RF INDUSTRIES, LTD.
7610 Miramar Road
San Diego, California 92126-4202
NOTICE IS HEREBY GIVEN THAT THE ANNUAL MEETING OF STOCKHOLDERS
WILL BE HELD ON MAY 30, 2003
An Annual Meeting of Stockholders of RF Industries, Ltd., a Nevada
corporation (the "Company"), will be held at the Mira Mesa Hotel at 9888 Mira
Mesa Blvd., Function Room A, San Diego, California 92131 on Friday, May 30,
2003, at 1:30 p.m., Pacific Standard Time, for the following purposes:
1. To elect six directors of the Company who shall serve until the 2004 Annual
Meeting of Stockholders (and until the election and qualification of their
successors).
2. To authorize an amendment to the Company's 2000 Stock Option Plan to
increase the number of shares of Common Stock reserved for issuance
thereunder by 100,000 shares.
3. To ratify the selection of J.H. Cohn LLP as the Company's independent
public accountants for the fiscal year ending October 31, 2003.
4. To transact such other business as may properly come before the Annual
Meeting of Stockholders or any adjournment thereof.
The Board of Directors has fixed the close of business on April 2, 2003 as
the record date for determination of stockholders entitled to notice of and to
vote at the Annual Meeting of Stockholders or any adjournment thereof.
All stockholders are cordially invited to attend the Annual Meeting of
Stockholders in person. Regardless of whether you plan to attend the meeting,
please sign and date the enclosed Proxy and return it promptly in the
accompanying envelope, postage for which has been provided if mailed in the
United States. The prompt return of Proxies will ensure a quorum and save the
Company the expense of further solicitation. Any stockholder returning the
enclosed Proxy may revoke it prior to its exercise by voting in person at the
meeting or by filing with the Secretary of the Company a written revocation or a
duly executed Proxy bearing a later date.
By Order of the Board of Directors
Terrie A. Gross,
Corporate Secretary
Chief Financial Officer
San Diego, California
April 15, 2003
RF INDUSTRIES, LTD.
7610 Miramar Road
San Diego, California 92126-4202
PROXY STATEMENT
General
The enclosed Proxy is solicited on behalf of the Board of Directors of RF
Industries, Ltd., a Nevada corporation (the "Company"), for use at the Annual
Meeting of Stockholders ("Annual Meeting") to be held on Friday, May 30, 2003,
at 1:30 p.m., local time, or at any adjournment or postponement thereof. The
Annual Meeting will be held at the Mira Mesa Hotel at 9888 Mira Mesa Blvd.,
Function Room A, San Diego, California 92131. The Company mailed this Proxy
Statement and the accompanying Proxy and Annual Report to all stockholders
entitled to vote at the Annual Meeting on or about April 15, 2003.
Voting
Only stockholders of record at the close of business on April 2, 2003, will
be entitled to notice of and to vote at the Annual Meeting. On April 2, 2003,
there were 3,398,154 shares of Common Stock outstanding. The Company is
incorporated in Nevada, and is not required by Nevada corporation law or its
Articles of Incorporation to permit cumulative voting in the election of
directors.
On each or any other matter properly presented and submitted to a vote at
the Annual Meeting, each share will have one vote and an affirmative vote of a
majority of the shares represented at the Annual Meeting and entitled to vote
will be necessary to approve the matter. Shares represented by proxies that
reflect abstentions or broker non-votes (that is, shares held by a broker or
nominee which are represented at the meeting, but with respect to which such
broker or nominee is not empowered to vote on a particular proposal) will be
counted as shares that are present and entitled to vote for purposes of
determining the presence of a quorum. Abstentions will be counted towards the
tabulation of votes cast on proposals presented to the stockholders and will
have the same effect as negative votes. Broker non-votes are counted towards a
quorum but are not counted for any purpose in determining whether a matter has
been approved. If the enclosed proxy is properly executed and returned to, and
received by, the Company prior to voting at the Annual Meeting, the shares
represented thereby will be voted in accordance with the instructions marked
thereon. In the absence of instructions, the shares will be voted "FOR" (i) the
nominees of the Board of Directors in the election of the six directors whose
terms of office will extend until the 2004 Annual Meeting of Stockholders and
until their respective successors are duly elected and qualified, (ii) amendment
to the Company's 2000 Stock Option Plan to increase the number of shares of
Common Stock reserved for issuance thereunder by 100,000 shares, and (iii) the
approval of the re-appointment of J.H. Cohn LLP as the Company's independent
auditors for the 2003 fiscal year.
