<PAGE>
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:
/ / Preliminary Proxy Statement
/X/ 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/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i) (1) 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:
---------------------------------------------------------------------------
5) Total fee paid:
---------------------------------------------------------------------------
/ / 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:
---------------------------------------------------------------------------
2) Form Schedule or Registration Statement No.:
---------------------------------------------------------------------------
3) Filing Party:
---------------------------------------------------------------------------
4) Date Filed:
---------------------------------------------------------------------------
<PAGE>
AM COMMUNICATIONS, INC.
100 Commerce Boulevard
Quakertown, PA 18951-2237
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on November 10, 2000
The Annual Meeting of Stockholders of AM Communications, Inc., a Delaware
corporation (the "Company"), will be held on Friday, November 10, 2000 at 9:30
a.m., local time, at Meyers Restaurant, 501 N. West End Boulevard (Route 309, 1
mile North of the intersection of Routes 313 and 663), Quakertown, PA 18951, for
the following purposes:
1. To elect six directors of the Company to hold office until the next Annual
Meeting of Stockholders or until their respective successors are duly
elected and shall qualify; and
2. To transact such other business as may properly come before the meeting or
any adjournment or postponement thereof.
The close of business on September 29, 2000 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.
The Proxy Statement accompanying this Notice contains detailed information
concerning the matters to be considered and acted upon at the meeting. Please
read it carefully.
All stockholders are cordially invited to attend the meeting. Whether or
not you plan 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. Your proxy may be revoked at any time prior to the
time it is voted and 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 2000 Annual
Report is also enclosed but is not to be regarded as proxy solicitation
material.
By Order of the Board of Directors,
Javad K. Hassan
Chairman
October 10, 2000
<PAGE>
AM COMMUNICATIONS, INC.
100 Commerce Boulevard
Quakertown, PA 18951-2237
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON
NOVEMBER 10, 2000
The enclosed proxy is solicited by the Board of Directors of AM
Communications, Inc., a Delaware corporation (the "Company"), 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 Friday, November 10, 2000 at 9:30 a.m., local time, and
any adjournment or postponement thereof. This proxy statement, the foregoing
notice, and the enclosed proxy are being mailed to stockholders on or about
October 10, 2000.
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, the shares represented by properly
executed proxies received by the Company will be voted "For" the nominees of the
Board of Directors in the election of six directors 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 Chairman
of the Company in writing, by delivering a duly executed proxy bearing a later
date, or by attending the meeting and voting in person.
The address of the principal executive offices of the Company is 100
Commerce Boulevard, Quakertown, PA 18951.
Outstanding Voting Securities
At the close of business on September 29, 2000, the record date to
determine stockholders entitled to vote at the Annual Meeting, the Company had
33,478,717 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 September 29, 2000, the aggregate market value of the
1
<PAGE>
Company's outstanding shares of Common Stock held by non-affiliates was
$14,494,857 (based on the average between the bid and the asked prices of such
stock on that date).
The presence, in person or by proxy, at the meeting of stockholders
entitled to cast a majority of the votes which all stockholders are entitled to
cast will constitute a quorum. Abstentions and broker non-votes are counted for
the purpose of determining the presence or absence of a quorum for the
transaction of business at the meeting. 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 133.33 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. Abstentions will be counted
in the tabulations of the votes cast on proposals presented to stockholders at
the meeting and will have the same effect as negative votes cast with respect to
the election of directors. Broker non-votes will not be counted for purposes of
determining the election of directors.
Voting Arrangements with Respect to Company Stock
On November 2, 1998, the Alvin Hoffman Revocable Trust UAD 2/28/86 ("the
Hoffman Trust") entered into a Voting Trust and Share Price Participation
Agreement dated November 2, 1998 (the "Voting Trust"), with Javad (Jay) K.
Hassan as voting trustee (the "Voting Trustee"), and pursuant thereto deposited
with the Voting Trustee 14,391,837 shares of the Common Stock of the Company,
constituting 43% of the issued and outstanding shares of the Company's Common
Stock. Pursuant to the terms of the Voting Trust, the Voting Trustee is
entitled, for the term of the Voting Trust, to exercise all voting rights with
respect to such shares. Accordingly, the management of the Company believes
that, while Alvin Hoffman, the settlor of the Hoffman Trust, remains a
beneficial owner of such shares, the transfer of voting rights with respect to
such shares has resulted in control of the Company by Mr. Hassan. Neither Mr.
