EXHIBIT 10.40

 

**PromissoryNote**

 

                This promissorynote (the “Note”), effective this 30th day of December, 2001, is made by andbetween Tiberiu Mazilu (the “Holder”), and AML Communications, Inc., a Delawarecorporation (the “Company”), having a place of business at 1000 Avenida Acaso,Camarillo, Ca 93012. 

 

                The Note is forthe principal sum (the “Sum”) of Fifty thousand Dollars ($50,000). 

 

**Methodsof payment:**

1.                                       TheCompany promises to pay Interest (see definitions) on the Sum at the end ofeach fiscal quarter (the “Installment”), commencing on September 30, 2002, forthe entire period defined in paragraph two (2) below. The unpaid interest forthe first two quarters should be accrued and payable by the Due Date, or at anearlier date by mutual agreement between the Holder and the Company.

2.                                       Thesaid Sum, including any remaining Interest (see definitions) should be fullypaid by the due date (the “Due Date”) of January 02, 2005. If, by the Due Date,the financial situation of the Company is not significantly improved to makethe above payment, the Holder and the Company will re-negotiate the terms ofthe Note in good faith.

3.                                       TheNote shall be immediately due and paid in full, including remaining Interest(see definitions), upon the occurrence of any of the following:

a)                      In case theCompany is consolidated, or merged with or into another corporation orcorporations, or a sale of all the assets of the Company.

b)                     Upon thedeath of the Holder.

c)                      Upon theinvoluntary termination of the Holder’s employment with the Company.

4.                                       Thenote shall be paid in full including remaining Interest (see definitions),twelve (12) months after the Holder’s voluntary termination of employment withthe Company.

5.                                       Incase of default in the payment of any Installment due under this Note, and notsolved or made within ten (10) days from the due date, it shall be accumulatedto the next Installment and payable with an accrued interest due under thisNote and interest definitions given below.

6.                                       TheCompany reserves the right to pre-pay this Note in whole or in part, includingremaining Interest (see definitions), without penalty.

 

**Definitions:**

1.                                       Interestrate (the “Interest”) shall be defined as the Annual Percentage Rate (APR),equal to the prime rate + 1.25%, of the principal Sum, calculated quarterlyfrom a monthly averaged APR for that quarter.

2.                                       Primerate is defined as the interest rate charged by banks to their creditworthycustomers 

                                                (www.forecasts.org/prime.htm).

 

All payments shall be made to such address as given above or designatedby the Holder.

 

Dated this 30th day of December, 2001
| By:        | Jacob Inbar        |
|------------|--------------------|
|       | President and CEO  |
|       | AML Communications |
|       |               |
| Signature: |               | /s/ | Jacob Inbar |   |
|            |                    |  |  |  |  |