes. The Company, as
of August 23, 1996, had 31,033,630 shares of Common Stock issue, 4,409,333
shares of Common Stock reserved for issuance upon exercise of options granted
under the Company's 1982 or 1991 Incentive Stock Option Plans, and 2,050,000
shares of Common Stock reserved for issuance pursuant to warrants and
convertible securities heretofore issued by the Company. If the proposed
amendment to the 1991 Plan is approved at the meeting, the Company will need to
reserve an additional 1,000,000 shares of Common Stock for issuance pursuant to
the 1991 Plan. The Company does not presently have a sufficient number of
authorized shares of Common Stock to fulfill all of these obligations.
Accordingly, it is necessary to amend the Company's Certificate of Incorporation
to increase its number of authorized shares of Common Stock.
If the proposed amendment to the Certificate of Incorporation is
approved, of the additional 10,000,000 shares of Common Stock provided for by
the proposed Amendment as of August 23, 1996, approximately 1,075,463 shares
(including 1,000,000 shares for issuance pursuant to the proposed amendment to
the 1991 Plan) would be required to be reserved for issuance under the Company's
stock option plans, outstanding warrants and outstanding convertible securities,
and 8,924,537 shares would be available in the future for other proper corporate
purposes.
The Board of Directors of the Company recommends a vote FOR the
proposal to amend Article 4 of the Company's Certificate of Incorporation to
increase the aggregate number of authorized shares of Common Stock from
40,000,000 to 50,000,000.
3. PROPOSAL TO INCREASE NUMBER OF SHARES
AUTHORIZED FOR ISSUANCE UNDER 1991 INCENTIVE STOCK OPTION PLAN
The Company's 1991 Incentive Stock Option Plan (the "1991 Plan") was
adopted in 1991. The 1991 Plan originally authorized the grant of options to
purchase up to an aggregate of 2,000,000 shares of Common Stock to all employees
and directors of the Company. In 1993, the 1991 Plan was amended to increase the
shares authorized for issuance under the 1991 Plan from 2,000,000 to 4,000,000.
In August, 1996, the Board of Directors of the Company amended the 1991 Plan,
subject to stockholder approval, to increase the aggregate number of shares of
the Company's Common Stock available for issuance thereunder from 4,000,000 to
5,000,000. Options to purchase an aggregate of 3,196,333 shares of the Company's
Common Stock are currently outstanding under the 1991 Plan.
9
<PAGE>
The following table sets forth information concerning stock options
granted under the 1991 Plan to the Company's Chief Executive Officer, to all
executive officers as a group, to certain current directors who are not
executive officers as a group, each nominee for election as a director, and all
other employees as a group:
Name of Individual and Position Number of
or Number in Group Option Shares Held
- ------------------ ------------------
Henry I. Boreen, Chairman and CEO (1) 670,000
All Current Executive Officers, as a group
(including Mr. Boreen) (6 persons) 2,110,000
Certain Current Directors Who are Not Executive
Officers, as a group (5 persons) 50,000
Keith D. Schneck, Director (1) 450,000
Alvin Hoffman, Director (1) 10,000
Herman O. Benninghoff, Director (1) 170,000
Hal Krisbergh, Director (1) 20,000
Burt Hoffman, Director (1) - 0 -
Lemuel A. Tarshis, Ph.D., Director (1) - 0 -
R. Barry Borden, Director (1) - 0 -
All Other Employees, As a Group (66 persons) 1,036,333
(1) Nominee for Election as a Director
The following is a brief summary of certain significant provisions of
the Plan:
1. Administration. The 1991 Plan is administered by the Compensation
and Stock Option Committee (the "Committee") appointed by the Board of
Directors. The Committee interprets the 1991 Plan and has discretion to select
participants, establish the manner in which options are granted and exercised,
cancel and modify options in certain situations and otherwise prescribe all of
the terms and provisions of options granted under the 1991 Plan.