Hoffman nor the Hoffman Trust received any consideration for the transfer of
voting rights.
Security Ownership of Certain Beneficial Owners and Management
The table below sets forth certain information as of September 29, 2000
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, each executive officer listed in the
cash compensation table, and all executive officers and directors of the Company
as a group.
2
<PAGE>
<TABLE>
<CAPTION>
Beneficial Ownership of Common Stock
Beneficial Owner (1) (2) No. of Shares Percentage of Class(12)
-------------------------------------------------------------------------------------------------------
<S> <C> <C>
Javad K. Hassan 23,920,837 (3) 55.6%
Alvin Hoffman 18,758,170 (4) 50.6%
Keith D. Schneck 986,666 (5) 2.9%
Michael L. Quelly 538,332 (6) 1.6%
Joseph D. Rocci 507,846 (7) 1.5%
R. Barry Borden 210,000 (8) *
Lemuel A. Tarshis 200,000 (9) *
Jill R. Felix 50,000 (10) *
Harry Tankin ---
All Directors, Nominees for Director
and Executive Officers as a Group (9 Persons) 30,780,014 (11) 63.1%
</TABLE>
* Less than one percent.
(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. Share amounts
include additional shares issuable pursuant to options or warrants held by such
owners which are exercisable or may become exercisable within 60 days of the
date hereof.
(2) The address of all beneficial owners is c/o AM Communications, Inc.,
100 Commerce Boulevard, Quakertown, PA 18951-2237.
(3) Includes (i) 14,391,837 shares of Common Stock deposited pursuant to
The Voting Trust and Share Price Participation Agreement between Mr. Hoffman and
Mr. Hassan, as the Voting Trustee, over which Mr. Hassan exercises all voting
rights, (ii) 1,666,666 shares issuable pursuant to stock options, and (iii)
1,130,053 shares issuable pursuant to the NeST Technologies, Inc. warrants
issued for services rendered, of which Mr. Hassan is CEO and sole owner, and
(iv) 6,732,281 shares issuable pursuant to the NeST (P) Ltd. warrants issued for
services rendered, which are controlled by Mr. Hassan's brother. Mr. Hassan
disclaims beneficial ownership of the shares set forth in (iv) above.
(4) 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) 25,825 shares of Senior
Convertible Redeemable Preferred Stock convertible into 3,443,333 shares of
Common Stock, (ii) 150,000 shares issuable pursuant to stock options, (iii)
773,000 shares of Common Stock currently owned by Mr. Hoffman's wife, and (iv)
14,391,837 shares of the Common Stock of the Company which the Hoffman Trust
beneficially owns but over which Javad K. Hassan, as Voting Trustee, exercises
all voting rights. Mr. Hoffman disclaims beneficial ownership of the shares set
forth in (iii) above.
(5) Includes 816,666 shares issuable pursuant to stock options.
(6) Includes 463,332 shares issuable pursuant to stock options.
3
<PAGE>
(7) Includes 455,000 shares issuable pursuant to stock options.
(8) Includes 200,000 shares issuable pursuant to stock options.
(9) Includes 200,000 shares issuable pursuant to stock options.
(10) Includes 50,000 shares issuable pursuant to stock options.
(11) Includes (i) 14,391,837 shares of Common Stock beneficially owned by
the Hoffman Trust but over which Javad K. Hassan, as Voting Trustee, exercises
all voting rights, (ii) 25,825 shares of Senior Convertible Redeemable Preferred
Stock convertible into 3,443,333 shares of Common Stock, (iii) 773,000 shares of
Common Stock currently owned by Mr. Hoffman's wife, as to which Mr. Hoffman
disclaims beneficial ownership, and (iv) 2,334,998 shares of Common Stock which
may be acquired upon the exercise of outstanding options, (v) 9,529,000 options
and warrants held by Mr. Hassan and the NeST entities of which Mr. Hassan
disclaims beneficial ownership of 6,732,281 shares, and (vi) 307,846 shares of
Common Stock held by other officers and directors.