Revocability of Proxies
When the enclosed Proxy is properly executed and returned, the shares it
represents will be voted at the Annual Meeting in accordance with any directions
noted thereon, and if no directions are indicated, the shares it represents will
be voted in favor of the proposals set forth in the notice attached hereto. Any
person giving a Proxy in the form accompanying this statement has the power to
revoke it any time before its exercise. It may be revoked by filing with the
Secretary of the Company's principal executive office, 7610 Miramar Road, San
Diego, California 92126-4202, an instrument of revocation or a duly executed
Proxy bearing a later date, or it may be revoked by attending the Annual Meeting
and voting in person. Please note, however, that if your shares are held of
record by a broker, bank or other nominee and you wish to vote in person at the
Annual Meeting, you must obtain from the record holder a proxy issued in your
name.
Solicitation
The Company will bear the entire cost of solicitation of Proxies, including
the preparation, assembly, printing, and mailing of this Proxy Statement, the
Proxy, and any additional material furnished to stockholders. Copies of
solicitation material will be furnished to brokerage houses, fiduciaries, and
custodians holding shares in their names that are beneficially owned by others
to forward to such beneficial owners. In addition, the Company may reimburse
such persons for their cost of forwarding the solicitation material to such
beneficial owners. The solicitation of Proxies by mail may be supplemented by
telephone, telegram, and/or personal solicitation by directors, officers, or
employees of the Company. No additional compensation will be paid for any such
services. Except as described above, the Company does not intend to solicit
Proxies other than by mail.
PROPOSAL 1:
NOMINATION AND ELECTION OF DIRECTORS
Each director to be elected will hold office until the next Annual Meeting
and until his or her successor is elected and has qualified, or until his or her
death, resignation, or removal. Six directors are to be elected at the Annual
Meeting. All six nominees are currently members of the Board of Directors.
The six candidates receiving the highest number of affirmative votes cast
at the Annual Meeting shall be elected as directors of the Company. Each person
nominated for election has agreed to serve if elected. If any of such nominees
shall become unavailable or refuse to serve as a director (an event that is not
anticipated), the Proxy holders will vote for substitute nominees at their
discretion. Unless otherwise instructed, the Proxy holders will vote the Proxies
received by them for the four nominees named below.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF EACH NAMED NOMINEE
Nominees
Set forth below is information regarding the nominees, including
information furnished by them as to their principal occupations for the last
five years, and their ages as of October 31, 2002, the end of the Company's last
fiscal year.
Name Age Director Since
----- ----- --------------
John R. Ehret 65 1991
Marvin Fink 66 2001
Howard F. Hill 62 1979
Henry E. Hooper 49 1998
Robert Jacobs 51 1997
Linde Kester 57 2001
John R. Ehret is President, Chief Financial Officer, and co-owner of TPL
Electronics of Los Angeles, California. He holds a B.S. degree in Industrial
Management from the University of Baltimore. He has been in the electronics
industry for over 35 years.
Marvin Fink , formerly President of Teledyne's Electronics Group, was at
Teledyne for 39 years. He holds a B.E.E. degree from the City College of New
York, a M.S.E.E. degree from the University of Southern California and a J.D.
degree from the University of San Fernando Valley. He is a member of the
California Bar.
Howard F. Hill, a founder of the Company in 1979, has credits in
Manufacturing Engineering, Quality Engineering and Industrial Management. He
took over the presidency of the Company in July 1993. He has held various
positions in the electronics industry over the past 35 years.
Henry E. Hooper is General Partner of the D3 Family Fund, LP, a partnership
that invests in small capitalization value stocks. Previously, Mr. Hooper worked
in the distribution industry, and served in various leadership capacities for
TESSCO Technologies, a distributor of wireless communications products and
services. He holds a bachelors degree and an MBA from Yale University. Mr.
Hooper has been in the telecommunications industry for over 15 years.
Robert Jacobs is RF Industries' Account Executive at Neil Berkman
Associates and coordinates the Company's investor relations. He holds an MBA
from the University of Southern California and has been in the investor
relations industry for over 18 years.
Linde Kester is the Proprietor of Oregon's Chateau Lorane Winery. He was
formerly Chairman and CEO of Xentek, an electronics power conversion
manufacturer which he co-founded in 1972. Kester was also a co-founder of Hidden
Valley National Bank in Escondido, California. He holds an A.A. in
Electron-Mechanical Design from Fullerton College and has over two decades of
experience in the electronics industry.
Management
Howard F. Hill is the President and Chief Executive Officer of the Company.
See "Nominees," above.
Terrie Gross joined the Company in January 1992 as Accounting Manager. She
was elected to Corporate Secretary in February 1995, and elected to Chief
Financial Officer in May 1997.