2. Participants. The Committee selects participants from among the four
executive officers, eight directors, and 71 other employees of the Company. The
aggregate fair market value (determined as of the time such option is granted)
of the Common Stock for which any participant may have options which become
exercisable for the first time in any calendar year may not exceed $100,000. No
determination has been made with respect to future recipients of options under
the 1991 Plan and it is not possible to specify the names or positions of the
individuals to whom options may be granted in the future, or the number of
shares, within the limitations of the 1991 Plan, to be covered by such options.
10
<PAGE>
3. Exercise Price. The price per share for each option granted under
the 1991 Plan is determined by the Committee, but it cannot be less than the
fair market value of the Common Stock on the date of grant. Furthermore, options
may not be granted to any participant who at the time such an option is granted
owns more than ten percent (10%) of the total combined voting power of all
classes of stock of the Company unless the purchase price of such shares of
Common Stock issuable upon exercise of each option is not less than 110 percent
(110%) of the fair market value of such shares on the date such option is
granted.
4. Period of Option. Unless otherwise provided by the Committee, each
option granted under the 1991 Plan becomes exercisable in one third increments
per year commencing upon the first anniversary of the date of grant.
5. Term of Option. Options granted under the 1991 Plan may not be
exercised after the earliest to occur of the following: (a) the expiration of
ten (10) years from the date such option was granted (five (5) years if the
option holder owned more than ten percent (10%) of the total combined voting
power of all classes of stock); (b) three (3) months from the date the
participant's employment terminates for any reason other than cause, disability,
or retirements; or (c) twelve (12) months from the date the participant's
employment terminates by reason of disability or death. In the event of
termination of employment of a participant by the Company "for cause" (as such
term is defined in the 1991 Plan), all options granted to the participant under
the 1991 Plan terminate immediately.
6. Expirations and Termination of the Plan. The 1991 Plan may be
abandoned or terminated at any time by the Board of Directors except with
respect to any incentive stock option then outstanding under the 1991 Plan. No
options may be granted pursuant to the 1991 Plan after its termination date of
December 10, 2001.
7. Federal Income Tax Matters. The following discussion is only a
summary of certain aspects of the federal income tax rules generally applicable
to an individual participating in an incentive stock plan and does not deal with
other taxes which may affect such an individual, such as state and foreign
taxes.
No taxable income will be recognized by the optionee upon either the
grant or exercise of the option. The Federal income tax consequences to the
participant on disposition of the stock received depend primarily on the
optionee's holding period of the stock. If the optionee disposes of the stock
more than two years after the option is granted and has held the stock for more
than one year after exercise, any gain or loss recognized by the optionee on
such disposition will constitute a long term capital gain or loss, measured as
the difference between the option exercise price and the sale price.
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Generally, if the optionee disposes of the stock before the holding
periods set forth above are satisfied, the optionee will recognize ordinary
income at the time of disposition equal to the difference between the option
exercise price and the lesser of the sale price of the fair market value of the
stock on the date the option was exercised. If the actual gain exceeds the
amount of ordinary income, the excess will be considered short-term or long-term
capital gain depending on how long the shares are actually held.
There are no Federal tax consequences to the Company upon the grant or
exercise of an option. However, if an optionee disposes of the stock acquired
without satisfying the holding period requirements set forth above, the Company
will be entitled to a deduction equal to the amount of ordinary income
recognized by the optionee upon disposition. There is no charge against the
Company in connection with the grant of an option under the 1991 Plan or the
exercise of an option for cash.
Each participant in the 1991 Plan should consult his or her tax advisor
as to alternative minimum tax consequences or other specific tax issues created
with respect to the options as they may apply to his or her particular
situation.
The Board of Directors has deemed it to be in the best interests of the
Company to increase the aggregate number of shares of Common Stock issuable
pursuant to the 1991 Plan from 4,000,000 to 5,000,000. This increase would
provide a means by which certain directors, employees and other persons
responsible for significant contributions to the Company's business may be given
an opportunity to purchase the Company's Common Stock. The Board of Directors
believes that the equity stake in the growth and success of the Company afforded
by stock options provides such key employees with an incentive to continue to
energetically apply their talents within the Company. For adoption of the
proposed amendment to the 1991 Plan, it will be necessary that it be approved by
the affirmative vote of a majority of the Common Stock and the Senior
Convertible Redeemable Preferred Stock voted at the meeting.
