UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): December 16, 2021
R F INDUSTRIES, LTD.
(Exact name of registrant as specified in its charter)
Nevada | 0-13301 | 88-0168936 |
(State or Other Jurisdiction | (Commission File Number) | (I.R.S. Employer |
of Incorporation) | Identification No.) | |
7610 Miramar Road, Bldg. 6000 | ||
San Diego, California 92126-4202 | ||
(Address of Principal Executive Offices) | ||
(858) 549-6340 | ||
(Registrant’s Telephone Number) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Securities registered pursuant to Section 12(b) of the Act: |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Common Stock, $0.01 par value per share | RFIL | NASDAQ Global Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01. Entry into a Material Definitive Agreement.
Membership Interest Purchase Agreement
On December 16, 2021, RF Industries, Ltd. (the “Company”) entered into a Membership Interest Purchase Agreement (the “Purchase Agreement”) with Wireless Telecom Group, Inc, a New Jersey corporation (“Seller”), and its wholly owned subsidiary Microlab/FXR LLC, a New Jersey limited liability company (“Microlab”) that designs and manufactures high-performance RF and microwave products such as dividers, directional couplers and filters enabling signal distribution and deployment of in-building DAS (distributed antenna systems), wireless base stations and small cell networks. The Purchase Agreement provides for the purchase by the Company of 100% of the issued and outstanding membership interests of Microlab (the “Interests”) from Seller. The boards of directors of both the Company and Seller have unanimously approved the Purchase Agreement and the transactions contemplated thereby (collectively, the “Transaction”).
Upon the closing of the Transaction (the “Closing”), under the terms of the Purchase Agreement, the purchase price for the Interests is estimated to be $24,250,000, subject to certain closing adjustments as set forth in the Purchase Agreement. The Company intends to pay the purchase price using a combination of cash on hand and borrowings from a credit facility.
The Closing is subject to customary closing conditions, including, without limitation, the absence of certain legal impediments, and approval by the holders of a majority of the voting power of the outstanding voting shares of Seller.
The Purchase Agreement contains customary restrictions on Seller’s ability to solicit alternative acquisition proposals from third parties and to provide non-public information to, and participate in discussions and engage in negotiations with, third parties regarding alternative acquisition proposals. The Purchase Agreement also contains customary covenants requiring the board of directors of Seller, subject to certain exceptions, to recommend that Seller’s shareholders approve the Transaction. Concurrently with the execution of the Purchase Agreement, Seller delivered voting and support agreements for the holders of approximately 11% of the outstanding shares of Seller’s common stock. Prior to the approval of the Transaction by Seller’s shareholders, the board of directors of Seller may (i) withhold, withdraw, qualify, or modify its recommendation that Sellers’s shareholders approve the Transaction because of a material intervening event or (ii) adopt, approve or recommend an alternative transaction if such alternative transaction is materially superior, subject to complying with notice and other specified conditions. Seller is expected to solicit the consent of its shareholders at a shareholder meeting to be held during the first quarter of 2022.
The Purchase Agreement contains certain termination rights for both the Company and Seller, including that, subject to certain limitations, (i) the Company or Seller may terminate the Purchase Agreement if the Transaction is not consummated by April 30, 2022, subject to a 30 day extension in the event certain customary conditions are satisfied (the “Termination Date”), (ii) the Company and Seller may mutually agree to terminate the Purchase Agreement, (iii) Seller may terminate the Purchase Agreement to accept a materially superior proposal, (iv) the Company or Seller may terminate the Purchase Agreement if requisite approval of the shareholders of Seller has not been obtained upon a vote taken at the shareholder meeting, (v) the Company or Seller may terminate the Purchase Agreement if certain other closing conditions are not met or waived, and (vi) the Company may terminate the Purchase Agreement if the Seller changes its recommendation to its shareholders with respect to approval of the Transaction.
If Seller terminates the Purchase Agreement to accept a superior proposal, then Seller is required to pay the Company a termination fee of $900,000. If the Company terminates the Purchase Agreement because Seller fails to include Seller’s board recommendation in its proxy statement or Seller’s board has effected an adverse recommendation change, among other reasons described in the Purchase Agreement, then Seller will pay the Company $900,000. If the Purchase Agreement is terminated by either party because Seller shareholder approval is not obtained at Seller’s shareholder meeting, then Seller will pay the Company its reasonable fees and expenses up to a maximum of $500,000. In addition, if Seller terminates the Purchase Agreement because (i) the Closing has not occurred by the Termination Date due to no fault of Seller, or (ii) due to the Company’s breach of its representations or covenants, the Closing conditions would not be satisfied and the Company will be required to pay Seller its reasonable fees and expenses up to a maximum of $500,000.
The Purchase Agreement contemplates that the Company will obtain representation and warranty insurance to cover any breach of Seller’s representations. The maximum aggregate liability of Seller for indemnification claims for breaches of Seller’s or Microlab’s representations (other than certain fundamental representations) is capped at $150,000. The maximum aggregate liability of Seller for indemnification claims is capped at the final purchase price.
Seller also agreed not to, directly or indirectly, (i) engage in any activities that compete with Microlab’s business and (ii) hire or solicit any employee, independent contractor, or consultant of Microlab’s business for a period of five years from the closing date, subject to certain carve-outs.
The foregoing description of the Purchase Agreement and the transactions contemplated thereby does not purport to be complete and is subject to, and qualified in its entirety by reference to, the full text of the Purchase Agreement, which is attached as Exhibit 10.1 and is incorporated herein by reference.
The Purchase Agreement contains representations and warranties by each of the Company, Seller, and Microlab. These representations and warranties were made solely for the benefit of the parties to the Purchase Agreement and:
● | should not be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate; |
● | may have been qualified in the Purchase Agreement by disclosures that were made to the other party in connection with the negotiation of the Purchase Agreement; |
● | may apply contractual standards of “materiality” that are different from “materiality” under applicable securities laws; and |
● | were made only as of the date of the Purchase Agreement or such other date or dates as may be specified in the Purchase Agreement. |
Item 8.01. Other Events
On December 17, 2021, the Company issued a press release announcing the execution of Purchase Agreement. A copy of such press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits
(d) | Exhibits. The following exhibits are filed as a part of this report. |
Exhibit No. | Description | |
10.1 | Membership Interest Purchase Agreement dated as of December 16, 2021 by and among RF Industries, Ltd., Wireless Telecom Group, Inc., and Microlab/FXR LLC | |
99.1 | Press Release issued by RF Industries, Ltd., dated December 17, 2021. | |
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
December 17, 2021 | By: | /s/ ROBERT DAWSON | |
Robert Dawson | |||
President and Chief Executive Officer |