Board Committees and Meetings
During the fiscal year ended October 31, 2002, the Board of Directors held
five meetings. All members of the Board of Directors hold office until the next
Annual Meeting of Stockholders or the election and qualification of their
successors. The Board of Directors also has an Audit Committee and a
Compensation Committee. Executive officers serve at the discretion of the Board
of Directors.
During the fiscal year ended October 31, 2002, each Board of Directors
member attended at least 75% of the meetings of the Board of Directors and at
least 75% of the meetings of the committees on which he served.
Audit Committee
The Audit Committee meets periodically with the Company's management and
independent accountants to, among other things, review the results of the annual
audit and quarterly reviews and discuss the financial statements, recommend to
the Board the independent accountants to be retained, and receive and consider
the accountants' comments as to controls, adequacy of staff and management
performance and procedures in connection with audit and financial controls. The
Audit Committee is also authorized to review related party transactions for
potential conflicts of interest. The Audit Committee, which as of the end of
fiscal 2002 was composed of Mr. Hooper, Mr. Fink and Mr. Kester, met one time
during fiscal 2002. The Audit Committee operates under a formal charter that
governs its duties and conduct. The Charter was reproduced as Appendix A to the
Company's proxy statement for the Annual Meeting of stockholders held on May 11,
2001
The Compensation Committee consists of Messrs. Ehret, Fink, Hill and
Kester. The Compensation Committee is responsible for considering and
authorizing remuneration arrangements for senior management.
Executive Compensation
Summary of Cash and Other Compensation.
--------------------------------------
The following table sets forth compensation for services rendered in all
capacities to the Company for each person who served as the Company's Chief
Executive Officer during the fiscal year ended October 31, 2002 (the "Named
Executive Officer"). No other executive officer of the Company received salary
and bonus, which exceeded $100,000 in the aggregate during the fiscal year ended
October 31, 2002.
Annual Compensation Long-Term Compensation Awards
------------------- -----------------------------
Securities
Underlying
Name and Principal Position Year Salary Bonus Options/SARs (#)
--------------------------- ---- ------ ----- ----------------
($) ($)
Howard F. Hill, President 2002 125,000 30,000 4,000
Chief Executive Officer, Director
2001 125,000 25,000 4,000
2000 125,000 25,000 4,000
As permitted by rules established by the SEC, no other annual compensation
is shown because perquisites and other non-cash benefits provided by the Company
do not exceed the lesser of 10% of bonus plus salary or $50,000 for the last
three fiscal years.
Option Grants.
--------------
The following table contains information concerning the stock option grants
to the Company's Named Executive Officer for the fiscal year ended October 31,
2002.
Option Grants in Last Fiscal Year
---------------------------------
% of Total Options
Securities Underlying Granted to Employees Base Price Expiration
Name Options Granted (#) in Fiscal Year ($/Share) Date
------ --------------------- ------------------- ----------- ------------
Howard F. Hill, President
Incentive Stock Option 2,000 1.9% $2.07 October 2012
Non-Qualified Option 2,000 14.3% $1.76 October 2012
Option Exercises and Holdings.
------------------------------
No options were exercised by Mr. Hill, the Named Executive Officer, during
the fiscal year ended October 31, 2002. The following table sets forth
information concerning option exercises and option holdings and the value, at
October 31, 2002, of unexercised options held by the Named Executive Officer:
Aggregated Options/SAR Exercises in Last Fiscal Year
and Fiscal Year-End Option/SAR Values
-----------------------------------------------------
Value of
Unexercised
Value Realized Number of Unexercised In-the-Money
Shares Market Price at Options/SARs at Fiscal /SARs at Fiscal
Acquired Exercise Less Year-End (#) Year-End ($)
Name Exercise # Exercise Price ($) Exercisable Unexercisable Exercisable (1)
---- ---------- ------------------ ----------- ------------- -----------
Howard F. Hill, 0 0 462,000 0 $933,280
President
(1) Represents the closing price per share of the underlying shares on the last
day of the fiscal year less the option exercise price multiplied by the
number of shares. The closing value per share was $2.07 on the last trading
day of the fiscal year as reported on the Nasdaq SmallCap Market.
During the fiscal year ended October 31, 2002, the Company did not adjust
or amend the exercise price of stock options awarded to the Named Executive
Officers.
Employment Agreement
The Company has no employment or severance agreements with any of its
executive officers for payments of more than $100,000, other than with the
President/Chief Executive Officer. On June 1, 1994, the Company entered into a
six-year, renewable employment contract with the President calling for annual
compensation of $85,000, increased to $125,000 in 1999, plus a bonus to be
determined by the Board. The employment contract was renewed effective January
1998 and the current term expires in 2005. In the event Mr. Hill is terminated
for a material breach of the employment contract, he shall be paid one years'
initial base salary. In addition, the employment contract granted the President
options to acquire 500,000 shares of common stock at $.10 per share. Such
options vested ratably over the first six-year term of the initial agreement.
