<PAGE>

                        SETTLEMENT AGREEMENT AND RELEASE

           THIS SETTLEMENT AGREEMENT AND RELEASE (this "AGREEMENT") is
entered into as of January 17, 2001 by and between AML Communications, Inc.,
a Delaware corporation ("AML" or the "COMPANY"), and Jacob Inbar, with
reference to the following facts:

           WHEREAS, AML and Mr. Inbar entered into that employment agreement
dated February 23, 1999 (the "EMPLOYMENT AGREEMENT"), pursuant to which Mr.
Inbar agreed to provide certain services to AML;

           WHEREAS, AML and Mr. Inbar wish to terminate Employment Agreement
and fully discontinue Mr. Inbar's employment by AML effective today;

           NOW, THEREFORE, BE IT RESOLVED, that for good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
the parties hereto agree as follows:

           1. SETTLEMENT FEE AND COBRA PAYMENTS. In consideration for the
immediate settlement of disputes regarding the Employment Agreement, AML
hereby agrees to pay to Mr. Inbar the sum of $36,659.30 (the "SETTLEMENT
FEE"). Furthermore, AML agrees to pay up to but not exceeding $400.00 per
month for health care insurance premiums under a COBRA plan for Mr. Inbar
(the "COBRA BILL"). The COBRA BILL will be paid up to and including the month
of August 2001. Thereafter, AML is not obligated to make any further COBRA
Bills. The parties agree that the Settlement Fee and the COBRA Bill
constitute full and complete compensation for all amounts due Mr. Inbar under
the Employment Agreement and constitute the only compensation to which Mr.
Inbar is entitled to receive from AML.

           2. PAYMENT OF SETTLEMENT FEE. The Settlement fee will be paid in
according to the schedule outlined in Exhibit A of this Agreement. Said
payments will be subject to applicable taxes and laws.

           3. CONFIDENTIALITY. Mr. Inbar agrees not to disclose to any person
not employed by the Company or any affiliated entity any confidential
information obtained; provided, however, that the restrictions contained
herein shall not apply to information that (i) was in Mr. Inbar's possession
prior to any disclosure to him by the Company, (ii) is or becomes generally
available to the public other than as a result of disclosure by Mr. Inbar or
his representatives in violation of this Agreement, (iii) is or becomes
available to Mr. Inbar on a non-confidential basis from a source (other than
the Company or its representatives) which is not, to Mr. Inbar's knowledge,
prohibited from transmitting the information to the public generally by a
contractual, legal, fiduciary or other obligation, (iv) was independently
acquired or developed by Mr. Inbar outside the scope of this Agreement
hereunder or by any predecessor of the Company or any affiliated entity
without violating Mr. Inbar's obligation under this Agreement and without any
obligation of Mr. Inbar to hold for the benefit of or contribute to the
Company, or (v) is knowingly furnished to a third party by the Company or any
representative of the Company without similar non-disclosure restrictions on
the third party's use of such information. In addition, this section shall
not preclude Mr. Inbar from the use or disclosure of information known
generally to the public or of information not considered confidential by the
Company or any affiliated entity or from making disclosures required by law
or court order. For purposes of this Agreement, the term "confidential
information" shall include all information of any nature and in any form
which is owned by the Company or any affiliated entity and which is not
publicly available or generally known to persons engaged in businesses
similar to that of the Company including, but not limited to, research
techniques; patents and patent applications; inventions and improvements,
whether patentable or not; development projects; computer software and
related documentation and materials (including source and use codes);
designs, practices, processes, methods, know- how and other facts relating to
the business of the Company; practices, processes, methods, know-how and
other facts related to sales, advertising, promotions, financial matters,
customers, customer lists or customers' purchases of goods or services from
the Company; industry contracts; and all other secrets and information of a
confidential and proprietary nature.

           4. COMPETITION. Mr. Inbar shall be prohibited from engaging in
competition with AML for a period of twelve months after the date of this
Agreement.

           5. MUTUAL RELEASE. In consideration of the promises, conditions
and covenants set forth herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Mr. Inbar

                                       24

<PAGE>

and AML mutually, on behalf of themselves and their successors, assigns and
others claiming through or under them, hereby, fully and forever release,
discharge and covenant not to sue each other with respect to any and all
claims, demands, suits, liabilities, causes of action, debts, charges,
contracts, or rights, whether in law or equity, that Mr. Inbar or AML has
held or now holds, against any of them, including, but not limited to, those
arising directly or indirectly from this Agreement.

           6. OTHER. Mr. Inbar will be allowed to maintain his email account
with the Company (jinbar@amlj.com) indefinitely. However, Mr. Inbar agrees to
continue to comply with the Company's policies regarding email and internet
usage for employees.

           7. GENERAL. This Agreement supersedes all other agreements between
the parties with respect to the subject matter hereof. This Agreement shall
be construed and enforced in accordance with the internal laws of the State
of California. If any part hereof is declared null and void, each other part
shall remain in full force and effect. In any action seeking to enforce the
terms of this Agreement, the prevailing party shall be entitled to reasonable
attorneys' fees and costs incurred in connection therewith.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.

                                AML COMMUNICATIONS, INC., a Delaware corporation



                                By:
                                        ----------------------------------------
                                Its:
                                        ----------------------------------------

                                Jacob Inbar
                                ------------------------------------------------


                                       25

<PAGE>

                              EXHIBIT A

<TABLE>
<CAPTION>

      Pay period      Payment Date      Amount(s)
      End Date
     <S>             <C>               <C>
      1/21/2001        1/26/2001         461.54
       2/4/2001         2/9/2001         461.54
      2/18/2001        2/23/2001         461.54
       3/4/2001         3/9/2001         461.54       14,500.00
      3/18/2001        3/23/2001         461.54
       4/1/2001         4/6/2001         461.54
      4/15/2001        4/20/2001         461.54
      4/29/2001         5/4/2001         461.54
      5/13/2001        5/18/2001         461.54
      5/27/2001         6/1/2001         461.54       14,500.00
      6/10/2001        6/15/2001         461.54
      6/24/2001        6/29/2001         461.54
       7/8/2001        7/13/2001         461.54
      7/22/2001        7/27/2001         461.54
       8/5/2001        8/10/2001         461.54
      8/19/2001        8/24/2001         461.54
       9/2/2001         9/7/2001         184.66

                                      36,569.30

</TABLE>


Note:  the last payment covers 4 working days


                                       26