<PAGE>

                                  EXHIBIT 10.35

                   TERMINATION AND CHANGE IN CONTROL AGREEMENT

        THIS AGREEMENT, dated as of September 12, 2001, is made by and between
AML Communications, Inc., a Delaware corporation (the "Company"), and Edwin J.
McAvoy (the "Executive").

                                   WITNESSETH

               WHEREAS, the Board of Directors of the Company (the "Board")
        recognizes the valuable services of the Executive to the Company since
        its inception, and as such recognizes the need to compensate the
        Executive in case of termination.

               WHEREAS, the Board has determined that it is essential and in the
        best interest of the Company and its stockholders to retain the services
        of the Executive in the event of a threat or occurrence of a Change in
        Control (as defined below) and to ensure his continued dedication and
        efforts in such event without undue concern for his personal financial
        and employment security.

               NOW THEREFORE, in consideration of the respective covenants and
        agreements set forth below and other good and valuable consideration,
        the receipt and sufficiency of which are acknowledged, the parties
        hereto agree as follows:

                                    AGREEMENT

1.  Terms of Agreement.  This Agreement shall commence as of the date hereof.

2.  Definitions.

        2.1.   Base Amount. For the purposes of this Agreement, "Base Amount"
               shall mean $155,000 or the Executive's annual base salary at the
               rate in effect immediately prior to the Termination, whichever is
               higher and shall include all amounts of his base salary that are
               deferred under any other agreement or arrangement with the
               Company.

        2.2.   Termination. For the purposes of this Agreement, Termination
               shall occur under the following circumstances:

               (a)    Disability. If the Company in good faith, after
                      considering all relevant medical evidence, establishes
                      that the Executive has incurred a Disability (as defined
                      below) during his term of employment, such party may give
                      the Executive notice of their intention to terminate the
                      Executive's employment with the Company.

                      "Disability" shall mean the Executive's failure to perform
                      his duties to the Company for a total of 16 consecutive
                      weeks during any 12- month period as a result of
                      incapacity due to mental or physical illness which is
                      determined to be total and permanent by a physician
                      selected by the Company and acceptable to the Executive or
                      the Executive's legal representative (such agreement as to
                      acceptability not to be withheld, delayed or conditioned
                      unreasonably)

               (b)    Good Reason. The Executive may terminate his employment
                      for Good Reason. For the purpose of this Agreement, the
                      Executive shall have "Good Reason" to terminate his
                      employment with the Company in the event of (i) any
                      reduction in the Executive's compensation (including
                      Annual Base Salary, Bonus Compensation and Benefits, but
                      excluding any termination or amendment of Benefits
                      pursuant to a termination or amendment generally of the
                      plan or arrangements relating thereto and excluding
                      discretionary bonuses or similar discretionary payments),
                      without the Executive's consent;


<PAGE>


                      (ii) any material breach by the Company of, or default by
                      it; provided, however, that in the case of any breach or
                      default, the Executive shall provide the Company with
                      written notice of such breach at least 30 days in advance
                      of his intended termination date and a reasonable
                      opportunity and period of time to cure such breach or
                      default (provided, further, however, if the Company cures
                      such breach, the Executive shall not have Good Reason to
                      Terminate his employment with the Company); (iii) any
                      substantial diminution of duties, responsibilities or
                      status, or other imposition by the Company of unreasonable
                      requirements or working conditions on the Executive which
                      are not withdrawn or corrected in all material respects
                      within a 30-day period following notice by the Executive
                      to the Company of such diminution or imposition or, if any
                      of the foregoing arose because of conditions or
                      circumstances outside the control of the Company, such
                      longer period, but not longer than 90 days, as may be
                      reasonably required under the circumstances.

               (c)    Without Cause. The Company may terminate the Executive's
                      employment hereunder Without Cause upon 30 days' written
                      notice.

               (d)    Mutual Agreement. The Executive's employment may be
                      terminated by Mutual Agreement between the Executive and
                      the Company at any time.

        2.3.   Change in Control. For the purposed of this Agreement, a "Change
               in Control" shall mean any consolidation or merger of the Company
               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

        2.4.   Company. For the purposes of this Agreement, the "Company" shall
               include the Company's "Successors and Assigns" (as hereunder
               defined)

        2.5    Successors and Assigns. For the purposes of this Agreement,
               Successors and Assigns" shall mean a corporation or other entity
               acquiring all or substantially all the assets and business of the
               Company whether by operation of law or otherwise, and any
               affiliate of such Successors and Assigns.

3.  Payment Upon Termination.

        3.1    Termination. Upon termination of the Executive, for other than
               Change in Control or Cause, the Company shall pay the Executive
               or the Executive's beneficiaries or estate or legal
               representatives in a single payment an amount in cash equal to
               the Base Amount divided by 12, multiplied by the number of years
               of service rendered by the Executive since the Company's
               inception in 1986, including the interrupted period from November
               2000 to February 2001.