Upon termination, Mr. Hill must exercise his options within one year of written
notice. The shares underlying his options may be sold to the Company at an
agreed upon price, and the Company has a right of first refusal to purchase such
shares.
Compensation of Directors
The Company compensates its directors with an annual grant of options to
purchase 2,000 shares of common stock. The exercise price of the options is set
at 85% of the closing price of the common stock on the last day of the fiscal
year. During the fiscal year ended October 31, 2002, options to purchase 2,000
shares of common stock were granted to each of the following directors: Messrs.
Ehret, Mr. Fink, Mr. Hill, Hooper, Mr. Jacobs and Mr. Kester. All options
granted were $1.76 per share. The directors are also eligible for reimbursement
of expenses incurred in connection with attendance at Board meetings and Board
committee meetings.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information regarding the ownership
of the Company's Common Stock as of February 28, 2003 by: ( i ) each director
and nominee for director; (ii) the executive officer named in the Summary
Compensation Table in Executive Compensation; (iii) all executive officers and
directors of the Company as a group; and (iv) all those known by the Company to
be beneficial owners of more than 5% of the Common Stock.
Name and Address of Number of Shares (1) &( 2) Percentage (2)
Beneficial Owner Beneficially Owned Beneficially Owned
------------------ ------------------ ------------------
Hytek International, Ltd. 752,167 22.1%
690 West 28th Street
Hialeah, FL 33010
Howard H. Hill 512,000(3) 13.3%
7610 Miramar Road, Building 6000
San Diego, CA 92126-4202
John R. Ehret 14,000(4) *
7610 Miramar Road, Building 6000
San Diego, CA 92126-4202
Robert Jacobs 6,000(5) *
7610 Miramar Road, Building 6000
San Diego, CA 92126-4202
Henry E. Hooper 17,555(6) *
7610 Miramar Road, Building 6000
San Diego, CA 92126-4202
Marvin Fink 15,165(7) *
7610 Miramar Rd., Bldg. 6000
San Diego, CA 92126-4202
Linde Kester 58,072(8) 1.7%
7610 Miramar Rd., Bldg. 6000
San Diego, CA 92126-4202
All Directors and Officers as a Group (7 706,792(8) 15.1%
Persons)
(1) This table is based on information supplied by officers, directors and
principal stockholders, excluding Hytek International, Inc. Except as
indicated in the footnotes to this table and pursuant to applicable
community property laws to the Company's knowledge, the persons named in
the table have sole voting and investment power with respect to all shares
of Common Stock. The inclusion in this table of such shares does not
constitute an admission that the named stockholder is a direct or indirect
beneficial owner of, or receives the economic benefit of such shares.
Applicable percentages are based on 3,398,154 shares outstanding on
February 28, 2003. (2) Shares of Common Stock, which were not outstanding
but which could be acquired upon exercise of an option within 60 days from
the date of this filing, are considered outstanding for the purpose of
computing the percentage of outstanding shares beneficially owned. However,
such shares are not considered to be outstanding for any other purpose. (3)
Includes 462,000 shares, which Mr. Hill has the right to acquire upon
exercise of options exercisable within 60 days. (4) Consists of 14,000
shares, which Mr. Ehret has the right to acquire upon exercise of options
exercisable within 60 days. (5) Consists of 6,000 shares, which Mr. Jacobs
has the right to acquire upon exercise of options exercisable within 60
days. (6) Consists of 17,555 shares, which Mr. Hooper has the right to
acquire upon exercise of options exercisable within 60 days. (7) Consists
of 15,165 shares, which Mr. Fink has the right to acquire upon exercise of
options exercisable within 60 days. (8) Includes 16,170 shares, which Mr.
Kester has the right to acquire upon exercise of options exercisable within
60 days. (9) Includes 602,890 shares, which the directors and officers have
the right to acquire upon exercise of options exercisable within 60 days. *
*Represents less than 1% of the outstanding shares.
There is no arrangement known to the Company, the operation of which may at a
subsequent date result in a change of control of the Company.
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information as of October 31, 2002 with respect to
the shares of Company common stock that may be issued under the Company's
existing equity compensation plans.