(12) 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.
The table below sets forth certain information as of September 29, 2000
with respect to each person and entity known to the Company to be the beneficial
owner of any of the outstanding shares of the Company's Senior Convertible
Redeemable Preferred Stock.
Beneficial Owner No. of Shares Percentage of Class
--------------------------------------------------------------------------------
Alvin Hoffman 25,825 100%
c/o AM Communications, Inc.
100 Commerce Boulevard
Quakertown, PA 18951
1. ELECTION OF DIRECTORS
At the meeting, the stockholders will be asked to elect six 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 properly
executed on the enclosed form will be voted, in the absence of other
instructions, for the election of the persons named below. Should any one or
more of these nominees become unavailable to accept nomination 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:
4
<PAGE>
<TABLE>
<CAPTION>
Became
Name & Age Director Principal Occupation and Business During Last Five Years
---------- -------- --------------------------------------------------------
<S> <C> <C>
Javad K. Hassan, 59 1998 Mr. Hassan joined the Company in November 1998 as Chairman of the
Board. Prior to joining the Company, Mr. Hassan held senior level
positions at AMP, Inc. from 1988 until he was named President of AMP
Communications Systems Business, a division of AMP, Inc., in 1995. He
previously had a 20 year career at IBM. Mr. Hassan is the founder and
principal shareholder of Nest Technologies, Inc., a US headquartered
technology services company which provides and receives services to and
from NeST (P) Ltd. located in India. He also is founder and principal
shareholder of Nestronix, Inc. a provider of outsource manufacturing
services. He also is Chairman of the Electronic Development Commission
for the Government of Kerala, India.
R. Barry Borden, 60 1996 Mr. Borden has been President of Broadbeam Corporation of Princeton,
New Jersey since 1997. He previously has held executive level positions
with other high technology companies including Mergent International,
Cricket Software, Inc., Franklin Computer Corporation and Delta Data
Systems. Mr. Borden is also a director of Fastnet Corporation and
Chairman of Sedona Corporation, a publicly held company.
Jill R. Felix, 56 2000 Ms. Felix has been President, CEO, and director of the University
Science Center since 1997. She previously held executive level
positions with Liberty Property Trust from 1983 to 1997. She also holds
director positions for numerous organizations including Greater
Philadelphia First, West Philadelphia Partnership, University City
District, Delaware Valley Industrial Resource Center, International
House, Valley Forge Historical Society and the Pennsylvania
BioTechnology Assoc.
Alvin Hoffman, 71 1995 Mr. Hoffman is a private investor and has been a registered broker with
Makefield Securities in Boca Raton, FL since 1982.
Keith D. Schneck, 45 1995 Mr. Schneck joined the Company in April 1995 as President and Chief
Financial Officer and Director. In April 2000, Mr. Schneck resigned
from his position as President and assumed a financial advisory role
with the NeST related companies in addition to continuing to serve as
Chief Financial Officer of the Company. 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.
Lemuel A. Tarshis, Ph.D., 1996 Dr. Tarshis is a private consultant. He also has been a director and
59 research professor at Stevens Institute of Technology since 1991. Prior
to 1992, Dr. Tarshis held vice president positions with General
Instrument Corporation. He is a director of NeST Technologies, Inc.
</TABLE>
5
<PAGE>
Section 16(a) Beneficial Ownership Reporting Compliance
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 Company's
securities with the Securities and Exchange Commission (the "SEC"). Officers,
directors, and greater than ten percent (10%) stockholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file. Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no Form 5s were
required for those persons, the Company believes that during its fiscal year
ended on April 1, 2000 all Section 16(a) filing requirements applicable to its
officers, directors and greater than 10% beneficial owners were timely satisfied
except for (a) an initial report of stock ownership and a report pertaining to
the issuance of warrants to it were filed late by Network Systems & Technologies
(P) Ltd., and (b) reports pertaining to the grants of stock options were filed
late by Javad K. Hassan, R. Barry Borden, Alvin Hoffman, Lemuel Tarshis, Joseph
D. Rocci, and Michael L. Quelly.
Information Concerning Meetings, Committees and Directors' Compensation
The Board of Directors held 4 regular meetings during the fiscal year ended
April 1, 2000. During fiscal 2000, 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 Company's 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. During
fiscal 2000, the Audit Committee consisted of Messrs. Tarshis and Hassan, and
met one time.
