into a Material Definitive Agreement.
November 13, 2019, Wireless Telecom Group, Inc. (the “Company”) entered into a Share Purchase Agreement (the “Purchase
Agreement”) with Holzworth Instrumentation Inc., a Colorado corporation (“Holzworth”), Jason Breitbarth, Joe
Koebel and Leyla Bly (each a “Seller” and collectively, “Sellers”), and Jason Breitbarth as the designated
representative of Sellers (“Sellers’ Representative”).
to the terms of, and subject to the conditions contained in, the Purchase Agreement, the Company will acquire from the Sellers
(the “Acquisition”) all of the outstanding shares of Holzworth, a Boulder, Colorado based provider of specialty phase
noise analyzers and signal generators.
aggregate purchase price for the Acquisition is a maximum of $17,000,000, consisting of payments in cash and stock one business
day after closing, deferred purchase price payments and contingent consideration in the form of an earnout. At the closing, the
Company will issue a promissory note, requiring the Company to pay on the next business day $500,000 of the purchase price by
issuing 347,318 shares of its common stock (the “Stock Consideration”), and $8,000,000 in cash (the “Cash Consideration”),
reduced by an indemnification holdback of $800,000 and payment of certain of Sellers’ transaction expenses and indebtedness
of Holzworth. The parties intend to make a 338(h)(10) election to treat the Acquisition as a purchase and sale of assets, and
the Company has agreed to pay any incremental taxes of Sellers resulting from that election.
first deferred purchase price payment of $750,000 is due in three equal quarterly installments on March 31, 2020, June 30, 2020
and September 30, 2020, respectively. The second deferred purchase price payment of $750,000 is payable on March 31, 2021. Each
deferred payment may be reduced as provided in the Purchase Agreement if Holzworth’s EBITDA (as defined in the Purchase
Agreement) for each fiscal year ending December 31, 2019 and December 31, 2020, respectively, is less than $1,250,000.
Company may also be required to pay additional amounts in cash and stock as earnout consideration. The first earnout payment will
be equal to two times the amount, if any, by which Holzworth’s EBITDA for the fiscal year ending December 31, 2020 exceeds
$1,250,000. The second earnout payment will be equal to two times the amount, if any, by which Holzworth’s EBITDA for the
fiscal year ending December 31, 2021 exceeds the greater of $1,250,000 or Holzworth’s EBITDA for the prior fiscal year.
The aggregate earnout payments, if any, cannot exceed $7,000,000.
Purchase Agreement contains customary representations, warranties and covenants, as well as indemnification provisions (subject
to certain exceptions and limitations). Consummation of the Acquisition is subject to satisfaction or waiver of, among other conditions,
(i) customary closing conditions, including accuracy of representations and warranties of the parties (subject to materiality
qualifiers), compliance with covenants in all material respects and the absence of a material adverse effect on Holzworth since
the execution date of the Purchase Agreement; (ii) each Seller entering into an employment agreement and a Lock-up and Voting
Agreement (as defined below); (iii) Holzworth’s employees having entered into confidential information and inventions assignment
agreements; and (iv) the Company having obtained proceeds from a debt financing, whether by way of amendment to its existing credit
facilities or otherwise, in an amount sufficient for the Company to pay the Cash Consideration.
Company expects to close the Acquisition by the end of the year. If the closing does not occur by January 31, 2020, then the Company
or Sellers’ Representative can terminate the Purchase Agreement.
and Voting Agreements
to the Purchase Agreement, at the closing of the Acquisition, the Company will enter into a lock-up and voting agreement (the
“Lock-up and Voting Agreement”) with each of the Sellers. Pursuant to the Lock-up and Voting Agreement, each Seller
will agree to restrict the sale, assignment, transfer, encumbrance or other disposition of its portion of the Stock Consideration
(the “Lock-up Shares”). For a period commencing on the closing date of the Acquisition (the “Effective Date”)
and ending on the date which is 36 calendar months following the Effective Date, each Seller will agree that, without prior written
consent by the Company, such Seller shall not sell, assign, transfer, encumber or otherwise dispose of the Lock-up Shares or enter
into any swap, option or short sale, among other transactions. Upon the prior written consent of the Company, a Seller may transfer
Lock-up Shares as a bona fide gift, by will or intestacy or to a family member or trust for the benefit of the Seller or a family
member; provided that any recipient of the Lock-up Shares sign and deliver to the Company a lock-up and voting agreement
substantially in the form of the Lock-up and Voting Agreement. The Lock-up Shares cease to be locked up in the event of a Change
of Control (as defined in the Lock-up and Voting Agreement).
addition, each Seller will, subject to certain limitations, agree, among other things, to appear at each meeting of the shareholders
of the Company and vote all of such Seller’s Lock-up Shares (a) in favor or against any proposal presented to the shareholders
in the same manner that the Company’s Board of Directors (the “Board”) recommends shareholders vote on such
proposal and (b) in favor of any proposal presented to the shareholders with respect to an action of the Company, which the Board
has approved, but as to which the Board has not made any recommendation, including in favor of any proposal to adjourn or postpone
any meeting of the Company’s shareholders if such adjournment or postponement is conducted in accordance with the terms
of the Lock-up and Voting Agreement.
the extent any shares of Company common stock are issued in payment of any Earnout Consideration (as defined in the Share Purchase
Agreement) in accordance with the terms of the Share Purchase Agreement, such shares shall be subject to all applicable transfer
restrictions, voting and other provisions set forth in the Lock-up and Voting Agreement, with the Effective Date with respect
to such shares being the date such shares were issued; provided that, to the extent the portion of the first $1,500,000 of Earnout
Consideration that is paid in cash represents less than 30% of such Earnout Consideration, the portion of shares of Company common
stock issued as Earnout Consideration constituting the difference between the cash percentage paid and 30% of the first $1,500,000
of Earnout Consideration shall not be considered Lock-Up Shares.
foregoing descriptions of the Purchase Agreement and the Lock-up and Voting Agreement do not purport to be complete and are subject
to, and qualified in their entirety by, the full text of the Purchase Agreement and the form of Lock-up and Voting Agreement,
as the case may be, copies of which are filed as Exhibit 10.1 and 99.1, respectively, to this Current Report on Form 8-K and are
incorporated herein by reference. The exhibits filed herewith have been attached to provide investors with information regarding
their terms. They are not intended to provide any other factual information about the Company, Holzworth, or the Holzworth business.
In particular, the assertions embodied in the representations and warranties in the Purchase Agreement were made as of a specified
date, are modified or qualified by information in confidential disclosure documents prepared in connection with the execution
and delivery of the Purchase Agreement, may be subject to a contractual standard of materiality different from what might be viewed
as material to shareholders, or may have been used for the purpose of allocating risk between the parties. Accordingly, the representations
and warranties in the Purchase Agreement are not necessarily characterizations of the actual state of facts about the Company,
Holzworth or their respective businesses at the time they were made or otherwise and should only be read in conjunction with the
other information that the Company makes publicly available in reports, statements and other documents filed with the SEC.
Form 8-K contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including the statement that the Company expects
to close the Acquisition by the end of the year. Investors are cautioned that forward-looking statements are not guarantees of
future performance and involve a number of risks and uncertainties that could materially affect actual results, including, among
others, the ability of the Company to obtain appropriate debt financing for the transaction on favorable terms or at all; the
ability of the Company and Holzworth to satisfy the various conditions to closing; as well as other risks and uncertainties set
forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. These forward-looking statements
speak only as of the date of this release and the Company does not undertake any obligation to update or revise any forward-looking
information to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise, as except as required by