A B C
-------------------- ----------------- -------------------------
Number of Securities
Remaining Availible for
Number of Securities Weighted Average Future Issuance Under
to be Issued Upon Exercise Price of Equity Compensation Plans
Exercise of Outstandig (Excluding Securities
Plan Catagory Outstanding Options Options ($) Reflected in Column A)
------------------------------------------------------ -------------------- ----------------- -------------------------
Equity Compensation Plans Approved by
Stockholders (1) 539,764 $2.77 57,651
Equity Compensation Plans Not Approved by
Stockholders (2) 706,000 $0.89 -0-
Total 1,245,764 $1.71 57,651
(1) Consists of options granted under the R.F. Industries, Ltd. (i) 2000 Stock
Option Plan, (ii) the 1990 Incentive Stock Option Plan, and (iii) the 1990
Non-qualified Stock Option Plan. The 1990 Incentive Stock Option Plan and
Non-qualified Stock Option Plan have expired, and no additional options can
be granted under these plans. Accordingly, the 57,651 shares remaining
available for issuance represent shares under the 2000 Stock Option Plan.
(2) Consists of options granted to five executive officers and/or key employees
of the Company under employment agreements entered into by the Company with
each of these officers and employees.
Compliance With Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and persons who own more than 10% of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
("SEC"). Executive officers, directors and greater than 10% stockholders are
required by SEC regulations to furnish the Company with copies of all Section
16(a) forms they file.
Based solely on its review of the copies of reporting forms received by the
Company, the Company believes that during its most recent fiscal year ended
October 31, 2002, that its officers and directors complied with the filing
requirements under Section 16(a).
PROPOSAL 2
AMENDMENT OF THE 2000 STOCK OPTION PLAN
At the Annual Meeting, stockholders are being asked to approve an amendment
to the Company's 2000 Stock Option Plan (the "2000 Plan") that would increase
the shares reserved for issuance thereunder by 100,000 shares of Common Stock.
Currently, the 2000 Plan provides that the aggregate number of options that can
be awarded under the 2000 Plan shall be (i) 300,000 plus (ii) an annual increase
of the lesser of 10,000 shares or 4% of the total number of shares of Common
Stock outstanding. The proposes amendment would increase the minimum 300,000
shares to 400,000 shares.
General
The Company's 2000 Plan provides for the grant of options to employees and
consultants of the Company. The increase in shares reserved for issuance under
the 2000 Plan has been necessitated by the hiring of new employees and the grant
of additional stock options to current employees as previously granted options
vest and become exercisable. The Company does not believe that the shares
remaining available for future grant pursuant to the 2000 Plan are sufficient to
attract new employees or retain existing employees. The increase will provide
sufficient additional stock to continue the Company's policy of equity ownership
by employees and consultants as an incentive to contribute to the Company's
success.
As of October 31, 2002, options for 262,349 shares had been granted under
the 2000 Plan and 57,651 shares remained available for future grants. Shares not
purchased under an option prior to its expiration will be available for future
option grants under the 2000 Plan. As of October 31, 2002, the fair market value
of shares subject to outstanding options was approximately $543,000, based upon
the closing price of the Common Stock as reported on the Nasdaq Stock Market
system on such date.
The primary features of the 2000 Plan are summarized below.
Purpose
The purposes of the 2000 Plan are to attract and retain the best available
personnel for positions of substantial responsibility, to provide additional
incentive to employees and consultants of the Company and to promote the success
of the Company's business.
Share Reserve
The Board of Directors and stockholders adopted the 2000 Plan in 2000. The
Company has reserved for issuance under the 2000 Plan 300,000 shares of common
stock plus the number of shares by which the 2000 Plan automatically increases.
On January 1 of each year, starting with the year 2001, the number of shares in
the reserve will automatically increase by 4% of the total number of shares of
common stock of the Company that are outstanding at that time or by 10,000
shares, whichever is less. In general, if options awarded under the 2000 Plan
are forfeited, then those options will again become available for grant under
the 2000 Plan.
Administration
The Compensation Committee of the Board of Directors ("Committee")
administers the 2000 Plan. The Committee has the complete discretion to make all
decisions relating to the interpretation and operation of the 2000 Plan. The
Committee has the discretion to determine who will receive an option, what type
of option it will be, how many shares will be covered by the option, what the
vesting requirements will be (if any), and what the other features and
conditions of each option will be. The Committee may also reprice outstanding
options and modify outstanding options in other ways.
Eligibility
Employees, outside directors and independent consultants and advisors to
the Company and its subsidiaries are eligible to participate in the 2000 Plan.
Types of Award
The 2000 Plan provides incentive stock options to purchase shares of common
stock of the Company and nonstatutory stock options to purchase shares of common
stock of the Company.
Exercise Price, Payment and Transferability
An optionee who exercises an incentive stock option may qualify for
favorable tax treatment under Section 422 of the Internal Revenue Code of 1986.