The Compensation and Stock Option Committee is responsible for the
administration of the Company's Stock Options Plans and is authorized to select
recipients of options pursuant to said plans and to determine the terms of their
options, subject to the provisions of the applicable plan. In addition, the
Committee reviews and approves employee compensation plans and such other
benefits as it deems advisable. During fiscal 2000, the Compensation and Stock
Option Committee consisted of Messrs. Borden and Hassan and met one time.
6
<PAGE>
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,
each director, who is not an employee of the Company, is entitled to receive,
annually, an automatic grant of stock options covering 50,000 shares of the
Company's Common Stock, pursuant to the Company's 1999 Stock Option Plan. The
exercise price for such options is equal to the fair market value of the Common
Stock on the date of grant and the options are fully exercisable at the time of
grant. In addition to the standard directors fees, grants of options to acquire
50,000 shares of the Company's Common Stock were made to each non-employee
director on February 3, 2000 except for Ms Felix who was granted 50,000 shares
upon her election to the Board on March 3, 2000. These options were fully vested
as of the date of grant. Javad K. Hassan received an option grant on February
19, 1999 to purchase 5,000,000 shares exercisable equally over a three year
period at an exercise price of $0.156 in accordance with a Services Agreement
with the Company.
Executive Officers
<TABLE>
<CAPTION>
Became
Name & Age Officer Position with the Company and Business During Last Five Years
---------- ------- -------------------------------------------------------------
<S> <C> <C>
Keith D. Schneck, 45 1995 Mr. Schneck joined the Company in April 1995 as President and Chief
Financial Officer and Director. In April 2000, Mr. Schneck resigned from
his position as President and assumed a financial advisory role with the
NeST related companies in addition to continuing to serve as Chief
Financial Officer of the Company. 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.
Michael L. Quelly, 46 1989 Vice President, Engineering from 1989 to present, except for the period
from October 1990 through March 1995 when he also was Executive Vice
President. He has been employed by the Company since 1982.
Joseph D. Rocci, 52 1988 Vice President, Product 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.
Harry J. Tankin, 48 1999 Vice President, Sales and Marketing of the Company since 1999. Effective
April 2000 was appointed President and resigned effective July 1, 2000.
Previously he was employed by General Instrument Corporation from 1995
to 1998 in several marketing management positions. From 1984 to 1995, he
was Marketing Manager for Digital Equipment Corporation.
</TABLE>
7
<PAGE>
Executive Compensation
The following tables set forth certain information concerning (a) the cash
remuneration paid by the Company during each of the last three fiscal years to
the Company's Chief Executive Officer and to each executive officer of the
Company whose cash compensation exceeded $100,000 per annum during any such
year, and (b) stock options granted during the last three fiscal years to each
such individual.
Summary Compensation Table
--------------------------
Annual and Long Term Compensation
<TABLE>
<CAPTION>
Name & Principal Fiscal Stock Options Other
Position Year Salary Awarded Compensation
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Keith D. Schneck 2000 $ 138,000 --- $ 4,838 (3)
CFO and Director 1999 138,000 1,350,000 (1) 4,528
1998 133,000 450,000 (2) 4,574
-------------------------------------------------------------------------------------------------
Michael L. Quelly 2000 $ 106,000 --- $ 3,870 (3)
Vice President, 1999 98,000 705,000 (4) 3,342
Engineering 1998 95,000 405,000 (5) 3,060
------------------------------------------------------------------------------------------------------
Joseph D. Rocci 2000 $ 106,000 --- $ 3,185 (3)
Vice President, 1999 94,000 705,000 (6) 2,751
Product Technology 1998 92,000 405,000 (7) 2,812
------------------------------------------------------------------------------------------------------
Harry J. Tankin * 2000 $ 110,000 1,000,000 $ 3,473 (3)
President, 1999 28,000 400,000 31
1998 --- --- ---
------------------------------------------------------------------------------------------------------
</TABLE>
* Mr. Tankin resigned as an officer and an employee of the Company effective
July 1, 2000.