        3.2    Change in Control. If the Executive is terminated within 18
               months after Change in Control has occurred, and has not been
               subject to termination in accordance with 3.1, the Company shall
               pay the Executive in a single payment an amount in cash equal to
               two (2) times the Base Amount.

        3.3    Bonus. Upon termination of the Executive, the Company shall pay
               the Executive or the Executive's beneficiaries or estate or legal
               representatives (in the case of termination due to death or
               disability), a bonus equal to the average of the annual bonuses
               received by the Executive in the two (2) years prior to the
               Termination.

        3.4    Benefits. All benefits, not limited to, any medical, dental,
               retirement, disability, life insurance or arrangements made
               available by the Company to any of its employees shall be
               extended to the Executive for the duration covered i.e. one month
               for each year of service.

        3.5    Date of Payment. The amount provided in section 3.1, 3.2 and 3.3
               shall be paid in a single lump sum cash payment within thirty
               (30) days after the effective date of termination.


<PAGE>


4.      Mitigation of Damages. In the event of any termination of the
        Executive's employment, the Executive shall not be required to seek
        other employment to mitigate damages, and any income earned by the
        Executive from other employment or self employment shall not be offset
        against any obligations of the Company to the Executive under this
        Agreement.

5.      Successors; Binding Agreement. This Agreement shall be binding upon and
        shall inure to the benefit of the Company, its Successors and Assigns,
        and the Company shall require any Successors and Assigns to expressly
        assume and agree to perform this Agreement in the same manner and to the
        same extent that the Company would be required to perform it if no such
        succession or assignment had taken place. Neither this Agreement nor any
        right or interest hereunder shall be assignable or transferable by
        Executive, his beneficiaries or legal representatives, except by will or
        by law of descent and distribution. This Agreement shall inure to the
        benefit of and be enforceable by the Executive's legal personal
        representative.

6.      Notice. For the purposes of this Agreement, notices and all other
        communications shall be in writing and shall be deemed to have been duly
        given when personally delivered or sent by certified mail, return
        receipt requested, postage paid, by overnight courier or by facsimile,
        addressed to the respective addresses and facsimile numbers last given
        by each party to the other, provided that all notices to the Company
        shall be directed to the attention of the President/CEO of the Company.
        All notices and communications shall be deemed to have been received on
        the date of delivery thereof or on the third business day after the
        mailing.

7.      Non-Exclusivity of Rights. Nothing in this Agreement shall prevent or
        limit the Executive's continuing or future participation in any benefit,
        bonus, incentive or other program provided by the Company and for which
        the Executive may qualify, nor shall anything herein limit or reduce
        such rights as the Executive may have under any other agreements with
        the Company. Amounts which are vested benefits or which the Executive is
        otherwise entitled to receive under any plan or program of the Company
        shall be payable in accordance with such plan or program.

8.      Settlement of Claims. The Company's obligation to make the payment
        provided for in this Agreement and otherwise to perform its obligations
        hereunder shall not be affected by any circumstances, including, without
        limitation, any set-off, counterclaim, recoupment, defense or other
        right which the Company may have against the Executive or others.

9.      Miscellaneous. No provision of this Agreement may be modified, waived or
        discharged unless such waiver, modification or discharge is agreed to in
        writing and signed by the Executive and the Company. No waiver by either
        party hereto at any time of any breach by the other party hereto of, or
        compliance with, any condition or provision of this Agreement to be
        performed by such other party shall be deemed a waiver of similar or
        dissimilar provisions or conditions at the same or at any prior or
        subsequent time. No agreement or representations, oral or otherwise,
        express or implied, with respect to the subject matter hereof have been
        made by either party.

10.     Governing Law. This Agreement shall be governed by and construed and
        enforced in accordance with the laws of the State of California without
        giving effect to the conflict of laws principles thereof.

11.     Severability. The provisions of this Agreement shall be deemed severable
        and the invalidity or unenforceablility of any provision shall not
        affect the validity or enforceability of the provisions hereof.

12.     Counterparts. This Agreement may be executed in several counterparts,
        each of which shall be deemed to be original, but all of which together
        will constitute one and the same Agreement.

13.     Entire Agreement. This Agreement constitutes the entire agreement
        between the parties hereto and supersedes all prior agreements, if any,
        understandings and arrangements, oral or written, between the parties
        hereto with respect to the subject matter hereof.

14.     No Inconsistent Action. The parties hereto shall not voluntarily
        undertake or fail to undertake any action or course of action
        inconsistent with the provisions or essential intent of this Agreement.
        Furthermore, it is the intent of the parties hereto to act in a fair and
        reasonable manner with respect to the interpretation and application of
        the provisions of this Agreement.


<PAGE>


        IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
by its duly authorized officer and the Executive as of the date and year first
above written.

                                            EXECUTIVE:

                                            By:
                                               ---------------------------------
                                               Edwin J. McAvoy



                                            AML COMMUNICATIONS, INC.
                                            A Delaware Corporation

                                            By:
                                               ---------------------------------
                                               Jacob Inbar
                                               President and CEO