Nonstatutory stock options, however, do not qualify for such favorable tax
treatment. The exercise price for incentive stock options granted under the 2000
Plan may not be less than 100% of the fair market value of the common stock of
the Company on the option grant date. In the case of nonstatutory options, the
minimum exercise price is 85% of the fair market value of the common stock of
the Company on the option grant date. Optionees may pay the exercise price by
using the following methods of payment as determined by the Committee: cash;
shares of common stock that the optionee already owns; a full-recourse
promissory note, except that the par value of newly issued shares must be paid
in cash; an immediate sale of the option shares through a broker designated by
the Company; or a loan from a broker designated by the Company, secured by the
option shares.
Options are generally not assignable or transferable other than by will or
the laws of inheritance and, during the optionee's lifetime, the option may be
exercised only by such optionee.
Vesting of Options and Termination of Service
The options will vest at the time or times determined by the Committee.
Options generally expire 10 years after they are granted, except that they
generally expire earlier if the optionee's service terminates earlier. Upon the
optionee's cessation of employment or service, the optionee will have a limited
period of time in which to exercise his or her outstanding options for any
shares in which the optionee is vested at that time. However, at any time while
the options remain outstanding, the Committee will generally have discretion to
extend the period following the optionee's cessation of employment or service
during which his or her outstanding options may be exercised. The Committee will
also have discretion to accelerate the exercisability or vesting of those
options in whole or in part at any time.
Change in Control
If a change in control of the Company occurs, an option under the 2000 Plan
may become fully vested and exercisable as determined by the Committee. A change
in control includes: (i) a merger of the Company after which the Company's
stockholders own 50% or less of the surviving corporation (or its parent
company); (ii) a sale of all or substantially all of the Company's assets; (iii)
a change in the composition of the Board that results in the replacement of more
than one-half of the Company's incumbent directors over a 24-month period; or
(iv) an acquisition of 20% or more of the Company's outstanding stock by any
person or group, other than a person related to the Company (such as a holding
company owned by the Company's stockholders).
Amendments
The Board may amend or terminate the 2000 Plan at any time. If the Board
amends the 2000 Plan, it does not need to ask for stockholder approval of the
amendment unless applicable law requires it.
Federal Income Tax Consequences
Options granted under the 2000 Plan may be either incentive stock options
that satisfy the requirements of Section 422 of the Internal Revenue Code or
non-statutory options that are not intended to meet such requirements. The
Federal income tax treatment for the two types of options differs as follows:
Incentive Options No taxable income is recognized by the optionee at the
time of the option grant, and no taxable income is generally recognized at the
time the option is exercised. The optionee will, however, recognize taxable
income in the year in which the purchased shares are sold or otherwise made the
subject of a taxable disposition. For Federal income tax purposes, dispositions
are divided into two categories: qualifying dispositions and disqualifying
dispositions. A qualifying disposition occurs if the sale or other disposition
is made after the optionee has held the shares for more than two (2) years after
the option grant date and more than one (1) year after the exercise date. If
either of these two holding periods is not satisfied, then a disqualifying
disposition will result.
Upon a qualifying disposition, the optionee will recognize long-term
capital gain in an amount equal to the excess of (i) the amount realized upon
the sale or other disposition of the purchased shares over (ii) the exercise
price paid for the shares. If there is a disqualifying disposition of the
shares, then the excess of (i) the fair market value of those shares on the
exercise date over (ii) the exercise price paid for the shares will be taxable
as ordinary income to the optionee. Any additional gain or loss recognized upon
the disposition will be recognized as a capital gain or loss by the optionee.
Non-Statutory Options No taxable income is recognized by an optionee upon
the grant of a non-statutory option. The optionee will in general recognize
ordinary income, in the year in which the option is exercised, equal to the
excess of the fair market value of the purchased shares on the exercise date
over the exercise price paid for the shares, and the optionee will be required
to satisfy the tax withholding requirements applicable to such income.
The Company will be entitled to an income tax deduction equal to the amount
of ordinary income recognized by the optionee with respect to the exercised
non-statutory option. The deduction will in general be allowed for the taxable
year of the Company in which such ordinary income is recognized by the optionee.
Accounting Treatment
Option grants made to employees or directors under the 2000 Plan that have
exercise or issue prices that are equal to or greater than the fair market value
per share on the grant or issue date will not result in any direct charge to the
Company's reported earnings. However, the fair value of those options is
required to be disclosed in the notes to the Company's financial statements, and
the Company must also disclose, in footnotes to its financial statements, the
pro-forma impact those options would have upon the Company's reported earnings
were the fair value of those options at the time of grant treated as a
compensation expense.