(1) Includes 850,000 shares of repriced stock options previously issued in
fiscal years 1997 and 1996.
(2) Repriced stock options previously issued in fiscal year 1996.
(3) Represents group life insurance premiums paid by the Company and matching
contributions under the Company's 401(k) plan paid by the Company in all
years.
8
<PAGE>
(4) Includes 405,000 shares of repriced stock options previously issued in
fiscal years 1998, 1997, 1995, and 1993.
(5) Includes 280,000 shares of repriced stock options previously issued in
fiscal years 1997, 1995, and 1993.
(6) Includes 405,000 shares of repriced stock options previously issued in
fiscal years 1998, 1997, 1995, and 1993.
(7) Includes 255,000 shares of repriced stock options previously issued in
fiscal years 1997, 1995, and 1993.
Other than the salary and bonus described herein, the Company did not pay
the executive officers named in the Summary Compensation Table any fringe
benefits, perquisites or other compensation in excess of 10% of such executive
officer's salary and bonus during fiscal 2000, 1999, and 1998. The above
compensation does not include certain insurance and other personal benefits, the
total value of which does not exceed, as to any named officer, the lesser of
$50,000 or 10% of such person's cash compensation. All of the Company's group
life, health, hospitalization or medical reimbursement plans, if any, do not
discriminate in scope, terms, or operation in favor of the executive officers or
directors of the Company and are generally available to all salaried employees.
The Company does not maintain any long term incentive plans and does not have
any employment contracts or arrangements with any of its executive officers
The Company has a stock option plan (the "1999 Plan") for its employees,
directors, and other persons responsible for significant contributions to the
Company's business. Under this 1999 Plan, which was approved by the stockholders
in February, 1999, either non-qualified options or incentive stock options may
be granted to purchase shares of the Company's stock at a price not less than
its fair market value on the date of the grant. Options generally become
exercisable one-third per year commencing one year after the date of grant and
terminating after 10 years. The aggregate maximum number of shares for which
options may be issued under the 1999 Plan is 10,000,000.
The following table sets forth options granted to the named executive
officers during fiscal 2000:
<TABLE>
<CAPTION>
% of Total
No. of Securities Options Granted Exercise
Fiscal Underlying Options to Employees Price Expiration
Year Granted in Fiscal Year ($/Share) Date
------ ------------------ ---------------- --------- -----------
<S> <C> <C> <C> <C> <C>
Harry J. Tankin * 2000 1,000,000 52% $0.50 2/3/10
</TABLE>
* Options were forfeited as Mr. Tankin resigned as an officer and employee of
the Company.
9
<PAGE>
The following table sets forth certain information pertaining to the shares
acquired by the individuals named in the Summary Cash Compensation Table upon
exercise of stock options in fiscal 2000 and pertaining to the number and value
of options held by such individuals at year end:
Fiscal 2000 Option Exercises and Year End Option Values
-------------------------------------------------------
<TABLE>
<CAPTION>
Number of Value of
Unexercised Options In-the-Money Options
Shares Value At Fiscal Year End at April 1, 2000(2)
Acquired Realized --------------------------- ----------------------------
Name on Exercise ($) (1) Exercisable Unexercisable Exercisable Unexercisable
------------------ ----------- ------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Keith D. Schneck 200,000 $420,000 816,666 333,334 $ 1,175,000 $ 478,000
Michael L. Quelly 90,000 30,218 463,333 241,667 666,600 346,800
Joseph D. Rocci 90,000 30,218 455,000 250,000 654,600 358,800
Harry J. Tankin * 133,334 360,468 --- 1,266,666 --- 1,472,400
</TABLE>
* Mr. Tankin resigned as an officer and an employee of the Company effective
July 1, 2000.
(1) Value realized is the difference between the market price of a share of
Common Stock on the date of exercise and the exercise price of the option,
multiplied by the number of shares underlying the option.