The Board of Directors recommends a vote FOR approval of the proposed
amendment to the 1991 Plan.
ADDITIONAL INFORMATION
Relationship with Independent Public Accountants
KPMG Peat Marwick LLP, which has served as the Company's independent
public accountants for the last fiscal year, has been selected by the Board of
Directors as the independent public accountants for the Company's current fiscal
year. A representative of KPMG Peat Marwick LLP is expected to be present at the
meeting with the opportunity to make a statement if he desires to do so and will
be available to respond to appropriate questions from stockholders.
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The Board of Directors approved the appointment of the Company's
independent public accountants to perform the audit services normally rendered
by public accounting firms.
Stockholder Proposals
Proposals of stockholders intended to be presented at the Annual Meeting of
Stockholders in 1997 must be received by the Company by May 20, 1997, in order
to be considered for inclusion in the Company's proxy statement and form of
proxy relating to the meeting.
Solicitation of Proxies
Expenses in connection with the solicitation of proxies will be paid by the
Company. Solicitation of proxies will be principally by mail. In addition, some
of the directors, officers or other employees of the Company may solicit proxies
personally, by telephone, or by mail, if deemed appropriate.
Annual Report on Form 10-KSB
The Company will provide without charge to each person solicited by this
proxy statement, on the written request of any such person, a copy of the
Company's Annual Report on Form 10-KSB, including the financial statements and
the schedules thereto, as filed with the Securities and Exchange Commission for
its 1996 fiscal year. Such written requests should be directed to the
Shareholder Relations Department, AM Communications, Inc., P.O. Box 9004,
Quakertown, PA 18951-9004.
Keith D. Schneck
President
September 18, 1996
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P R O X Y This Proxy is Solicited on Behalf of the Board of
AM Communications, Inc. Directors The undersigned hereby appoints Keith D
1900 AM Drive Schneck and Patricia A. Eynon, and each of them,
P.O. Box 9004 proxy for the undersigned, with full power of
Quakertown, PA 18951-9004 substitution, to vote all shares of Common Stock
and Senior Convertible Redeemable Preferred Stock
of AM Communications, Inc. which the undersigned
is entitled to vote at the Annual Meeting of
Stockholders to be held on October 17, 1996 at
11:00 a.m. or any adjournment thereof.
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1. Election of Directors. [ ] FOR all eight nominees listed (except as marked
to the contrary below).
[ ] WITHHOLD AUTHORITY to vote for all eight nominees
listed below.
(To withhold authority to vote for any individual nominee, strike a line
through the nominee's name listed below.)
Nominees: Herman O. Benninghoff, II R. Barry Borden Henry I. Boreen
Alvin Hoffman Burt Hoffman Hal Krisbergh
Keith D. Schneck Lemuel A. Tarshis
2. Proposal to amend Article 4 of the Certificate of Incorporation of the
Company to increase the Company's authorized shares of Common Stock from
40,000,000 to 50,000,000 shares. [ ] For [ ] Against [ ] Abstain
3. Proposal to amend the Company's 1991 Incentive Stock Option Plan to increase
the aggregate number of shares of the Company's Common Stock authorized for
issuance under the 1991 Plan from 4,000,000 to 5,000,000 shares.
[ ] For [ ] Against [ ] Abstain
4. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
NOT VALID UNLESS DATED AND SIGNED ON REVERSE SIDE
<PAGE>
This proxy when properly executed will be voted in the manner directed herein by
the undersigned stockholder. If no direction is made, this proxy will be voted
FOR the election of all eight nominees for directors, and FOR Proposals 2 and 3.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by duly authorized officer. If a partnership, please
sign in partnership name by authorized person.
The undersigned hereby revokes all previous proxies for such meeting, and hereby
acknowledges receipt of the Notice of the Meeting, the Proxy Statement, and the
Annual Report of AM Communications, Inc. furnished therewith.
Dated: __________________________,1996
__________________________________________________
Stockholder's Signature
__________________________________________________
Stockholder's signature, if held jointly.
Please mark, sign, date, and return the proxy card promptly using the enclosed
envelope.