Option grants or stock issuances made to employees or directors under the
2000 Plan that have exercise or issue prices that are less than the fair market
value per share on the grant or issue date will result in a direct compensation
expense to the Company in an amount equal to the excess of such fair market
value over the exercise or issue price. The expense must be amortized against
the Company's earnings over the period that the option shares or issued shares
are to vest.
Option grants made to non-employee consultants under the 2000 Plan will
result in a direct charge to the Company's reported earnings over the vesting
period based upon the fair value of the option measured as of the grant date.
The number of outstanding options may affect the Company's earnings per
share on a fully diluted basis.
Option Grants
The following table sets forth with respect to the Named Executive Officers
and the various indicated groups, the number of shares of Common Stock subject
to the stock options granted under the 2000 Plan from November 1, 2001 through
October 31, 2002 and the weighted average exercise price payable per share.
Weighted Average
Number of Exercise Price of
Name and Position Option Shares Granted Options
------------------ --------------- -----------------
Howard F. Hill, President, Chief Executive Officer and Director 4,000 $1.92
John R. Ehret, Director 2,000 $1.76
Marvin Fink, Director 2,000 $1.76
Henry E. Hooper, Director 2,000 $1.76
Robert Jacobs, Director 2,000 $1.76
Linde Kester, Director 2,000 $1.76
All current executive officers as a group (2 persons) 6,000 $1.97
All current non-employee directors as a group (5 persons) 10,000 $1.76
All employees, including current officers who are not executive
officers, as a group (54 persons) 106,430 $2.04
--------------
Required Vote
The affirmative vote of the holders of a majority of the Common Stock
present or represented at the Annual Meeting is required to approve the
amendments to the 2000 Plan.
PROPOSAL 3:
SELECTION OF AUDITORS
Subject to stockholder approval at the Annual Meeting, the Board has
selected J.H. Cohn LLP to continue as the Company's independent auditors for the
fiscal year ending October 31, 2003. A representative of J.H. Cohn LLP is
expected to be present at the Annual Meeting. The representative will have an
opportunity to make a statement and will be available to respond to appropriate
questions from stockholders.
Stockholder ratification of the selection of J.H. Cohn LLP as the Company's
independent accountants is not required by the Company's Bylaws or otherwise.
However, the Board is submitting the selection of J.H. Cohn LLP to the
stockholders for ratification as a matter of good corporate practice. If the
stockholders fail to ratify the selection, the Board will reconsider whether or
not to retain that firm. Even if the selection is ratified, the Board in its
discretion may direct the appointment of a different independent accounting firm
at any time during the year if the Board determines that such a change would be
in the best interests of the Company and its stockholders.
The affirmative vote of the holders of a majority of the shares represented
and voting at the meeting will be required to ratify the selection of J.H. Cohn
LLP.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF PROPOSAL 3
REPORT OF THE AUDIT COMMITTEE (1)
The following is the report of the Audit Committee with respect to the
Company's audited financial statements for the fiscal year ended October 31,
2002.
The Audit Committee has reviewed and discussed the Company's audited
financial statements with the management. The Audit Committee has discussed with
J.H. Cohn LLP, the Company's independent accountants, the matters required to be
discussed by Statement of Auditing Standards No. 61, Communication With Audit
Committees which includes, among other items, matters related to the conduct of
the audit of the Company's financial statements. The Audit Committee has also
received written disclosures and the letter from J.H. Cohn LLP required by
Independence Standards Board Standard No. 1, which relates to the accountant's
independence from the Company and its related entities, and has discussed with
J. H. Cohn LLP their independence from the Company.
The Audit Committee acts pursuant to the Audit Committee Charter. Fees for
J.H. Cohn LLP for the last fiscal year were: Audit $34,400 and all other fees of
$46,000, which includes reviewing Form 10-Qs, preparation of tax filings, and
other matters. The Audit Committee does not believe that any of the additional
services provided by J.H. Cohn LLP are incompatible with J.H. Cohn LLP's
independence.
Based on the review and discussions referred to above, the Audit Committee
recommended to the Company's Board of Directors that the Company's audited
financial statements be included in the Company Annual Report on Form 10-KSB for
the fiscal year ended October 31, 2002.
The Audit Committee has also recommended that J.H. Cohn be engaged as the
Company's auditors for the fiscal year ending October 31, 2003.
AUDIT COMMITTEE
Marvin Fink
Henry Hooper
Linde Kester
(1) The material in this report is not deemed "soliciting material," is not
deemed filed with the SEC, and is not to be incorporated by reference in
any filing of the Company under the Securities Act of 1933, as amended, or
the Securities Exchange Act of 1934, as amended, whether made before or
after the date hereof and irrespective of any general incorporation
language in any such filing.