(2) Value is based upon the closing price of the stock on April 1, 2000, less
the exercise price.
Certain Relationships and Related Transactions
On November 2, 1998, Javad (Jay) K. Hassan entered into a Services
Agreement with the Company pursuant to which Mr. Hassan (i) was appointed to the
Company's Board of Directors and elected to serve as its Chairman of the Board,
(ii) agreed to assume the duties and responsibilities described therein, and
(iii) was granted, on February 19, 1999, an option to acquire 5,000,000 shares
of the Company's Common Stock, at a per share exercise price of $0.156 which was
equal to the fair market value of the stock on the date of grant.
On the same date, the Company entered into a strategic development and
manufacturing agreement with Network Systems & Technologies (P) Ltd. (NeST (P)
Ltd.). NeST (P) Ltd. is a technology company located in India which provides
software and hardware design services and manufacturing services. NeST (P) Ltd.
is controlled and managed by N. Jehangir, who is the brother of Mr. Jay Hassan.
Mr. Hassan is the founder, CEO, and owner of NeST Technologies, Inc. a U.S.
headquartered technology services company which provides and receives services
to and from NeST (P) Ltd. Collectively these operations are referred to as NeST.
The Company has the option to pay for NeST development services either in cash
or through the issuance of warrants. During fiscal 1999, the Company issued
4,234,018 warrants to purchase AM Common Stock, at an exercise price of $.01 per
share, in payment for $670,000 of NeST services rendered from November 1998
through April 3, 1999. The Company also issued warrants to purchase 3,628,316
shares of the Company's Common Stock at an exercise price of $.01 per share in
payment of $1,157,197 of NeST development services rendered for the period from
April 1999 through January 1, 2000. In addition, a total of $569,083 of NeST
10
<PAGE>
development expenses were incurred during fiscal 2000 of which $299,042 was paid
in cash and $270,041 is reflected as a liability on the Company's balance sheet
as of April 1, 2000. The warrants are presently exercisable and expire five
years from the date of issuance.
Keith D. Schneck, the Chief Financial Officer and a director of the Company
also provides advisory services to Mr. Hassan and NeST related companies under a
services agreement between the Company and these entities.
During the fourth quarter of fiscal 2000, the Company entered into an
agreement with NeSTronix, to outsource all of its manufacturing requirements
commencing January 1, 2000. NeSTronix provides complete turnkey electronic
design and outsourcing services to third party customers, and is owned and
controlled by the Company's Chairman, Mr. Javad K. Hassan. Under this
relationship, the Company's existing manufacturing staff was transferred and
became employees of NeSTronix as of January 2, 2000. In return, the Company
received a long-term commitment from NeSTronix to manage and supply all of the
Company's manufacturing requirements for a three year period with agreed upon
pricing. The Company paid $441,000 during fiscal 2000 for such services.
In June 1999, the Company entered into an agreement with its chairman,
Javad K. Hassan, whereby Mr. Hassan provided a $500,000 line of credit to the
Company, with interest payable at 10%. Payment of all outstanding borrowings and
interest is due by December 31, 2001; however, no amounts were borrowed under
this line during fiscal 2000.
Effective April 1, 2000, the Company agreed to provide certain
administrative and manufacturing support services and provide office space to
NeST and several other entities associated with Mr. Hassan's non-AM business
ventures. The Company received fees during fiscal 2000 totaling $615,500 for
such services. Should the level of services exceed planned levels, the parties
will negotiate an increase in the quarterly fee.
Under a consulting agreement with Lemuel A. Tarshis, a director of the
Company, the Company expensed a total of $35,000 during fiscal 2000.
ADDITIONAL INFORMATION
Relationship with Independent Public Accountants
KPMG LLP, which had previously served as the Company's independent public
accountants, resigned effective October 11, 1999. The former accountant's
reports on the Company's financial statements for the two fiscal years ended
April 3, 1999 did not contain an adverse opinion or a disclaimer of opinion, nor
was either report qualified as to uncertainty, audit scope or accounting
principles. During the Company's two most recent fiscal years prior to, and
subsequent interim periods through, the date of KPMG's resignation, there were
11
<PAGE>
no disagreements with KPMG on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of KPMG, would have caused
them to make reference to the subject matter of the disagreements in connection
with their opinions.