Stock Performance Graph(1)
The following graph compares the cumulative total return for the Company,
the NASDAQ US Stock Index and the NASDAQ Electronic Components Stock Index
during the last five fiscal years. The graph shows the value, at the end of each
calendar month, of $100 invested in the Common Stock or the indices on October
31, 1997. Historic stock price performance is not necessarily indicative of
future stock price performance.
(GRAPHIC OMMITTED)
o The monthly return on investment for each of the periods for the Company is
based on the closing price on the last trading day of each month. The
Indices are based on their respective values on the final trading day of
each month.
Certain Transactions
On April 1, 1997, the Company loaned to Howard Hill, its President and
Chief Executive Officer, $70,000 pursuant to a Promissory Note which provides
for interest at the rate of 6% per annum and which has no specific due date for
principal. Interest on the loan is paid annually. The loan is evidenced by a
promissory note that is secured by a lien on certain of Mr. Hill's personal
property.
Mr. Jacobs, a director of the Company, is an employee of Neil Berkman
Associates, the Company's public relations firm. For the fiscal years ended
October 31, 2002 and October 31, 2001, the Company paid to Neil Berkman
Associates $39,360 and $31,785, respectively, for services rendered.
STOCKHOLDERS' PROPOSALS
Stockholders who intend to submit proposals at the 2004 Annual Meeting must
submit such proposals to the Company no later than December 15, 2003 in order
for them to be included in the Proxy Statement and the form of Proxy to be
distributed by the Board of Directors in connection with that meeting.
Stockholders proposals should be submitted to RF Industries, Ltd., 7610 Miramar
Road, San Diego, CA 92126-4202.
ANNUAL REPORTS
The Company's 2003 Annual Report on Form 10-KSB which includes audited
financial statements for the Company's fiscal year ended October 31, 2002, is
being mailed with the Proxy Statement to stockholders of record on or about
April 15, 2003.
OTHER MATTERS
The Board of Directors knows of no other matters which will be brought
before the Annual Meeting. However, if any other matter properly comes before
the Annual Meeting of any adjournment thereof, it is intended that the persons
named in the enclosed form of Proxy will vote on such matters in accordance with
their best judgment.
Terrie A. Gross,
Corporate Secretary
Chief Financial Officer
San Diego, California
April 15, 2003
PROXY
RF INDUSTRIES, LTD.
a Nevada Corporation
ANNUAL MEETING OF STOCKHOLDERS
May 30, 2003
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Howard F. Hill and John Ehret, or either of
them, as proxies, each with the power to appoint his or her substitutes, and
hereby authorizes them to represent and vote, as designated below, all of the
shares of Common Stock of RF Industries, Ltd., held of record by the undersigned
on April 2, 2003 at the Annual Meeting of Stockholders to be held at the Mira
Mesa Hotel at 9888 Mira Mesa Blvd., Function Room A, San Diego, CA 92126 on
Friday, May 30, 2003, at 1:30 p.m. Pacific Standard Time, or any adjournments or
postponement thereof with all powers which the undersigned would possess if
personally present, upon and in respect of the following matters and in
accordance with the following instructions, with discretionary authority as to
any and all other matters that may properly come before the meeting.
1. For the election as directors of the nominees listed below, except to the
extent that authority is specifically withheld.
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote
(except as marked to the contrary for all nominees listed below
below)
Nominees: Howard F. Hill, John R. Ehret, Henry E. Hooper , Robert Jacobs,
Marvin Fink and Linde Kester.
(INSTRUCTIONS: To withhold authority to vote for any individual nominee,
write that nominee's name on
the space provided below.)
2. Proposal to authorize an amendment to the company's 2000 stock option plan
to increase the number of shares of common stock reserved for issuance
thereunder by 100,000 shares.
[ ] For [ ] Against [ ] Abstain
-
3. Proposal to ratify appointment of J.H. Cohn LLP, as independent auditor.
[ ] For [ ] Against [ ] Abstain
In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
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 Proposals 1, 2 and 3. I understand that I may revoke this Proxy
only by written instructions to that effect, signed and dated by me, which must
be actually received by the Company prior to the commencement of the Annual
Meeting.
DATED:
_____________________________
_____________________________
Signature
_____________________________
Signature if Held Jointly
_____________________________
Number of Shares
Please sign exactly as your name appears on your stock certificate. 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 the
shares are owned by a corporation, sign in the full corporate name by the
President or other authorized officer. If the shares are owned by a Partnership,
sign in the name of the Partnership name by an authorized person. Please mark,
sign, date and return the Proxy promptly using the enclosed envelope.
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