On January 24, 2000, the Registrant engaged Grant Thornton LLP, independent
certified public accountants, as the Registrant's principal accountant to audit
the Registrant's financial statements for the fiscal year ending April 1, 2000.
Such new accounting firm was engaged in replacement of KPMG LLP, independent
certified public accountants, who had previously been engaged for the same
purpose and whose resignation was effective October 11, 1999. A representative
of Grant Thornton LLP is expected to be present at the meeting.
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 for 2001 Annual Meeting of Stockholders
The Company anticipates that its 2001 Annual Meeting of Stockholders will
be held on or about August 15, 2001.
Stockholder proposals intended to be considered at the 2001 Annual Meeting
of Stockholders and which the proponent would like to have included in the proxy
materials distributed by the Company in connection with such meeting, pursuant
to Rule 14a-8 promulgated under the Securities Exchange Act of 1934, as amended
(the "1934 Act"), must be received at the principal executive offices of the
Company no later than May 1, 2001. Such proposals may be included in next year's
proxy materials if they comply with certain rules and regulations promulgated by
the Securities and Exchange Commission.
Stockholder proposals intended to be considered at the 2001 Annual Meeting
of Stockholders and for which the proponent does not intend to seek inclusion of
the proposal in the proxy materials to be distributed by the Company in
connection with such meeting must be received at the principal executive offices
of the Company no later than July 1, 2001. Any stockholder proposal received
after such date will not be considered to be timely submitted for purposes of
the discretionary voting provisions of Rule 14a-4 promulgated under the 1934
Act. In accordance with Rule 14a-4(c), the holders of proxies solicited by the
Board of Directors of the Company in connection with the Company's 2001 Annual
Meeting of Stockholders may vote such proxies in their discretion on certain
matters as more fully described in such Rule, including without limitation on
any matter coming before the meeting as to which the Company does not have
notice on or before July 1, 2001.
12
<PAGE>
Solicitation of Proxies
Expenses incurred in connection with the solicitation of proxies for the
meeting to which this proxy statement pertains 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 (none of whom will receive
additional compensation therefor) may solicit proxies personally, by telephone,
or by mail, if deemed appropriate. Arrangements may also be made with brokerage
houses and other custodians, nominees and fiduciaries to send proxies and proxy
materials to the beneficial owners of stock, and reimbursement for expenses
incurred in connection therewith may be made by the Company.
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 2000 fiscal year. Such written requests should be directed to the
Shareholder Relations Department, AM Communications, Inc., 100 Commerce
Boulevard, Quakertown, PA 18951-2237.
Javad K. Hassan
Chairman
October 10, 2000
13
<PAGE>
P R O X Y
AM Communications, Inc.
100 Commerce Boulevard
Quakertown, PA 18951-2237
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Keith D. Schneck and Patricia A. Eynon, and each
of them, proxy for the undersigned, with full power of 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 November 10, 2000 at 9:30 a.m. or any
adjournment or postponement thereof.
--------------------------------------------------------------------------------
1. Election of Directors. ___ FOR all six nominees listed
(except as marked to the contrary below).
___ WITHHOLD AUTHORITY to vote for all six nominees
listed below.
(To withhold authority to vote for any individual nominee, strike a line through
the nominee's name listed below.)
Nominees: R. Barry Borden Jill R. Felix Javad K. Hassan
Alvin Hoffman Keith D. Schneck Lemuel A. Tarshis
2. 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>
Whether or not you plan to attend the meeting in person, you are urged to sign
and return your proxy without delay in the return envelope provided for that
purpose which requires no postage if mailed in the United States. 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 six nominees for directors and as the Proxies deem advisable
on such other matters as may properly come before the meeting. This proxy may be
revoked at any time prior to the time it is voted.
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 herewith.
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.
Dated: ____________________ , 2000
________________________________________
Stockholder's Signature
________________________________________
Stockholder's Signature, if held jointly
Please mark, sign, date, and return the proxy card promptly using the enclosed
envelope.
